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Could I get some help with what the closing entries are when winding up a company? Especially those affecting Cash Flow. Many thanks.

Robertina Edwin's Profile

Answers

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

Hmmm. You are going to have to give me some additional details. Accounting entries aren't any different for an operational company vs winding up a company. If you sell assets, you book them as normal. If you write off A/R, you make the same entry.

Can you give some examples of the transactions you are looking at?

David Ziska
Title: CEO
Company: Council Business Solutions
(CEO, Council Business Solutions) |

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.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

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.

Ron Lathouwers
Title: CFO
Company: WEM Corp
(CFO, WEM Corp) |

Consult your tax accountant and your attorney about how to distribute the assets that are left.

Robertina Edwin
Title: Accounting Officer
Company: Eastern Caribbean Central Bank
(Accounting Officer, Eastern Caribbean Central Bank) |

Thanks much Scott, David, Emerson and Ron for clearing that up. The guidance will be followed - the situation is no longer a maze. Great!

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