Can someone explain why dividends paid (3102) from the current and previous years still appear as an asset in the Capital and Reserves in the Balance sheet? They were tagged as dividends and the recipient named in the ‘Salary, Dividend or other drawings’ Menu. Thanks.
Stephen
Have you ever ran the year end process after each financial year?
Thank you. I have now, and there is now a year end closing journal but the current balance sheet still shows in the Capital and Reserves 3101 retained profits and undistributed reserves which match the figure for the year end closing journal as a credit ie debit 0 credit x. If the dividends have been distributed, surely they are not part of the Capital and Reserves? Or am I missing something here?
You’re missing something yes.
Retained profit is what was left after each year end. So these will always appear after a closing journal has been added.
And it will always carry forward. If you had spent all your left over money then that’s when it would appear as 0
Thanks. I can get my head around P & L but the Balance Sheet is more of a challenge.
Similarly, Corporation Tax paid Nom 2320 as set by Quickfile, is showing in the balance sheet, after YE run, is that correct??
Yes. 2320 is in the Balance Sheet. So is 2203, Vat Liability, 2210 PAYE and 2220 Net Wages. I don’t understand why they are Assets!
Taking VAT Liability as an example, typically what happens is that when you submit a VAT return it puts a credit (liability) on that nominal and then when you actually pay HMRC it puts a matching debit which cancels out the liability.
The same thing applies for corporation tax - when you record your tax liability that will be as a credit on 2320, and when you pay it over to HMRC that will be a debit on the same nominal. But if you make the payment before you’ve recorded the liability then the money you paid over will look like an “asset” on your balance sheet. When you create the liability journal as per the following post, then the asset will disappear.
Things like the above will show as liabilities until they are paid. If they show as an asset its because you’ve paid one of them before recording it in a journal for example.
As Ian says, when you run a vat return the payment due will be a liability, when it’s paid it will reduce to 0.
If these are showing as assets and not liabilities you’ve either not set up your opening balances properly when you started quickfile or for example with paye, you tagged a payment but never actually created a paye journal to record a future liability.
I strongly advise you get professional advice from an accountant as it appears to be way over your head.
Thank you all for the help and advice. Our accountants take my Quickfile data and prepare the accounts on their own Non-QF system. I am trying to arrange the QF data so that it aligns with our accountants data so that I have a clearer picture during the year as opposed to just at the year end when they prepare the final accounts. The PL is reasonably straightforward and aligns, and I am beginning to understand the intricacies of the Balance sheet. Now I have identified the issues, I need to speak to them as well. Thank you again.
After burning midnight oil, corporation tax, salaries and PAYE now appear to be done correctly and the year ends, apart from the very recent year end have been completed. I could not have done that without the help given. My one remaining issue is that paid dividends, i.e. those funds that have left the company via the current account, still appear as Undistributed Reserves in the Balance Sheet even after running Year End processes. Presumably there are journal entries to be made and advice on how to make this would be appreciated.
When you say they appear as reserves in the balance sheet. Do you mean the balance sheet is showing dividends paid. Or do you mean when you drill down in to the undistributed reserves nominal you see the dividends?
If its the former. Press the spy glass next to dividends paid and check the dates fall outside the locked period.
Thanks. Now sorted. The Balance Sheet now only shows retained profits.