Introduction to Debtors
Debtors in accounting are amounts which are owed to a business by customers, they are sometimes referred to as accounts receivable.
When a business allows a customer credit terms and invoices them for a product or service and receives payment at a later date 30 days 60 days etc, then while the customer owes the business the amount outstanding they are classified as a debtor in the bookkeeping records.
Debtors are recorded in the balance sheet of the business under the heading of current assets which means they are convertible into cash within a year.
How do you Record Debtors?
Normally a debtor is 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 the business an outstanding debtors aged analysis.
If for example, sales are made on credit terms 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 2018||Customer A||Invoice 123||Page 4||200|
|9th May 2018||Customer B||Invoice 456||Page 7||400|
The next entry would be to the sales ledger to record the debtor to the personal account of each customer.
|Customer A||Page 4|
|8th May 2018||Sales||SDB 1||200|
|Customer B||Page 7|
|9th May 2018||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|