Crash course on debtors on accounts if possible please?

GoldenOldy

I wonder if someone could help me understand the following accounts please? Lets say its my company, (although it is not)

Debtors         (15,000)….they owe you?

Cash at bank.  5,000….you have this in reserve?

———————————————

                      (10,000) deficit? Why ? Shouldnt it be 20k positive if someone owes you 15k?

Creditors.    (40,000) …you owe them?

Net current Liabiliities.   (50,000)…again why if someone owes you 15k

Total assets  less liabilities  (50k)  does this mean you are 50 in the red?

tightauldgit

Doesnt look right. What's the source?

GoldenOldy

Its from companies house. I changed the figures for a few pounds for anonymity , but can add the real one below if that helps?

DE_612183

Debtors and Cash at Bank = Current Assets

uknick

GoldenOldy said:

I wonder if someone could help me understand the following accounts please? Lets say its my company, (although it is not)

Debtors         (15,000)….they owe you?

Cash at bank.  5,000….you have this in reserve?

———————————————

                      (10,000) deficit? Why ? Shouldnt it be 20k positive if someone owes you 15k?

Creditors.    (40,000) …you owe them?

Net current Liabiliities.   (50,000)…again why if someone owes you 15k

Total assets  less liabilities  (50k)  does this mean you are 50 in the red?

As on your other thread on this issue, it would help us to see the full accounts for context.  For instance the bottom half of the balance sheet showing equity and reserves would help to see what is happening.  The historical figures will also be of use to check whether it's a gradual slip into insolvency or a one off due to a bad year.  

On the face of what you have shown us, the company appears to be insolvent, i.e. it can't cover it's debts with its assets. 

GoldenOldy

I understand that debtors and cash at bank should be current assets, but why have they been subtracted on here?

DE_612183

GoldenOldy said:

I understand that debtors and cash at bank should be current assets, but why have they been subtracted on here?

No idea - need more context...

Perhaps the accountant was rubbish
Perhaps they entered the debtors as a negative rather than a positive value

Can you link to the company or give us the company number?

uknick

Simplistically, debtors owe you money and are an asset.  The figure should be positive.  If negative, strictly speaking it should be moved to the liabilities section of the balance sheet.

Debtors are usually made up of;

Trade debtors - people who you have invoiced and still owe you money less any amount for expected bad debts
Prepayments - money you've paid up front that covers more than one financial year, e.g. insurance or rent
VAT - possibly if HMRC owes the company a refund at year end

As this figure is negative it would help to see note 5 which should break down the make up of the debtor figure. 

I can't really say this enough times, one needs to see the whole set of accounts to make any meaningful comment on them.

GoldenOldy

Post Script…whatever the reason for a negative debtor (let us just say the debts written off, why would you subtract your cash at bank from this negative figure ? Is it that you would have had assets made up of the 3,839 and because youve written off lets say 15k that puts you in a negative situation regarding assets?


interestingly the trade creditors to whom the company owes money are in brackets too.

[Deleted User]

GoldenOldy said:

Post Script…whatever the reason for a negative debtor (let us just say the debts written off, why would you subtract your cash at bank from this negative figure ? Is it that you would have had assets made up of the 3,839 and because youve written off lets say 15k that puts you in a negative situation regarding assets?


interestingly the trade creditors to whom the company owes money are in brackets too.

That’s fine for the creditors as there is only one entry in liabilities. Had there been more than one, for example creditors plus overdrawn bank account, both would have been shown as positives with the total of both then subtracted from the current assets.

I also note that both years had negative debtors which is a new one for me. 

uknick

Those look accounts pretty screwed up (technical accounting term).  The trade creditor figure is the wrong sign and so is taxation.  Both of these should be positive as the "other creditors" is.

I don't know what you're trying to do with the accounts but to my eye they reflect;

a) bookkeeping that doesn't appear to be correct and,
b) an insolvent company I wouldn't touch with a barge pole