Balance sheet accounting using the example of a GmbH in SKR 04

This article on balance sheet accounting explains the logic of double-entry bookkeeping from the foundation of a corporation in Germany to the first trade in goods and the first annual financial statements. Using a manageable number of business transactions, this article demonstrates the application of double-entry bookkeeping for a GmbH.

If you invest a little time, you will understand the connection between accounting at account level, the profit and loss account and the balance sheet through practically comprehensible business transactions, even without business management training. This understanding is the basis for any correct automation of internal or external accounting.

If this article uses terms that you are not yet familiar with, we recommend that you read the Learning videos from the Chair of General Business Administration and Business Taxation headed by Prof. Dr. Philipp Dörrenberg at the University of Mannheim and watch the video relevant to you if required.

This article allows you to read the article Automating credit checks - example for a limited liability company and forms the technical basis for classifying business transactions and analyzing the Creditworthiness to analyze.

Example of a GmbH with non-cash formation - from the opening balance sheet to the closing balance sheet

A GmbH is obliged to keep proper accounts. This article describes all the necessary entries, from the opening balance sheet and current business transactions to the profit and loss account and the closing balance sheet. In this example, the GmbH is not founded with a cash capital contribution, but with a property worth € 1,000,000.

The postings follow the standard chart of accounts SKR 04. An account is an accounting account. If you are new to this topic, be sure to watch the video double-entry bookkeeping to. An overview of all accounts can be found on the homepage Buchungssatz.de " Correct account assignment and posting of business transactions from A-Z.

Opening balance sheet of the GmbH

The GmbH is founded through a contribution in kind. The property contributed has a value of € 1,000,000. As a GmbH requires a minimum capital of € 25,000, this value is regarded as share capital. This is shown in the balance sheet as subscribed capital, while the property is recognized as a fixed asset.

Opening bookings

Accounting record: Land (0200) € 1,000,000 to subscribed capital (0800) € 1,000,000

Land is generally not depreciated as it is not subject to wear and tear or depreciation through use. For the sake of simplicity, real estate transfer tax is ignored in the example.

Opening entries via the opening balance sheet account (EBK)

Accounting record: FBC (9000) € 1,000,000 to land (0200) € 1,000,000

Accounting record: Subscribed capital (0800) € 1,000,000 to EBK (9000) € 1,000,000

Transactions during the year

Once the company has been properly established, ongoing business transactions arise. These include the sale of goods, the purchase of materials and other operating expenses such as salaries and rent payments.

Customer orders and sale of goods

A customer orders 100 units of a product at a net price of €200 per unit.

The outgoing invoice amounts to:

• Net amount: € 20,000
• Value added tax (19 %): € 3,800
• Gross amount: € 23,800

Entry of the outgoing invoice:

Accounting record: Receivables from L+L (1400) € 23,800 to sales revenue (8400) € 20,000 and sales tax (1776) € 3,800

After receipt of payment, the amount is booked to the business account:

Posting record: Bank (1200) € 23,800 to receivables from L+L (1400) € 23,800

Purchase of materials for production

In order to process the customer's order, raw materials, auxiliary materials, operating materials, merchandise and external services are purchased. The net costs for purchasing amount to a total of 10,000 euros. All materials for the order are consumed in full.

Entry of the incoming invoice:

Wages and rent payments

Payroll accounting records employees' gross wages as well as payroll tax and social security contributions. As the contributions are not paid immediately, liabilities to the tax office and social security institutions arise.

Posting of payroll accounting:

1,000 is inadvertently transferred to social insurance instead of 600 euros.

1. posting of payroll accounting

Payment of taxes due to the tax office

The company has tax obligations to the tax office from VAT and wage tax. The VAT liability amounts to € 3,800, which arose from the sales. At the same time, however, deductible input tax of € 1,900 was recognized on the purchase of materials. This input tax can be offset against the VAT payable, which reduces the actual VAT payment to € 1,900.

In addition, there is a wage tax liability of € 500, which must be withheld and paid to the tax office. The total payment to the tax office therefore results from the reduced VAT of € 1,900 plus the wage tax of € 500, i.e. a total of € 2,400, which is paid from the business account.

2. payment of social security contributions due

The liability to social security in the amount of € 600 is settled. However, a total of € 1,000 was transferred although only € 600 was due, resulting in an overpayment of € 400. This overpayment is posted as a negative liability in debit on account 1742. In the next payroll period, this amount can either be offset against a future payment or reimbursed by the social insurance provider.

As the overpaid amount is reclaimed, the following entry is made:

Rent for business premises

In addition, there are rental costs for business premises. The rent is paid directly via the bank account. To simplify the example, it is assumed that the rent is not subject to input VAT.

Payment of the invoice

After receipt of the delivery, the supplier invoice is settled:

The purchase was paid in full and the corresponding costs were recorded in the accounts. All material expenses and external services are necessary for the fulfillment of the customer order.

Profit and loss account (P&L)

As the GmbH is domiciled in Germany and is subject to a trade tax rate of 400 %, corporation tax must be paid, Solidarity surcharge and trade tax on the profit are taken into account.

The corporation tax amounts to 15 % of the taxable profit. A profit of € 5,000 results in a tax burden of € 750. In addition, the solidarity surcharge of € 5.5 % is levied on this, resulting in a further tax amount of € 41.25.

The trade tax is initially calculated using the trade tax base of 3.5 %. The trade tax base is therefore € 175. This value is multiplied by the assessment rate of 400 %, resulting in a trade tax charge of €700.

The total tax burden is therefore made up of € 750 corporation tax, € 41.25 solidarity surcharge and € 700 trade tax, i.e. a total of € 1,491.25. After deducting these amounts from the profit, a net profit for the year of € 3,508.75 remains, which can be recognized in the balance sheet as profit carried forward or distributed.

The company reports an operating result of € 5,000 in the income statement.

Closing balance sheet of the GmbH

The closing balance sheet presents the company's financial position at the end of the year.

As the company was founded with contributions in kind, it has hardly any liquid capital. However, it was able to generate a certain bank balance (€ 5,000) through business activities.

Statement of accounts for the profit and loss account (P&L)

The relevant P&L accounts can be derived from the given business transactions. These accounts either belong to the Income side (credit entries) or to the Expense side (debit entries) and ultimately result in the net profit for the year. In a separate article, we show the Difference between totals and balances list and statement of accounts .

Revenue accounts

Expense accounts

Cost of materials

Personnel expenses

Other operating expenses

Taxes on income and earnings

Statement of accounts for the balance sheet

Errata

We would like to thank the attentive readers who pointed out the following discrepancies to us.

• Total cost of materials corrected from 1,000 euros to 10,000 euros due to typo. Reported by Anonymous.
• No discrepancies have yet been reported to us. Please send us an e-mail to editorial@konfuzio.com and we will include you by name in this section if you wish.