Flat Management Companies -
GBA9
Contents
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Introduction
This booklet is for people who manage
a company that has been incorporated to manage a property
divided into a number of separate flats. Usually, the company
will own the freehold but sometimes it will hold a headlease
instead. Under legislation introduced on 27 September 2004,
the property may be held as commonhold, where the common parts
are owned and managed by a ‘commonhold association’.
This booklet is aimed at smaller companies,
as the arrangements of larger flat management companies can
be complex and are best handled by professionals. It covers
some of the possible questions you will need to consider such
as:
- Do we need a limited company?
- If we have a company, what will our
responsibilities be?
It also gives advice on how to keep accounting
records and how to understand the accounts that are prepared
from them. It does not explain the statutory framework governing
the format in which accounts must be prepared, or the complex
and lengthy accountancy rules.
This booklet is a general source of information
for companies registered under the Companies Act:
- it does not explain the process by
which leaseholders may acquire the right to manage their
own premises. Information on RTM (right to manage) companies
is available from the Office of the Deputy Prime Minister
(tel. 020 7944 4400 or visit www.odpm.gov.uk);
- it does not explain the law on commonhold
or how to set up a commonhold association. Information on
commonhold associations is available from the Department
for Constitutional Affairs (tel. 020 7210 8614 or visit
www.dca.gov.uk).
However, RTM companies and commonhold
associations are incorporated under the Companies Act and
the information in this booklet generally applies to them.
This is a guide only. If you are in any doubt, you should
seek independent help from an accountant or solicitor.
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Chapter 1
Do you need a company?
1. What is a limited company?
In law, a limited company is a 'person' in its own right.
This means it can own property (such as a freehold or leasehold)
and enter into contracts in its own name. It exists independently
and separately from the people involved.
When a property is divided into a number of flats, each flat
owner usually has a lease of their own flat but they may also
hold shares in a management company that owns the freehold
(or lease) of the entire building. As shareholders, the flat
owners have their say in running the limited company. Normally,
the company's constitution will say that shareholders who
sell their flats must also transfer their shares to the new
owners. This ensures that - at any given time - the limited
company represents the interests of all the current flat owners.
However, it remains a separate legal entity regardless of
who holds its shares from time to time.
| Some limited companies do not have
shares and are instead 'limited by guarantee'. In England
and Wales, this includes commonhold associations and RTM
companies. If your company is limited by guarantee, it
means that the members have agreed to contribute to the
assets of the company if it is wound up. In this booklet,
the terms 'shareholder' and 'member' mean the people who
own the company. |
Instead of having a company, you may wish to consider two other
options:
- If your organisation does not own property
but simply collects money from residents for repairs and
maintenance, and pays bills when they arise, then less formal
arrangements may be appropriate such as a residents association.
- Residents could consider buying the
freehold of their properties in their own names or as trustees.
Ask a solicitor or accountant to tell
you whether one of these options would best suit your circumstances.
2 Why have a limited company?
One reason why residents of a block of flats would have a company
is to own the freehold or 'head lease'. Freehold gives outright
ownership of the property to the company. A 'head lease' is
a lease granted directly to the company, who may in turn grant
subleases of the property (or parts of it) to the flat owners.
For the purposes of this booklet, the difference between
a company that owns a freehold and one that holds a 'head lease'
is immaterial. However, the company is also often used
for collecting a central pool of cash for carrying out repairs
and maintenance to common parts of the property. Often it is
a condition of buying a flat that the buyer becomes a member
or shareholder of the company. In some cases all flat owners
automatically become directors. See question
5 about directors' responsibilities.
Another reason why a company
would be set up is so that leaseholders of flats can exercise
their right to manage the building they live in. The right
to manage must be exercised through a limited company set
up for that purpose. This type of company is called a ‘RTM
Company’. There are special rules about setting up and running
a RTM company in England and Wales which are not covered in
this booklet. More information is available from the Office
of the Deputy Prime Minister (tel. 020 7944 4400 or visit
www.odpm.gov.uk)
A limited company would also be set up
to own and manage the common parts of a development made up
of separate units under ‘commonhold’. This type of company
is called a ‘commonhold association’. There are special rules
about setting up and running a commonhold association which
are not covered in this booklet. More information is available
from the Department for Constitutional Affairs (tel. 020 7210
8614 or visit
www.dca.gov.uk).
