Recording an initial share capital from Directors’ Loan Account

Accounting
1

Hi,

I have followed your instructions at “Limited Company Bookkeeping - The Basics” http://help.quickfile.co.uk/main/1/limited_company_bookkeeping_-_the_basics.htm and I have a huge doubt about the Directors’ Loan Account when journalizing an initial share capital.

As far as I have understood, the DLA is a liability account so any increase should be credited. If I debit it as you suggest to do at “Limited Company Bookkeeping - The Basics”, it shows that a payment were done already to the DLA from the bank account which is not correct.

I have tried this and it seems that it works:

Bank Account From Ordinary Shares Dr 1000
Ordinary Shares To Bank Account Dr 1000
Ordinary Shares From DLA Cr 1000
Directors’ Loan Account To Ordinary Shares Cr 1000

Is this correct?

I really appreciate any help.

Thanks!

Best regards,
Lucho

2

Dr Director a/c
Cr Share capital a/c

if actual money transfer involved
Dr Bank
Cr Director a/c
Dr director a/c
Cr Share capital

3

Hi,

Thank you for your message.

I have done as you said and I found that there are payments as “money in” from Ordinary Shares at the DLA sheet. Is that correct? Please see captures below.

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All those transactions are paid up share capital that the Director transfer to the Bank a/c. The ones with no “money in” transactions are out the pocket expenses which I do not know how to add to Ordinary Shares.

Many thanks,
Lucho

4

No No, any out of pocket expense should be recoded like

Dr Expense ( which ever relevet expense is, e.g Printing, advert, telephone, purchases etc)
Cr Director a/c

DO NOT touch Share capital at all.
Share capital will have only one entry of value say you have 100 paid up share capital

then you will do one JOURNAL entry
Dr Director a/c
Cr Share capital

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5

Thank you for help and message.

How to tag from the bank that unique journal entry if I have a string of bank transfers to fund the company along with those various expenses I have covered “out-of-pocket”?

Many thanks!

6

If you are doing journal entries for expenses i.e Dr Expenses Cr Director a/c then no bank involved hence no tagging
If you transfer payment to bank account then under receipt you will tag it as receipt not in list and then pick director a/c

1 Like