i am selfimployed and run a market stall and i have been uesing sage v12 do do my books on i will be coming to the end of my first year end of this month i have a capital account set up in my sage funds i put in to start up £5.000 and a drwings account funds i have took for myself .
and last week i was chating to someone and they told me i have to clear my drwings account is this right and if so how do i do it i did not undrstand what he was saying
I wouldn't worry about your drawings account. I think the point they were making is: in Sage, when you've done all the entries for the first year and go into year two, you do a 'year end' which clears all the profit and loss items. However, it doesn't clear the drawings account out (as that's not a profit and loss account). What it means is, if you don't do it, your drawings account will start to look quite high, because it's all the drawings you've taken from day 1.
Your accountant, if you have one, would usually give you some opening balance adjustments, of which one would be to transfer the annual drawings accounts to Capital at the end of the year.
You can do this yourself by journal. Dr Capital, Cr Drawings.
What Nick says is correct.
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Thankyou for your help i dont have an accountant i will be doing it my self like i say my capital is 5.000 and my drwings are 15.000 . so i can do as you say and move it to my capital account will that mean i have 10.000 in my capital this part i do not understand
Add in any other capital introduced, if you have any
Deduct drawings.
You can do this as a Journal entry to clear the accounts at the end of the year to leave you with a new balance on your Capital Account. Hopefully it will increase (depending how much you withdrew, via your Drawing Account).
can i just ask do i also have to move the profit and loss account in the same way to my capital account sorry to sound thick but saves me a lot by doing it my self
TK
-- Edited by Tk on Thursday 8th of September 2011 08:39:08 PM
Seeing as you've mentioned it, Tk, the last time i did a market trader in 2001, I charged roughly £200. There were a few others then, but we moved premises and there's not as many about now. It makes me wonder what traders are paying for their accounts in Leek, Cheadle etc. best wishes Tim
