At the time when payment is made by the creditor below entry is recorded. In the above case, Daniel Constructions is a creditor for Axis Housing, and the same is recorded in their books for 90,000 due to the credit purchase. Many such creditors combined together are known as “Sundry Creditors”. As a result, such transactions usually lead to the addition of a debtor & a creditor in the books of the seller and buyer, respectively.

• Keeping track of debtors is essential for companies because if too many people or businesses fail to pay, the company may be unable to pay its bills on time.
• As per the golden rules of accounting, Sundry Debtor a/c is a personal account.
• With the efficiency and low cost of today’s accounting systems, the need for classifying customers and accounts as sundry has been eliminated.

Usually, the company maintains separate ledger accounts to record business transactions for each customer. This is justifiable if the customer purchases in larger volumes at frequent intervals. This may not be justifiable for smaller customers, thus it is more convenient to maintain a single ledger account named ‘sundry debtors’ to record such small scale infrequent transactions.

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In addition, it is the phenomenon where the customer has to owe money to the business. Creditors being a liability have a credit balance in Accounts. All credit purchases made during the year should be credited to the https://kelleysbookkeeping.com/relationship-between-balance-sheet-and-income/ Creditors Account, showing an increase in the creditors’ balance. On the other hand, all transactions such as payment to a creditor, purchase returns, etc. that reduces the creditors’ balance should be debited.

• Suppose “Daniel Constructions” sold building material worth 60,000 to “Axis Housing” on credit, and Axis Housing (buyer) agrees to pay the related invoices in the future accounting period.
• E.g. The above purchase will be recorded as follows in the books of PQR since Company C is a sundry creditor.
• For instance, prior to the low cost of computers and accounting software, the bookkeeper had to add a page to the company’s subsidiary ledger book for every new customer.
• The company has purchased goods on credit and payments are yet to be made to them.
• The term ‘Debtor’ refers to a person or entity that owes money to your business for goods or services sold on credit.

Sundry Creditors are the trade payables who comes under the current liability. Here, the company owes money to the creditor on account of goods and services received. Debtors or ‘receivables’ are customers who owe funds to the company. They have purchased goods on credit and, payments are yet to be made by them. Sundry debtors, also known as ‘sundry receivables’ refer to a company’s customers who rarely make purchases on credit and the amounts they purchase are not significant.

What are sundry debtors and sundry creditors?

Adding a new page for every occasional customer could result in a subsidiary ledger book that was unwieldy. Therefore, it was more practical to have one page entitled sundry on which those occasional customers’ small transactions were entered. The term ‘Creditor’ refers to a person or entity to that you owe money for goods or services purchased on credit. Accurately recording such debtors allows a company to manage its cash flow more effectively, as it can use the amounts owed to it to pay for its own expenses or investments.

As covered in the previous heading, sundry debtors are shown in the company’s balance sheet as “assets”; therefore, they are an asset for the business. These amounts are recorded as assets because they represent a future economic benefit that is expected to be received by the company. The journal entry debits the inventory or the purchases and credits the accounts payable or creditors, What Do Sundry Creditors And Sundry Debtors Mean? being a current liability. Creditors or ‘payables’ are customers to which the company owes funds. The company has purchased goods on credit and payments are yet to be made to them. Sundry creditors, also known as ‘sundry payables’ refer to a company’s suppliers from whom the company rarely make purchases on credit and the amounts purchased from them are not significant.

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On the contrary, the creditors are the parties who have sold the goods on credit. In a company, both have effective working capital management. E.g. The above purchase will be recorded as follows in the books of PQR since Company C is a sundry creditor.

Here Bini is the sundry debitor and akhandalamani is the sundry creditor. As per the golden rules of accounting, Sundry Creditor A/c is a personal account. Suppose a furniture-making company, Wood Ltd. sells furniture worth 30,000 to QRT Ltd. on credit. Keeping track of debtors is essential for companies because if too many people or businesses fail to pay, the company may be unable to pay its bills on time. As per the golden rules of accounting, Sundry Debtor a/c is a personal account.

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The term ‘Debtor’ refers to a person or entity that owes money to your business for goods or services sold on credit. A group of such individuals or entities is called Sundry Debtors. They may also be referred to as accounts receivable or trade receivables. Obviously, sundry debtors are the most common terms used in the accounting realm. Sundry Debtors are an integral part of the current asset sector.

The term ‘sundry’ is used to describe an income/expense that is relatively small or occur infrequently and therefore not assigned to specific ledger accounts. They are also known as ‘miscellaneous income/expenses’ and are classified together as a group when they are presented in financial statements. The difference between sundry debtors and sundry creditors is dependent on whether the company is the seller or the purchaser. If the company is the seller, then this results in sundry debtors and if the company is the buyer, this results in sundry creditors.

At the time when payment is received from the debtor below entry is recorded. A person who receives goods or services from a business in credit or does not make the payment immediately and is liable to pay the business in the future is called a Sundry Debtor. In the credit change, both selling and purchasing of goods add up the relationship toward debtor and creditor.

It also helps the company forecast future revenues and better plan its operations. In the above case, Axis Housing is a debtor for Daniel Constructions and the same is recorded in the books of Daniel Constructions (seller) for 60,000 due to credit sales. Many such debtors combined together are known as “Sundry Debtors”. Suppose “Daniel Constructions” sold building material worth 60,000 to “Axis Housing” on credit, and Axis Housing (buyer) agrees to pay the related invoices in the future accounting period. Sundry creditors are the creditors to whom the company owes a sum as a result of purchasing goods and services on credit…. As a result, such transactions usually lead to the addition of a debtor & a creditor in the books of the seller and the buyer respectively.

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Sundry debtors are also referred to as accounts receivable. ‘Debtors’ refer to people or businesses who owe you money for goods or services provided on credit. Therefore, QRT Ltd. will become a debtor for Wood Ltd., whereas Wood Ltd. will become a creditor for QRT Ltd. With the efficiency and low cost of today’s accounting systems, the need for classifying customers and accounts as sundry has been eliminated. Learn what accounts receivables are and why they’re important. Understand the definition of accounts receivable, look at different types of accounts receivable, and examine examples.