The Creditor's ledger.
The creditors ledger will consist mainly of the accounts of businesses with whom goods are purchased on credit. Nearly all goods and services are paid for an agreed number of days after the transaction itself (i.e. 30 days, 60 days, 90 days etc.). When Pepe buys goods and services he is in debt to these businesses during the credit period. They are his creditors.
| Mr. R. Sandborne | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DR | CR | |||||||||
| Debit Side | Credit Side | |||||||||
| Date | Details | Folio | Amount | Date | Details | Folio | Amount | |||
| May 01 | Balance b/d | 320.00 | ||||||||
| May 06 | Purchase of Eggs | C912 | 50.00 | |||||||
| May 15 | Payment for goods | C909 | 305.23 | |||||||
| May 31 | Balance c/d | 64.77 | ||||||||
| 370.00 | 370.00 | |||||||||
| June 01 Balance b/d | 64.77 | |||||||||
What this shows was that on May 01 Mr. Sandborne was owed £320.00 by Pepe's Pizza Parlour.
On May 06 Pepe purchased £50.00 worth of eggs from him on credit. Mr. Sandborne is therefore the giver of goods and his account is therefore credited.
On May 15 £305.23 fell due for payment to Mr. Sandborne and the amount was paid. In this case Mr. Sandborne was the receiver of money and his account is therefore debited.
On May 31 the account was ruled off and at this point Mr. Sandborne was owed £64.77 by Pepe's Pizza Parlour.
He is Pepe's creditor. The account balance is carried down on the right hand side of the ledger.
| The Debtors ledger. | The Cash ledger. | The General ledger. | Return to the menu? |
If you have looked at all of the ledgers, you are ready to learn about double entries.