3 What does the limited company do?
Flat management companies typically manage common parts of
the building. They may have other responsibilities. Your property
probably has parts common to all the flat owners living in
it: boundaries, roofs, halls, drives and gardens being typical
examples. These require maintenance, insurance, lighting,
etc. These costs are funded by the individual flat owners,
who make periodic contributions into a pooled fund.
Many flat management companies choose to account for these
transactions within the company. Chapter2
and chapter 3 give
information on the financial accounting required.
If your
company just pays a few bills, perhaps for repair or maintenance,
then your advisor may say that these payments need not
go through the company's books. Less formal arrangements,
such as collecting the money through a residents association,
may be satisfactory. The company could then continue to
own the freehold (or head lease) of the property, but
all its accounting transactions would be conducted elsewhere
- the company would then be 'dormant'.
Accounts would still have to be prepared, presented to
members, and delivered to Companies House, but all that
would mean is a simple 'nil' balance sheet that does not
have to be audited.
A standard dormant company balance sheet, Form DCA, is
available for companies that have been dormant since incorporation.
For this, and more information about dormant company accounts,
see our booklet, 'Dormant
Companies'. |
4 What are the legal responsibilities of limited companies?
The prime purpose of limited companies is to limit the liabilities
of entrepreneurs who use them for business purposes. In exchange
for this limited liability,
companies are required to make certain information about themselves
available to the public. This information is filed at Companies
House. The timing and presentation of the information is governed
by law.
Flat management companies, although mostly formed for a different
purpose, are governed by the same legislation - primarily, the
Companies Act 1985. It does not allow flat management companies
to be treated any differently to other companies.
The main requirements of this Act affecting flat management
companies are that they file:
These documents and notifications
must be filed at Companies House. Chapter
4 gives information about what you need to send to Companies
House and when.
5 Who is responsible
for managing the company?
Managing the business of the company is the responsibility of
its officers. Legally,
all companies must have:
- at least one director (unless the company
is a plc); and
- a company secretary.
A sole director cannot also be the company
secretary. There must be two officers.
The directors and secretary manage the company on behalf of
the members. Among other things, they are responsible for
holding meetings and ensuring that all the necessary returns,
accounts and other documents reach Companies House by the
due date.
6 What happens if documents are not delivered to Companies
House?
When you are appointed as an officer, you take on some very
important obligations. If you don't comply with them, there
could be very serious consequences. The company officers could
be prosecuted because they are personally responsible for
ensuring that documents are delivered on time. Failing to
do so is a criminal offence.
Your company could also be 'struck off the register' and dissolved.
In this case all assets (such as the freehold of your property)
would be 'bona vacantia'. This means they belong to the Crown.
Your company would then not be able to sell its freehold and
you may find that you couldn't sell your flat. So it is in
your interests to ensure that the company complies with the
law and stays on the register.
7 Do the members get a say in how the company is managed?
Generally a company must hold at least one meeting of its
members every year. This is known as the annual general meeting.
Other general meetings may also be held.
At meetings, the members elect and remove directors, pass
various resolutions and consider the company's accounts. However,
they cannot reject the accounts, as these are the responsibility
of the directors and not the members. If the members were
to refuse to adopt the accounts, this could be taken as a
vote of no confidence in the directors.
If all the members agree that they do not want to hold an
annual general meeting, they may pass a resolution saying
so. A copy of the resolution must be sent to Companies House.
If the company decides not to hold annual general meetings,
this may complicate the appointment of directors and make
it difficult for members to discuss company affairs.
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Chapter 2
Statutory accounts
1 What accounts must the company keep?
All limited companies have a duty to keep accounting records
and to prepare annual accounts. The Companies Act and other
regulations specify the format in which the annual accounts
must be prepared, the information that needs to be disclosed,
and the rules affecting the valuation and treatment of the
transactions and balances appearing in the accounts.
These rules are long and complicated. Residents will rarely
have the time and patience to understand them. So our strong
advice to flat management companies is to employ a professional
accountant to prepare your annual statutory accounts. The
cost would be shared among the leaseholders.
2 What if our company cannot afford a professional accountant?
Many small flat management companies do not want to employ
an accountant and try to prepare their accounts themselves.
