Re: Preparing accounts with respect to DCA form.

deepp@xxxxxxxxxxxxx wrote:

On Jun 18, 10:58 am, Peter Saxton <p...@xxxxxxxxxxxxxxxxx> wrote:
On Mon, 18 Jun 2007 08:45:59 +0100, Peter Saxton

1. Issue 1,000 shaes of £1 each

Called up Share Capital not paid 1,000
Cash at Bank and in Hand 0

Issued Share Capital 1,000
Profit & Loss A/c 0

2. Pay for shares

Called up Share Capital not paid 0
Cash at Bank and in Hand 1,000

Issued Share Capital 1,000
Profit & Loss A/c 0

Nearly! I understand these calculations, no problem. But Im unsure how
to display them on the balance ***.

I think what he's trying to say is that "Issued Share Capital" goes
in the Balance *** on the liability side, balanced (if paid) by
"Cash at Bank and in Hand" on the asset side.

It all looks a lot simpler and obvious once the shares have been paid
for, but we can work backwards from this to see what the position
should be before they are paid.

Obviously you would not have the corresponding "cash in bank" to balance
the "issued share capital", but you *would* already have that "issued
share capital", and it would already be a liability. So it needs to be
balance by something else, some other asset, and its name is "called up
share capital not paid". It's an asset because it's something you the
shareholder owes the company.

You seem to have understood this because you said:

Taking your first example and
ignoring anything else the balance *** you send to Companies House
would look like this.

Current Assets:
Called up Share Capital not paid 1000
Cash at Bank and in Hand 0
-------
1,000

Issued Share Capital 1,000
Profit & Loss A/c 0
--------
1,000

And now let's look at your version.

My version looks like this
Current Assets:
Called up Share Capital not paid 1000
Cash at Bank and in Hand 0
-------
1,000

This looks OK so far, but I'm not sure about the following.

Total Assets less liabilities 1,000

Capital And Reserves:
Allocated Called up Share Capital 1,000
Profit & Loss A/c 0
--------
Shareholders Funds 1,000

I suspect it might make more sense to show the asset "share capital not
paid" as a deduction on the liability side (but not within "ordinary"
liabilities, but within the shareholders funds section), rather than as
an addition on the asset side.

This would then make "Total assets less liabilities" zero.
It would also make "Shareholders funds" zero, which is fine because,
after all, shareholders are owed the value of the shares but
haven't paid for them yet, so their funds *should* be zero!

Capital and Reserves:
Issued Share Capital: £1000
Less: Called up Share Capital not paid: (£1000)
-------
Shareholders Funds: 0

.