Reconciling reserves to bank account

Reconciling reserves to bank account

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Hi there

I have prepared some limited company accounts for a service industry that hasn't traded in the financial year.  The only expense is depreciation and an insurance refund.  This results in a loss per accounts, and a small profit per tax comp.  As the company has ceased trading, the director wants to withdraw all reserves - i can do this per the accounts no problem, but this will still leave a small bank balance of a few hundred quid - why is this?  How would the director ever get this money out, or does it need to be left to cover deferred tax?

I'm completely confused :-/ I have tried to reconcile the reserves to the bank, but there is always a bank balance left even when all retained profit has been taken as dividends?

Any information would be gratefully received.

Thanks

Replies (7)

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By Triggle
20th Mar 2013 22:44

You will have to provide us with the final balance sheet that you are looking at as there are too many variables involved to give a definitive answer.

Just the abbreviated one will do. Obviously no names no pack drill.

On face value, the company must have a creditor (the share capital perhaps, a share premium account perhaps, the CT due perhaps, or the deferred tax provision perhaps, or your fees accrual perhaps or... well I could go on) that means that when you draw a cheque for the P&L reserves figure on the balance sheet a few hundred quid is still "undrawable" from the bank account.

 

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By FAY7H
20th Mar 2013 23:02

Thanks for your reply
Very basic balance sheet:

FA. 692
Drs 352
Bank 104
Trade crs 6
C/tax 4
D/tax provision 138 (207 previous yr, difference to P&L)
Share cap 1000

Reserves bf were 526
Loss for the year after tax is 258 so the difference here has been taken as a dividend so the reserves for the current year are now nil

I understand the bank balance would change given the repayment of the directors loan back in,, payment of the trade creditors and the corporation tax, but this will still leave a balance in the bank - I guess I was hoping to identify exactly what makes up this balance and why it is there undrawable!

Thanks in advance :-)

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By Ian Bee
21st Mar 2013 10:18

Cessation?

Has this company ceased to trade? If it has, some of the balances should be written off (eg fixed assets, deferred tax) and what did the final CT comp show?

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By FAY7H
21st Mar 2013 20:39

It is no longer trading and about to be declared dormant, this will be the last set of full financial statements, then ill just be filing the balance sheet

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By johngroganjga
21st Mar 2013 20:58

You have cash left because although you have distributed the reserves you have not distributed the share capital.  The final cash balance remaining after all the assets have been liquidated and the liabilities discharged will be the balance to be distributed to the shareholders on the winding up of the company.

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By FAY7H
22nd Mar 2013 10:53

Thank you, should this be the value of the share capital then if the assets are not to be sold?

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By johngroganjga
22nd Mar 2013 11:04

The net assets will remain at £1,000 unless and until there are further profits or losses to be booked.  How much of this will be cash depends on what happens to the liabilities and the other assets.  If the other assets realise their book values (no more and no less) and the liabilities on the balance sheet are discharged in cash, the cash balance remaining will be £1,000.

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