Transactions with Director

Jan

Hi
I'm a little rusty at reading company accounts, so please bear with me.

I'm looking at balance sheets for a small local company. Can someone please explain these transactions to me?
Transactions with Director read:-
2012 2011
Balance outstanding at start of year (35834) -
Amounts advanced 20459 38166
Amounts repaid (9000) (74000)
Balance outstanding at end of year (24375) (35834)


Business was acquired in 2010, when £35000 was paid for goodwill, which is to be amortised over the next 5 years, so by the last set of accounts in 2014 this is showing as £7k. I'm fairly OK with most of the transactions on the balance sheet, except for Creditors: amounts falling due within one year (38853) and Provision for Liabilities (3606) - 2011 figures. What would these relate to? It's a nursery so wages/ paye/rent will be biggest outlay - no gas/electric/rates etc.
The balance sheet shows Profit & Loss as £4,255 in 2011, total Assets of £4,355 made up of profit plus £100 share capital
Balance sheet in 2014 (the last available) has Capital & Reserves of (£4043), no split so does this mean a loss of £4143, as share capital will still be £100 ?

The reason I am looking is that we are being given the run around re payment of rent and even to my rusty eye, this company doesn't look to be doing too well!

Many thanks in advance

Jan

ps Sorry cannot work out how to format transactions so they line up.

Rozzi Rainbow

Hi Jan

Your transactions with director suggest that in 2011 the director/s lent £38,166 to the company, and the company repaid them £74,000, so the DLA was overdrawn by £35,834 at the end of the year. (The question I would wonder here is why the company paid £74K to the director - presumably there was insufficient retained earnings for this to be declared as dividends.)

In 2012 the director/s lent the company another £20,459, of which £9,000 was repaid, meaning the overdrawn balance at the end of the year was reduced to £24,375.

The creditors due within one year may be bank overdrafts or loans - the notes to the accounts should itemise this further (but maybe you won't have access to these if you don't have the full set of accounts). Provision for liabilities may relate to deferred tax - again the notes should itemise this.

The notes should also itemise the Reserves - the fact this figure is negative at the 2014 year end suggests that overall they have made cumulative losses, however it could also mean they have declared dividends in excess of the cumulative profits.

mynameiswhat

I think on the DLA it is the other way around - the £9k and £74k is the director putting money back into the business and the balances at the year end are liabilities to the company (money owed back to the director). This would mean a significant part of the creditors due within one year is the DLA.

Jan

Thanks to both of you. To be honest I had interpreted the DLA Rozzi's way but as I say I am so rusty I thought I must have got it the wrong way 'round and now mynameiswhat and MarieNovell agrees we both have.

Just found out this morning that the rent up to last term has been paid, so immediate problem over - until this term ends!