Introduction to Debtors
Debtors are amounts which are owed to you by your customers, they are sometimes referred to as Accounts Receivable.
When you allow your customer credit and invoice them for a product or service and receive payment at a later date 30 days 60 days etc, then while they owe you the money they are classified as a debtor.
Debtors are recorded in the balance sheet of the business under the heading Current Assets, that means they are convertible into cash within a year.
How do you record Debtors?
Debtors are normally first recorded in the Sales Ledger which contains a personal account for each customer. In this way a listing of the sales ledger accounts will give you a listing of outstanding debts or debtors.
If for example, sales are made on credit to Customer A for £200 and Customer B for £400 the first entry would be to the sales day book to record the sales.
|Sales Day Book||Page 1|
|8th May 2013||Customer A||Invoice 123||Page 4||200|
|9th May 2013||Customer B||Invoice 456||Page 7||400|
The next entry would be to the Sales Ledger to record the Debtors to the personal accounts of each customer.
|Customer A||Page 4|
|8th May 2013||Sales||SDB 1||200|
|Customer B||Page 7|
|9th May 2013||Sales||SDB 1||400|
Finally the double entry posting would be the total from the sales day book and the sales ledger.
|Debtors Control Account||600|