Debtors and Creditors

Debtors Ledger
• Debtors ledger: this ledger records the details of the
each credit sales customer.

• The company maintains separate ledger accounts to

record business transactions from customers that
purchase in large volumes at frequent intervals.

• The totals of each debtors ledger is summed and

presented in the Debtors Control account.
 What is included in Debtors Control?
• Opening balance of account
• Credit sales
• Credit sale returns (return inwards)
• Discount allowed
• Payments received to settle accounts
• Bad debts/Irrecoverable debt
• Sundry debtors
 Debtors Control account
Debtors Control (Asset)
DR (+) (-)CR
Balance b/d XXXXXX Discount allowed XXXXX
Credit sales XXXXX Bank XXXX
Returns on sale XXXX
Bad debt (credit losses) XXXX
 Creditors Ledger
• The company has purchased goods on credit
and will pay later.

• Separate ledger accounts are kept for each

creditor. Large, frequent purchases made by the
company.

• The sum of all creditor ledgers are presented in

Creditors Control.
 What is included in Creditors Control?
• Opening balance of account
• Credit purchases
• Discount received
• Payments to creditors
• Credit purchase returns (returns outwards)
• Sundry creditors
 Creditors Control Account
Creditors Control (Liability)
DR (-) (+) CR
Discount received XXXX Balance b/d XXXXX
Bank XXXX Credit purchases XXXXX
Returns to supplier (return outwards) XXX
What are Sundry Debtors and Sundry Creditors?
Sundry Debtors Sundry Creditors
Infrequent credit Are suppliers who have
sales to customers, sold goods in small
owing small amounts quantities to the
of money to the company on credit.
company.
 Calculating Mark-up, cost of sales and
Selling price
• If mark-up is on cost…then Cost = 100%
• Calculate the SP if Cost = R80 and mark-up is
20%.

• Cost …………… 100%

• Mark-up…………20%
• Selling price…. 120%

• Therefore, SP = R80 x 120/100 = R96

 Calculating Mark-up, cost of sales and
Selling price
• If mark-up is on Selling price then SP = 100%
• Calculate the SP if cost is R60 and mark-up is
25%.
• Cost…………….. 75%
• Mark-up………….25%
• Selling price…….100%

• Therefore SP = R60 x 100/75 = R80.