Could I get some help with what the closing entries are when winding up a company? Especially those affecting Cash Flow. Many thanks.
Answers
Hmmm. You are going to have to give me some additional details.
Can you give some examples of the transactions you are looking at?
I agree with Scott.
I am in the process of winding down a services company. Never did it before, but it looks like I am going to end up with a cash balance, and an equal amount in retained earnings / net assets. My last entry will be to cr cash, db retained earnings, and then give someone that pile of cash.
Just a note. Be reminded of the hierarchy/priority of payments/distributions.
To answer your question, the goal is to ZERO OUT balances. In concept....
1. Sale of non-cash assets.
2. Payment to (creditor) liabilities.
3. Distribution of remaining cash (non-cash assets can also be identified and used as distribution) to shareholders. Note that even shareholders have differing payment priorities depending on the capital structure.
Consult your tax
Thanks much Scott, David, Emerson and Ron for clearing that up. The guidance will be followed - the situation is no longer a maze. Great!