Many of these attempts go badly wrong. They are made without
the slightest reference to, or knowledge of, the Companies
Act; yet the directors happily sign a statement in the accounts
acknowledging their responsibility for preparing them to meet
the Act's requirements.
Directors should note that the Companies Act means they can
be prosecuted if their accounts fail to comply with its requirements.
Many small flat management companies elect one of their members
to keep a record of transactions, and many also expect him
or her to prepare the statutory accounts. But preparing statutory
accounts can be time consuming, stressful and frustrating.
All the members should carefully consider whether it is fair
to impose that burden, and whether the chosen person is confident,
competent and happy with the responsibility.
Again, our advice is that you employ a professional
accountant to prepare the statutory accounts.
3 Our treasurer does the book-keeping and accounts - what
can we do to make their job easier?
Members can make the life of the book-keeper easier by ensuring
that their contributions are paid into the company bank account
on time.
Being able to write up the accounting records regularly, filing
and cross-referencing paperwork, and completing details on
cheque stubs will all make the book-keeping task easier. If
you are the treasurer but inexperienced in this role, it is
worth remembering that relying on your memory doesn't work
very well - you should keep proper written records and update
them regularly.
4 Does Companies House give technical advice on accounts?
No. We can give general guidance, but not advice on specific
accounting issues. Firstly, giving technical advice is not
a role that the Government has given us. Secondly, it is not
practicable: your accounts are subject to complex legal requirements,
and we do not know enough about your company to be confident
that we are giving you proper advice.
Consult an accountant if you need this sort of advice.
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Chapter
3
Accounting records and statutory accounts - a worked
example
This chapter uses a fictional example
of a small flat management company, showing how it keeps its
accounting records, and how these are used to produce the
statutory accounts. You can judge from the example whether
it is reasonably close to your own situation.
You can use this chapter to help keep your accounting records,
and to understand the accounts that are prepared from them.
The example does not explain why records are kept this way,
or the technical framework in which the accounts are prepared.
To do so would require a longer and more complex guide. The
accounts shown here for illustration are prepared under the
Companies Act. For financial years beginning on or after 1
January 2005, companies may opt to prepare accounts under
international accounting standards.
There are two aspects that perhaps need a preliminary explanation.
Freehold purchase
The freehold will be shown as an asset on the balance sheet,
usually valued at its cost. There are various ways in which
its purchase could have been funded, and various ways in which
to show the funding in the accounts. The accounts need to
reflect both the purchase and its funding.
In our example we have set up a reserve, simply called other
reserve. Thus the members paid £2,500 into the company
to buy the freehold - the bank balance was increased by this
receipt, as was the other reserve. On buying the freehold,
the bank balance was reduced by £2,500 and an asset was acquired
for the same value.
Rainy day funds - a maintenance reserve
The accounts of some flat management companies may contain
a maintenance reserve, although a different term may be used.
This will arise when the members recognise the probability
of a major expense in the near future, such as a roof replacement.
Members of these companies decide to drip-feed contributions
towards the cost over a number of years, thus softening the
financial blow of funding the project in one year.
The contributions will be reflected as income, and the money
placed in a bank account, in much the same way as other member
contributions. But on the balance sheet a separate heading,
maintenance reserve, will be used to record
the cumulative value less expenditure on project(s) earmarked
to this reserve.
As most small flat management companies do not use such a
reserve, and for the purposes of clarity, the accounting treatment
of this type of reserve has been omitted from the following
example.
Recording the transactions
Melyn House is a large building split into five flats, each
with a 99-year lease. On 1 April 1999 the leaseholders bought
the freehold of the building.
The freehold was actually acquired by a company specifically
set up to own the freehold. The company is named 'The Melyn
House Management Company Limited', and all five of the leaseholders
are shareholders. When the company was set up, each leaseholder
agreed to take one share with a face value of £1. This nominal
value would be paid to the company on receiving the share.
| Sometimes companies do not receive
payment of the face value of the shares they issue. However,
if they don't, it creates a special kind of debt owed
to the company by the shareholders which must be shown
on the statutory accounts each year under the heading,
'called-up share capital not paid'. It is the first item
shown on the balance sheet and it represents an asset.
For information on how to show unpaid capital in the accounts,
refer to our booklet, 'Accounts
& Accounting Reference Dates'. |
As well as holding the freehold, the company is responsible
for maintaining the common parts of the property - the drive,
garden, perimeter fencing, hall and stairs, the roof, and outbuildings.
