How to calculate "capital and reserves" for Micro-entity accounts?

[Alexio]

I understand that the 'capital and reserves' figure should be the same as the 'Total net assets or (liabilities)' figure, but I do not know how to calculate the figure independently. HMRC's description gives me the inverse of the 'Total net assets or (liabilities)' figure, which seems wrong. That description is "The current amount the owners have invested in the company, or the amount owed to the owner, plus any surplus funds".

I am also a little concerned about where to account for the share capital, since it isn't mentioned anywhere. Is it a current asset only?

Lastly, the Government website says that income should be rounded down and expenses should be rounded up, but my accounting software (VT) just rounds to the nearest pound, and it rounds very early in the calculation, rather than at the end. What is the correct rounding procedure?

 

[Scalloway]

Capital and reserves is the share capital plus the accumulated profits and losses of the company. If this is the first year's accounts it will be the profit or loss for the year plus share capital.

where to account for the share capital,

Share capital is part of the capital and reserves.

 

[Alexio]

It definitely isn't profit or loss plus share capital.

 

[Scalloway]

It definitely isn't profit or loss plus share capital.

How do you come to that conclusion?

 

[Alexio]

For example, with these figures:

Share capital

100​

Directors loan

4400​

Purchase of fixed asset

-3300​

Shipping of fixed asset

-550​

Duty on fixed asset

-330​

There's no way the two sheet totals can get within £500 of each other

 

[Scalloway]

You have £320 un accounted for. Is this money in the bank? Have you spent it on running costs?

This image shows my tried and tested method of doing a simple set of accounts

https://imgur.com/gallery/CPfENkC

 

[Alexio]

I'm more stuck on where to put the numbers in the forms so that the two match. The £320 is in the bank.

 

[Scalloway]

Fixed assets ....................................£4,480
Current assets - Bank .........£320
Current liabilities - loan.(£4,400)
Net Current liabilities.....................(£4,080)
TOTAL.......................................................£100

Capital and reserves...........................£100
TOTAL.......................................................£100

 

[Alexio]

So the duty and shipping should be considered part of the cost of the fixed asset? Is that right, even though they're expenses in the accounts? What if there was a £100 phone bill to account for as well?

How would the figures go into the P&L sheet so that the total is the same?

 

[Alexio]

I looked up info on fixed assets and oddly shipping and duty should be included in the value, but I still can't get the two sheets within £50 of each other.

I don't see how your total is £100. It calculates as £400. 4480+320-4400=400.

Regarding rounding, should I round down for income and assets and up for expenses and liabilities? HMRC and Companies House seem to give different advice and the numbers won't match if I round differently.

 

[Alexio]

Should Share Capital held as cash be included in Current Assets and not mentioned on the P&L, so the Balance Sheet total is different to the P&L total by the amount of Share Capital? I can either do that or not mention the cash held (which is entirely Share Capital) in which case the two totals will be the same. I cannot seem to get the P&L Micro Entities total to match the total in VT because VT includes the Share Capital in the total and the Micro Entities form doesn't.

I've resolved everything else, so that's a relief. Just this one thing left to do.

 

[Scalloway]

Share capital is the amount that goes in Capital and Reserves.

By the way I think there is a typo in my figures but I'm not at my computer so I can't check.

 

[Alexio]

My figures are fine now, it's just what to do about Share Capital and the totals that I'm stuck on.

It says Capital and Reserves must be the same as Total Net Assets or Liabilities. It is the same, and it's also the same as the P&L total, but only if Share Capital isn't accounted for anywhere at all. My specific questions are in my last comment. I really just need a straight answer for which boxes Share Capital should affect.

 

[Scalloway]

How was the £100 phone bill paid?

 

[Alexio]

There isn't one, it was just a question.

I can see you have no intention of helping with this. You have avoided my central question throughout your replies, and you gave me numbers that don't add up. You're obviously trying to cause problems - a troll accountant having a laugh.

 

[Scalloway]

I apologise for my error. I was trying to reply from a train yesterday. These are the correct figures with the correction in red.

Fixed assets ....................................£4,180
Current assets - Bank .........£320
Current liabilities - loan.(£4,400)
Net Current liabilities.....................(£4,080)
TOTAL.......................................................£100

Capital and reserves...........................£100
TOTAL.......................................................£100

 

[Scalloway]

How was the £100 phone bill paid?

There isn't one, it was just a question.

If there was it would increase director's loan if you paid it yourself and create a zero balance for capital and reserves.

 

[Alexio]

Except that your Capital and Reserves figure of £100 is wrong.

I don't know why you're replying here. Is it your hobby to troll threads and not help? Or do you do it to cause problems, maybe expecting people to then turn to you and pay you to sort things out? That seems likely.

 

[Scalloway]

Except that your Capital and Reserves figure of £100 is wrong.

Share capital is part of the capital and reserves.

Is there a profit or loss for the year that changes the figure of £100?