Receipts and Payments Account” for a receivership scenario. In receivership, an individual or entity, known as a receiver, is appointed to take control of a company’s assets and finances for the benefit of creditors. The Receipts and Payments Account is a summary of the cash transactions made by the receiver during the receivership period. Here’s how you would typically prepare it:
- Opening Balance: Start with the opening balance of cash on hand or at bank at the beginning of the receivership period.
- Receipts: List all the cash receipts received by the receiver during the period. This includes any funds received from debtors, sales of assets, loans, or any other sources of income. Each receipt should be categorized based on its nature, such as:
- Cash sales
- Collections from debtors
- Interest income
- Proceeds from asset sales
- Loans received
- Other income
- Payments: Record all the cash payments made by the receiver during the period. This includes payments made to creditors, operating expenses, salaries, taxes, interest on loans, and any other cash outflows. Each payment should be categorized based on its purpose, such as:
- Payments to creditors
- Operating expenses (e.g., rent, utilities, salaries)
- Taxes
- Interest payments
- Repayment of loans
- Purchase of assets
- Other expenses
- Closing Balance: Calculate the closing balance of cash on hand or at bank at the end of the receivership period. This is calculated by adding the opening balance to the total receipts and subtracting the total payments.
- Additional Information: Provide any additional information or explanations that may be necessary for stakeholders to understand the transactions recorded in the Receipts and Payments Account.
The Receipts and Payments Account is typically prepared on a cash basis and does not include non-cash transactions such as depreciation or accruals. It provides a summary of the cash flow activities during the receivership period and is used to ensure that all cash received and disbursed by the receiver has been properly accounted for.