Dividends - Accounting

[X5211]

I will be taking this up with my accountant but until I get a chance can anyone explain to how the account below could have a dividend balance now available of £28,072.51 but only around £21,000 in bank account? I would have assumed dividends available would be roughly a figure of profits-expenses payable and less than amount in bank account??


Available to withdraw from the Company

Opening Reimbursed Available Balance now
Balance per Bank this time available

Net Wages 5,416.64 1,625.38 1,666.66 5,457.92
Expenses/Mileage 438.91 - - 438.91
Dividend 30,007.90 10,167.00 8,231.61 28,072.51

35,863.45 11,792.38 9,898.27 33,969.34

[Dr Jekyll]

Does someone owe the company a lot of money?

[X5211]

Dr Jekyll said:

Does someone owe the company a lot of money?

No.. All invoices paid on time.. Anything else

Formatting is way off..

[essayer]

You need to have the whole balance sheet really otherwise it doesn't make sense.

[X5211]

essayer said:

You need to have the whole balance sheet really otherwise it doesn't make sense.

Happy to share what I have if yourself or anyone else wants to have a look... cheers

[dave123456]

X5211 said:

Available to withdraw from the Company

Opening Reimbursed Available Balance now
Balance per Bank this time available

Net Wages 5,416.64 1,625.38 1,666.66 5,457.92
Expenses/Mileage 438.91 - - 438.91
Dividend 30,007.90 10,167.00 8,231.61 28,072.51

35,863.45 11,792.38 9,898.27 33,969.34

think you need to tabulate this for it to make sense.

could be any one of a number of things, year one of the business? difference could be made up by net balance of debtors / creditors, stock held on the balance sheet that's paid for, items capitalised, loans etc.

impossible to say but accounting profit is not cash based so it is not a particularly easy question to explain concisely.

[HootersGsy]

As the others have said we need to see the balance sheet but it's likely going to be as simple as you've spent the money on some fixed assets of some sort or another, or they've used the accrual basis for your income and recognised some WIP.

[X5211]

Does this help at all??

Available to withdraw from the Company

Net Wages Opening Balance- 5,416.64
Reimbursed per Bank - 1,625.38
Available this time - 1,666.66
Balance now available - 5,457.92


Expenses/Mileage Opening Balance - 438.91
Reimbursed per Bank - -
Available this time - -
Balance now available - 438.91


Dividend Opening balance - 30,007.90
Reimbursed per Bank - 10,167.00
Available this time - 8,231.61
Balance now available - 28,072.51

Total
Opening balance - 35,863.45
Reinbursed per bank - 1,792.38
Available this time -9,898.27
Balance now available - 33,969.34

I am an IT contractor and the company is in 5th year of business with very little assets. Over the year I have bought a couple of laptops etc but not more than £5,000 in total

Edited by X5211 on Wednesday 4th March 20:45

Edited by X5211 on Wednesday 4th March 20:46

[dave123456]

appears to be ledger extracts, so you presumably owe yourself £28k of dividends. any cash drawn would go against this balance.

[X5211]

dave123456 said:

appears to be ledger extracts, so you presumably owe yourself £28k of dividends. any cash drawn would go against this balance.

I guess this is my lack of understanding. How can you "owe" yourself dividends.. I thought they were only "available" from profits-expenses (inc all tax)???

[dave123456]

dividends are paper entries that are made against distributable reserves. distributable reserves arise from profits. the dividend is settled in cash - although if you are the only employee I would take more as salary up to your personal allowance rather than dividend.

so you have, by the looks of it, booked dividends that haven't been settled yet.

however the info is sparse so I am only making an educated guess.

[Countdown]

X5211 said:

I guess this is my lack of understanding. How can you "owe" yourself dividends.. I thought they were only "available" from profits-expenses (inc all tax)???

As above - seeing a full P&L /BS for the year would help.

I'm guessing that the "Dividend owed" means the same as "Retained Profits" aka "Reserves" aka "Owners Equity". If I'm right then this HAS to equal the top half of the balance sheet (i.e. Fixed Assets + Current Assets - Liabilities)

If you don't have any fixed assets or debtors then the balancing figure should (as you say) be cash.

What was the cash figure at the start of the year and what was your Nett profit?

[X5211]

Thanks for your help guys. Anyone fancy having a quick look? Message and I will email them over..

[Countdown]

Happy to have a look if it helps - prior year comparatives would also be helpful

[X5211]

Countdown said:

Happy to have a look if it helps - prior year comparatives would also be helpful

Cheers, I have messaged you to send your email over as cant attach spreadsheet via this system..

[Countdown]

X5211 said:

Cheers, I have messaged you to send your email over as cant attach spreadsheet via this system..

[e-mail]

[X5211]

Countdown said:

[e-mail]

Sent.. Thanks

[Countdown]

X5211 said:

Sent.. Thanks

Hi X5211

I've had a very quick look and the figures seem to add up. All those figures you've put on each tab should match the cash flows on your bank statement. In layman's terms you've got

Sales income
Less : bills and stuff
Equals :net profit (aka available to withdraw)

So, to answer your original question - yes dividend SHOULD be equal to the cash sat in the company bank account.

I've only had a quick look on the iPad so apologies if I've missed something. I'll look at it in more detail when I get the chance.

P.s. in August 2010 why are you showing client entertainment as income rather than expenditure??

[Countdown]

ETA - all it needs to solve is for your accountant to cross reference that spreadsheet to the bank stmts.

(Wish some of my clients produced figures as clear as yours )

[X5211]

Countdown said:

Hi X5211

I've had a very quick look and the figures seem to add up. All those figures you've put on each tab should match the cash flows on your bank statement. In layman's terms you've got

Sales income
Less : bills and stuff
Equals :net profit (aka available to withdraw)

So, to answer your original question - yes dividend SHOULD be equal to the cash sat in the company bank account.

I've only had a quick look on the iPad so apologies if I've missed something. I'll look at it in more detail when I get the chance.

P.s. in August 2010 why are you showing client entertainment as income rather than expenditure??

Thank you, really appreciate you doing that. If you get a chance then great, if not don't worry at all..

Yeah the dividend I am told is "available" is around £12,000 more than that of the cash in the bank currently.

I will have a look at the Aug2010 client entertainment :-) Going to blame the wife for that one..