Give + Take

[Henry_17]

London Mix,

Nice detective work!

[LondonMix]

No detective work on my part. Someone else looked up their accounts, I just know what debtors are in accounting terms and can't think of any reason a small retail business would have such a significant amount. It could be something to do with their payment system but it is odd.

[Penguin68]

I just know what debtors are in accounting terms and can't think of any reason a small retail business would have such a significant amount. It could be something to do with their payment system but it is odd.

It very much depends on their year end and how e.g. regular prepayments work - if they pay rental quarterly in advance (many commercial companies do) then a year end at the end of month 1 would leave two months rental prepayment as a 'debtor' - i.e. prepayment. Equally the 'rental' element of utilities (as opposed to usage charges) is also an up-front payment - e.g. telephone services. Where retail businesses have regular commercial customers (not an issue here) they may deliver goods in advance of billing (or the bill being paid).

[LondonMix]

Penguin as you say, a small retail business shouldn't deliver goods in advance. That's why I said this small retail business having such significant amount of debtors is odd and not easy to guess what it is.

Commercial leases are not typically paid in advance (they have bank guarantees or deposits) but that is a possible explanation. Even so, rent on LL isn't that high. If that was even 2 months rent that would equate to 60k per annum. When Boho Bar was being released the commercial rent was 31k for an entire year so that just doesn't seem plausible.

Prepayment of utilities wouldn't normally total 10k for such a small retail business either. Normally a deposit for rent would be booked as a long-term asset unless they prepared the accounts under the assumption they would be moving premises within 1 year of the balance sheet date. However, given this was done multiple years in a row, that seems unlikely.

I'm not sure what it is but that's not to say its anything bad. Its just odd like I said before.

[Penguin68]

As the creditors/ debtors figures go towards drawing up a balance sheet a long term 'debtor' (such as a rental deposit) might be booked as such, rather than in any other asset class. Equally the business may have given a loan (e.g. to a principle of the business) - i.e. for purchase of a car etc. - which might be being treated in this manner. Although normal commercial loans would be expected to be paid down, in this case this might not have happened, or have been required.

[LondonMix]

Yes, it might actually just be a loan-- they could have taken out some of the equity from the venture this way for any number of reasons.

[Cedges]

edhistory Wrote:

-------------------------------------------------------

> > My only query would be what their circa ?10k of

> debtors

>

> How about the tangible assets?

Most likely to be fixtures and fittings, epos system, etc. Possible a vehicle if they had one.

[edhistory]

See page to 2 of the accounts for the value of the assets before depreciation.

[adriana0808]

TRY https://afashionistastore.com THEY ARE GREAT. SELL MY ITEMS QUICKLY.