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books2013


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Director left Ltd co- accounting entries
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Hi all

I am looking for help on the following please;

One director has left he had a credit balance on DLA of £700, the other director got the 50% shares from resigning director for nil consideration.

The leaving directors DLA balance was used to repay company bills

I am unsure of the correct accounting entries and would appreciate help, thanks



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AndersonAccountancy


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Hi,

I suspect this could potentially open a can of worms if there was any value in the company as the share value could not be nil but that's another story.

The £700 you refer to as paying company bills - do you mean liabilities such as suppliers? If so, I would journal the DLA balance to the bank account then pay the bills to the bank account resulting in nil effect, clearing the DLA and everyone's happy. I would assume that the shares are not seperated on the BS? If not, then no action here but certainly you would need to do a stock transfer form (and signed by both parties) and initiate the share transfer when you come to do the annual return.

That's about it really.

Hope it helps.

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David P Anderson FAIA

 
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