How the credit sales and credit purchased are ascertained under single entry system?
Answers
Answer:
Explanation:
For Credit sale we Prepare Debtor Account
Debtor is Asset
The opening balance of Debtor is Debit
Increase in Asset Debit
Decrease in Asset Credit
if we credit sale to customers then debtor increased means debit
when cash received by debtor means credited due to decrease in asset
if we discount the debtor for early payment then debtor decrease credit
if we can not collect money from debtor then debtor decreases means credit
if debtor paid us by cheque then debtor decreases rule is credit
if debtor paid us by bill then debtor decreases rule is credit
if debtor paid us by cash then debtor decreases rule is credit
if above cheque which we get from debtor bounced then debtor again increase means debit
if above Bill which we get from debtor bounced then debtor again increase means debit
the closing balance of debtor is credit
Similarly
we create creditor account for credit purchased
creditor is Liability
The opening balance of creditor is Credit
Increase in Liability is credit
Decrease in Liability Debit
if we credit Purchase by sellers then creditor increased means credit
when we cash paid to creditor due to this creditor decrease Result Debit
if we get discount by the creditor for early payment then creditor decrease means debit
when we cheque paid to creditor due to this creditor decrease Result Debit
when we bill paid to creditor due to this creditor decrease Result Debit
the closing balance of creditor is debit
NOte : if bill or cheque are bounced the entry become reversed which you can see in format below
