Directors Loan postings

ExcelAnt

Hello,

I am giving some advice to a friend on there new business and the bookeeping thus far has been done by the directors sister.

They set up a ltd company and the two directors fronted 6k each for start up costs. However, the physical £12,000 was not deposited to the company bank account, about half was. The other half was spent before the account got setup on furniture and stock etc.

To account for this can I "pretend" the bank paid these items? Therefore making the bank statements semi false but ultimately everything balances.

or is it better to use a control account to bounce off such as the suspense?

I ask because at the end of the year they will hire an accountant to sign off the books and I want to make it as easy as possible for them so they dont get overcharged.

Thanks in advance

coojee

ExcelAnt wrote: »

Hello,

I am giving some advice to a friend on there new business and the bookeeping thus far has been done by the directors sister.

They set up a ltd company and the two directors fronted 6k each for start up costs. However, the physical £12,000 was not deposited to the company bank account, about half was. The other half was spent before the account got setup on furniture and stock etc.

To account for this can I "pretend" the bank paid these items? Therefore making the bank statements semi false but ultimately everything balances.

or is it better to use a control account to bounce off such as the suspense?

I ask because at the end of the year they will hire an accountant to sign off the books and I want to make it as easy as possible for them so they dont get overcharged.

Thanks in advance

DR assets, CR Directors Loan account.

You can't use the bank account or a suspense account. The above transactions are a true picture of what actually happened and reflect the fact that the directors are now owed money by the business. It's only the same as what should have been done when they deposited the cash ie DR Bank, CR DLA

ExcelAnt

Hiya,

thanks for the response, makes perfect sense.

its all a bit of a mess as the bookeeper didnt know what to do with it. so has reduced the directors loan (initially psoted as 6k)

can fix it now

Monsoon

It's all a directors loan of £12k, except one half will be Dr bank Cr Loan, and the other half will be Dr Expenses/Assets, Cr Loan.