LLP double entry examples
Introduction
The chart of accounts in the LLP templates in VT Transaction+ and VT Final
Accounts are designed to provide the information required to prepare the
statutory accounts of an LLP. In particular, details on the movements for six
different categories of members' interests are potentially required.
Before looking at the examples provided below, please read Accounting for Limited Liability Partnerships - A brief guide. As discussed in that document, it is particularly important to understand the distinction between the automatic division of profits and profits available for discretionary division. Profits are available for discretionary division only if the LLP has an unconditional right to refuse payment of the profits of a particular year unless and until the members agree to divide them (albeit in pre-agreed ratios).
Examples
| Members salaries (when incurred) | £ | £ |
| Debit P/L - Members remuneration: Salaries paid under LLP agreement | X | |
| Credit BS - Profits due to members: Members remuneration | X | |
| Automatic division of profits | £ | £ |
| Debit P/L - Members remuneration: Automatic division of profits | X | |
| Credit BS - Profits due to members: Members remuneration | X | |
| Discretionary division of profits (in year in which members made decision) | £ | £ |
| Debit BS - Other reserves (inc profit): Allocation of profits to members | X | |
| Credit BS - Profits due to members: Allocation of profits | X | |
| When salaries or profits actually paid to members | £ | £ |
| Debit BS - Profits due to members: Drawings | X | |
| Credit BS - Bank: Current a/c | X | |
Please note that profits that are not automatically divided are automatically transferred to Other reserves (inc profit) by both VT Transaction+ and VT Final Accounts manual entry workbooks.