This maintenance is funded by each of the leaseholders paying
£50 into the company each month.
The leaseholders are:
| Flat 1: |
Mr Baker |
| Flat 2: |
Mrs Butler |
| Flat 3: |
Mr & Mrs James |
| Flat 4: |
Mr Taylor |
| Flat 5: |
Mr & Mrs Smith |
The company has 3 officers:
- Mr Baker is a director and was elected
chairman;
- Mrs Butler (who is an accountant) is
a director and was elected treasurer; and
- Mr Smith is a director and also the
company secretary.
Mr Smith sent notice of the appointment
of the directors and company secretary on
Forms 288a to Companies House.
Setting up a book-keeping system
Mrs Butler knows that the simplest way is the best way of accounting
for the company's few transactions. These transactions will
consist of just the monthly income from the leaseholders and
the expenses of managing and maintaining the property. She had
already set up a bank account in the company's name, and all
the transactions will be reflected in this bank account.
She uses a cash book to record all the receipts
and payments.
A ledger records all the amounts due from the
leaseholders and all the amounts actually received.
The only other requirement is two files, one
to keep all the invoices raised against the company, and one
to keep the bank statements. File dividers in the invoice file
split the invoices into two categories: paid and unpaid. This
allows Mrs Butler to see, at a glance, what bills are outstanding
at any time.
Recording the transactions (1) - the
issued share capital
Each of the leaseholders bought one ordinary £1 share at a cost
of £1 each. They are therefore shareholders. The £5 collected
from issuing the shares has been used to open the bank account.
In the receipts section of the cash book, Mrs Butler enters
£5 and describes it as 'contributions for purchase of shares'.
Alongside, she enters the date - 1 April 1999.
Cash Book - Receipts
| Date |
Description |
Total
amount |
Service
charges |
Other |
| 1/4/99 |
Contributions for purchase of shares
|
5 |
|
5 |
She then opens the ledger. There is a separate page for each
flat in the house. There are two columns for entering the transactions,
one is headed 'Due' and the other 'Received'.
For each flat she enters '£1' in the Due column, and '£1' in
the Received column. This shows that each shareholder had paid
for their ordinary share.
The ledger for each flat then looked like this:
Ledger: Flat 1 - Mr Baker
| Date |
Description |
Amount
due |
Amount
received |
Running
total |
| 1/4/99 |
One ordinary share of £1 |
1 |
1 |
|
Recording the transactions (2) - funding the purchase
of the freehold
The cost of the freehold was £2,500 and this was payable on
1 April. Each of the shareholders contributed £500 to fund the
purchase and the money had been banked that morning.
Again, for each flat in the ledger Mrs Butler enters '£500'
in the Due column, and '£500' in the Received
column. She describes these entries as 'contribution to purchase
of freehold'.
Ledger: Flat 1 - Mr Baker
| Date |
Description |
Amount
due |
Amount
received |
Running
total |
| 1/4/99 |
One ordinary share of £1 |
1 |
1 |
|
| 1/4/99 |
Contribution to purchase of freehold
|
500 |
500 |
|
She enters the £2,500 (£500 x 5) received in the receipts section
of the cash book.
Cash Book - Receipts
| Date |
Description |
Total
amount |
Service
charges |
Other |
| 1/4/99 |
Contributions for purchase of shares
|
5 |
|
5 |
| 1/4/99 |
Contributions for freehold purchase
|
2,500 |
|
2,500 |
Recording the transactions (3) - buying
the freehold
That same day she makes out a cheque to Lamberts, the seller
of the freehold, for £2,500. Mrs Butler writes the number '1/99'
on the invoice received from the seller and writes 'Paid, cheque
number: 10001' on the invoice. She places the invoice in the
'Paid' section of the invoice file. In the payments section
of the cash book she enters:
Cash Book - Payments
| Date |
Supplier |
Cheque
no |
Invoice
no |
Total
amount |
Other |
| 1/4/99 |
Lamberts - freehold |
10001 |
1/99 |
2,500 |
2,500 |
Laid out like this, the entry gives much valuable information
that will be useful when drawing up the accounts at the end
of the year. It also cross-refers to the cheque and the invoice.
