Drawing on a Director's Loan account etc

Jezzer21 · ‎April 08, 2021

Hello folks

I've been doing some consulting work recently and it's nice to see money coming in. Just before the FY end, my accountant ran payroll and issued dividends so that my wife and I could draw some of the funds out of the company as income. We are both directors of the company BTW.

So now there is cash in the bank, I'd like to allocate the nett salary and dividend figures to the Directors loan account, so that I can draw the income from that account as and when we want it and the relevant transactions are nice and clear. Does this make sense?

What Journal entries do I need to make: -

a) When crediting the nett salary and dividend figures to the Directors' Loan account and

b) When drawing cash from the company's bank account, debiting the Directors' Loan account accordingly

Finally, am I over-complicating things?

Thanks in anticipation!

Jez

Certified gold trainer · ‎August 18, 2021

HI Jez

I realise this is an old post so you may have solved already.

The wages ( which I assume were not calcualated using Quickbooks) would be put on with a journal something like this:-

Dr Directors salaries ( Gross) 10

Dr Employers NIC 1

Cr PAYE & NI Due 3

Cr Directors Current Account 8

As you say when you draw the funds the dr would be to the directors current account, you should not need a journal for this just allocate the payment out either as an expense or through the bank feed to that same directors current account.

I hope this helps

Martyn A Smith A.F.A, M.I.P.A

Institute of Financial Accountants

www.themobileaccountant.co.uk

Certified Gold Quickbooks Trainer and Accountant

www.quickbookstraininguk.co.uk

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