Recording the transactions (4) - service
charges due
The shareholders agreed to pay £50 a month to finance the maintenance
and management of the common parts of the property. They agreed
to pay this on the first day of each month. But at the first
meeting they overlooked collecting this money.
Mrs Butler opens her ledger and against each flat makes a new
entry:
Ledger: Flat 1 - Mr Baker
| Date |
Description |
Amount
due |
Amount
received |
Running
total |
| 1/4/99 |
One ordinary share of £1 |
1 |
1 |
|
| 1/4/99 |
Contribution to purchase of freehold
|
500 |
500 |
|
| 1/4/99 |
Service charge - April 1999 |
50 |
|
50 |
She then sends reminders to all the shareholders, saying that
if they all send their cheques by Friday she would only need
to make one visit to the bank to deposit them.
Recording the transactions (5) - Service
charges paid
The cheques duly arrive and are banked. In the ledger against
each flat Mrs Butler adds another entry (in italics).
The ledger for each flat looks like this:
Ledger: Flat 1 - Mr Baker
| Date |
Description |
Amount
due |
Amount
received |
Running
total |
| 1/4/99 |
One ordinary share of £1 |
1 |
1 |
|
| 1/4/99 |
Contribution to purchase of freehold
|
500 |
500 |
|
| 1/4/99 |
Service charge - April 1999 |
50 |
|
50 |
| 7/4/99 |
Service charge - April 1999
- paid |
|
50 |
|
This shows that all the flats have paid the service charges
due, and nothing is outstanding. But as this transaction also
involved paying money into the bank account, she has to update
the cash book.
Cash Book - Receipts
| Date |
Description |
Total
amount |
Service
charges |
Other |
| 1/4/99 |
Contributions for purchase of shares
|
5 |
|
5 |
| 1/4/99 |
Contributions for freehold purchase
|
2,500 |
|
2,500 |
| 7/4/99 |
April service charges |
250 |
250 |
|
Recording transactions (6) - Additional
service charges
In June an invoice arrives from the solicitor for buying the
freehold and setting up the company. It is for £624. Mrs Butler
is busy the day it arrives and places it in the unpaid section
of the invoice file. Later, she realises they do not have enough
funds to pay this bill. After she explains the position to the
other shareholders, they each contribute an extra £200.
Mrs Butler enters these receipts into the ledger for
each flat :
Ledger: Flat 1 - Mr Baker
| Date |
Description |
Amount
due |
Amount
received |
Running
total |
| 1/4/99 |
One ordinary share of £1 |
1 |
1 |
|
| 1/4/99 |
Contribution to purchase of freehold
|
500 |
500 |
|
| 1/4/99 |
Service charge - April 1999 |
50 |
|
50 |
| 7/4/99 |
Service charge - April 1999
- paid |
|
50 |
|
| 1/5/99 |
Service charge - May 1999 |
50 |
|
50 |
| 10/5/99 |
Service charge - May 1999 - paid
|
|
50 |
|
| 1/6/99 |
Service charge - June 1999 |
50 |
|
50 |
| 8/6/99 |
Service charge - June 1999 - paid
|
|
50 |
|
| 15/6/99 |
Additional service charge - June
1999 |
200 |
|
200 |
| 22/6/99 |
Additional service charge
- June 1999 - paid |
|
200 |
|
But again this transaction also involves paying money into the
bank account, and she has to update the cash book. The five
cheques are paid in on 24 June. In the receipts section she
adds a new entry:
Cash Book - Receipts
| Date |
Description |
Total
amount |
Service
charges |
Other |
| 1/4/99 |
Contributions for purchase of shares
|
5 |
|
5 |
| 1/4/99 |
Contributions for freehold purchase
|
2,500 |
|
2,500 |
| 7/4/99 |
April service charges |
250 |
250 |
|
| 6/5/99 |
May service charges |
250 |
250 |
|
| 4/6/99 |
June service charges |
250 |
250 |
|
| 24/6/99 |
Additional service charge - legal
fees |
1,000 |
1,000 |
|
Recording transactions (7) - legal
fees
The legal fees of £624 included VAT but, as with most flat management
companies, Melyn House Management Company Limited cannot register
for VAT and cannot, therefore, reclaim this from Customs and
Excise. Such expenses are therefore simply recorded at their
gross (VAT inclusive) cost.
Mrs Butler transfers the invoice from the unpaid to the paid
section of the invoice file and writes on it 'paid, cheque number
10002'. She also writes the number '2/99' on the invoice.
The entry in the payments section of the cash book is:
Cash Book - Payments
| Date |
Supplier |
Cheque
no |
Invoice
no |
Total
amount |
Other |
| 1/4/99 |
Lamberts - freehold |
10001 |
1/99 |
2,500 |
2,500 |
| 26/6/99 |
Solicitors |
10002 |
2/99 |
624 |
624 |
Recording transactions (8) - gardening
A professional gardener maintains the garden of Melyn House.
He charges a flat rate of £100 a month, but quotes extra for
any big, non-routine jobs.
Mrs Butler records these payments in the cash book as they arise
throughout the year, and files the invoices in the 'paid' and
'unpaid' sections of her invoice file.
Recording transactions (9) - electricity
Similarly, quarterly electricity bills are paid in July (£89),
October (£93), January (£119) and April (£134).
Mrs Butler records these payments in the cash book as they arise
throughout the year, and files the invoices in the 'paid' and
'unpaid' sections of her invoice file.
Recording transactions (10) - insurance
The previous owner had insured the building up to the year ended
31 July 1999. The company is now invoiced for £824 for insurance
covering the year from 1 August 1999 to 31 July 2000. This prompts
Mrs Butler to seek quotes from other insurance companies and
the most competitive is for £585 from Bloggs Insurance. The
shareholders agree to insure the building with this company
at their July meeting.
Mrs Butler enters the payment in the payments section of the
cash book:
Cash Book - Payments
| Date |
Supplier |
Cheque
no |
Invoice
no |
Total
amount |
Other |
Gardening |
Electricity |
Insurance |
| 1/4/99 |
Lamberts - freehold |
10001 |
1/99 |
2,500 |
2,500 |
|
|
|
| 26/6/99 |
Solicitors |
10002 |
2/99 |
624 |
624 |
|
|
|
| 26/6/99 |
Gardening - May |
10003 |
3/99 |
100 |
|
100 |
|
|
| 26/7/99 |
Electricity to 14th July
|
10004 |
4/99 |
89 |
|
|
89 |
|
| 26/7/99 |
Gardening - June |
10005 |
5/99 |
100 |
|
100 |
|
|
| 29/7/99 |
Bloggs Insurance |
10006 |
6/99 |
585 |
|
|
|
585 |
She writes 'Invoice 6/99, paid 29/7/99, chq 10006' on the invoice.
Recording transactions (11) - unpaid
service charges
In January 2000, Mr Taylor's company sends him to work abroad.
Mr Taylor had very little notice and forgot to make arrangements
to pay his service charges while he was away. He did not return
until June, when he paid the outstanding service charges.
From January to June Mrs Butler simply records the service charges
due from Mr Taylor in the ledger.
Recording transactions (12) - Routine
maintenance
In August the shareholders agree that a boundary fence needs
some maintenance work. This costs £411. This is entered in the
payments section of the cash book:
Cash Book - Payments
| Date
|
Supplier
|
Cheque
no |
Invoice
no |
Total
amount |
Gardening
|
Electricity
|
Insurance
|
Maintenance
|
| 1/4/99 |
Lamberts - freehold |
10001 |
1/99 |
2,500 |
|
|
|
|
| 26/6/99 |
Solicitors |
10002 |
2/99 |
624 |
|
|
|
|
| 26/6/99 |
Gardening - May |
10003 |
3/99 |
100 |
100 |
|
|
|
| 26/7/99 |
Electricity to 14th July |
10004 |
4/99 |
89 |
|
89 |
|
|
| 26/7/99 |
Gardening - June |
10005 |
5/99 |
100 |
100 |
|
|
|
| 29/7/99 |
Bloggs Insurance |
10006 |
6/99 |
585 |
|
|
585 |
|
| 31/7/99 |
Gardening - July |
10007 |
7/99 |
100 |
|
|
|
|
| 8/8/99 |
Gardening - tree surgery |
10008 |
8/99 |
280 |
|
|
|
|
| 30/8/99 |
Gardening - August |
10009 |
9/99 |
100 |
|
|
|
|
| 2/9/99 |
Johnson Fences |
10010 |
10/99 |
411 |
|
|
|
411 |
Mrs Butler writes 'Invoice 10/99, paid 2/9/99, chq 10010' on
the invoice.
Recording transactions (13) - Unpaid invoices
Towards the end of March 2000 a water pipe bursts, damaging
part of the wooden floor in the hall. The pipe is repaired and
some of the floor replaced. Mrs Butler receives an invoice for
£375 on 28 March. She places it in the 'unpaid' section of her
file and doesn't pay it until 21 April - after the company's
first year-end.
This is the end of the first
financial year of the company. Mrs Butler has comprehensive
accounting records showing all the transactions throughout the
year. Copies of her records are shown below.
Because the company had been set up in March 1999, shortly before
it acquired the freehold,
the company's accounting reference date at Companies House is
31 March. See Chapter
4 for more information on accounting reference dates. Accounts
now need to be prepared for the year-end 31/3/2000.
The accounting records
Cash Book - Receipts
| Date |
Description |
Total
amount |
Service
charges |
Other |
Ref |
| 1999 |
|
| 1/4/99 |
Contributions for purchase
of shares |
5 |
|
5 |
1
|
| 1/4/99 |
Contributions for freehold
purchase |
2,500 |
|
2,500 |
2 |
| 7/4/99 |
April service charges
|
250 |
250 |
|
5 |
| 6/5/99 |
May service charge |
250 |
250 |
|
5 |
| 4/6/99 |
June service charge
|
250 |
250 |
|
5 |
| 24/6/99 |
Additional service charge
- legal fees |
1,000 |
1,000 |
|
6 |
| 2/7/99 |
July service charge
|
250 |
250 |
|
5 |
| 1/8/99 |
August service charge
|
250 |
250 |
|
5 |
| 2/9/99 |
September service charge
|
250 |
250 |
|
5 |
| 8/10/99 |
October service charge
|
250 |
250 |
|
5 |
| 5/11/99 |
November service charge
|
250 |
250 |
|
5 |
| 5/12/99 |
December service charge
|
250 |
250 |
|
5 |
| 2000 |
|
| 14/1/00 |
January service charge
|
200 |
200 |
|
5,11
|
| 8/2/00 |
February service charge
|
200 |
200 |
|
5,11
|
| 8/3/99 |
March service charge
|
200 |
200 |
|
5,11
|
 |
| |
|
6,355 |
3,850 |
2,505 |
|
Cash book - Payments
| Date |
Supplier |
Cheque
no. |
Invoice no. |
Total amount |
Other |
Gardening |
Electricity |
Insurance |
Maintenance |
Ref |
| 1999
|
| 1/4/99 |
Lamberts freehold |
10001 |
1/99 |
2,500 |
2,500 |
|
|
|
|
3
|
| 26/6/99 |
Solicitors |
10002 |
2/99 |
624 |
624 |
|
|
|
|
7
|
| 26/6/99 |
Gardening - May |
10003 |
3/99 |
100 |
|
100 |
|
|
|
8
|
| 26/7/99 |
Electricity to 14 July |
10004 |
4/99 |
89 |
|
|
89 |
|
|
9
|
| 26/7/99 |
Gardening - June |
10005 |
5/99 |
100 |
|
100 |
|
|
|
8
|
| 29/7/99 |
Bloggs Insurance |
10006 |
6/99 |
585 |
|
|
|
585 |
|
10
|
| 31/7/99 |
Gardening - July |
10007 |
7/99 |
100 |
|
100 |
|
|
|
8
|
| 8/8/99 |
Gardening - tree surgery |
10008 |
8/99 |
280 |
|
280 |
|
|
|
8
|
| 30/8/99 |
Gardening - August |
10009 |
9/99 |
100 |
|
100 |
|
|
|
8
|
| 2/9/99 |
Fence repairs |
10010 |
10/99 |
411 |
|
|
|
|
411 |
12
|
| 30/9/99 |
Gardening - Sept |
10011 |
11/99 |
100 |
|
100 |
|
|
|
8
|
| 23/10/99 |
Electricity to 14 Oct |
10012 |
12/99 |
93 |
|
|
93 |
|
|
9
|
| 31/10/99 |
Gardening - October |
10013 |
13/99 |
100 |
|
100 |
|
|
8
|
|
| 30/11/99 |
Gardening - Nov |
10014 |
14/99 |
100 |
|
100 |
|
|
8
|
|
| 28/12/99 |
Gardening - Dec |
10015 |
15/99 |
100 |
|
100 |
|
|
8
|
|
| 2000
|
| 23/1/00 |
Electricity to 13 Jan |
10016 |
16/99 |
119 |
|
|
119 |
|
|
9
|
| 31/1/00 |
Gardening - January |
10017 |
17/99 |
100 |
|
100 |
|
|
|
8
|
| 26/2/00 |
Gardening - February |
10018 |
18/99 |
100 |
|
100 |
|
|
|
8
|
| 28/3/00 |
Gardening, incl. tidy up |
10019 |
19/99 |
220 |
|
220 |
|
|
|
9
|
| |
| |
|
|
|
5,921 |
3,124 |
1,500 |
301 |
585 |
4110 |
|
Ledger: Flat 1 - Mr Baker
| Date |
Description
|
Amount
Owing |
Amount
Paid |
Running
total |
Ref |
| 1999
|
| 1/4/99 |
One ordinary share of
£1 |
1.00 |
1.00 |
- |
1 |
| 1/4/99 |
Contribution to purchase
of freehold |
500 |
500 |
- |
2 |
| 1/4/99 |
Service charge - April
1999 |
50 |
|
50 |
4 |
| 7/4/99 |
Service charge
- April 1999 - paid |
|
50
|
- |
5 |
| 1/5/99 |
Service charge - May
1999 |
50 |
|
50 |
4 |
| 105/99 |
Service charge
- May 1999 - paid |
|
50
|
- |
5 |
| 1/6/99 |
Service charge - June
1999 |
50 |
|
50 |
4 |
| 6/6/99 |
Service charge
- June 1999 - paid |
|
50
|
- |
5 |
| 15/6/99 |
Additional service charge
- June 1999 |
200 |
|
200 |
6 |
| 22/6/99 |
Additional s/c
- June 1999 - paid |
|
200
|
- |
6 |
| 1/7/99l |
Service charge - July
1999 |
50 |
|
50 |
4 |
| 6/7/99l |
Service charge
- July 1999 - paid |
|
50
|
- |
5 |
| 1/8/99 |
Service charge - August
1999 |
50 |
|
50 |
4 |
| 4/8/99 |
Service charge
- August 1999 - paid |
|
50
|
- |
5 |
| 1/9/99 |
Service charge - September
1999 |
50 |
|
50 |
4 |
| 1/9/99 |
Service charge
- September 1999 - paid |
|
50
|
- |
5 |
| 1/10/99 |
Service charge - October
1999 |
50 |
|
50 |
4 |
| 3/10/99 |
Service charge
- October 1999 - paid |
|
50
|
- |
5 |
| 1/11/99 |
Service charge - November
1999 |
50 |
|
- |
4 |
| 5/11/99 |
Service charge
- November 1999 - paid |
|
50
|
- |
5 |
| 1/12/99 |
Service charge - December
1999 |
50 |
|
50 |
4 |
| 3/12/99 |
Service charge
- December 1999 - paid |
|
50
|
- |
5 |
| 2000
|
| 1/1/00 |
Service charge - January
2000 |
50 |
|
50 |
4 |
| 6/1/00 |
Service charge
- January 2000 - paid |
|
50
|
- |
5 |
| 1/2/00 |
Service charge - February
2000 |
50 |
|
50 |
4 |
| 11/2/00 |
Service charge
- February 2000 - paid |
|
50
|
- |
5 |
| 1/3/00 |
Service charge - March
2000 |
50 |
|
50 |
4 |
| 13/3/00 |
Service charge
- March 2000 - paid |
|
50
|
- |
5 |
| |
| |
Amount owing at 31 March
2000 |
|
|
- |
|
Ledger: Flat 2 - Mrs Butler
| Date |
Description
|
Amount
Owing |
Amount Paid
|
Running total
|
Ref |
| 1999
|
| 1/4/99 |
One ordinary share of
£1 |
1 |
1 |
- |
1
|
| 1/4/99 |
Contribution
to purchase of freehold |
500 |
500 |
- |
2
|
| 1/4/99 |
Service charge - April
1999 |
50 |
|
50 |
4
|
| 7/4/99 |
Service charge
- April 1999 - paid |
|
50 |
- |
5
|
| 1/5/99 |
Service charge - May
| |
