[Solve] Debtors and Creditors In Balance Sheet

 Welcome back to our blog today we are going to talk about debtors and creditors in the balance sheet with examples so if you are an accountant then you should know what is debtors and creditors and how to show them in the balance sheet.

Debtors and Creditors In Balance Sheet

 What are debtors and creditors?

First, let me tell you about what are debtors and creditors? 

* Debtors (Accounts Receivable):

• Debtors refer to the individuals or entities who owe money to your business for goods or services provided on credit.

* Creditors (Accounts Payable):

• Creditors are the individuals or entities to whom your business owes money for goods or services received on credit.

Debtors And Creditors In The Balance Sheet

Now let's start to solve the example:

Item	Description	Amount
Assets
- Current Assets
- Cash and cash equivalents	Immediate access to funds for expenses and payments	20,000
- Accounts receivable (debtors)	Money owed by customers for purchased goods or services	40,000
- Trade debtors (customers)	35,000
- Other debtors (loans to employees, advances)	5,000
- Inventory	Finished goods and raw materials ready for sale	18,000
- Prepaid expenses	Expenses paid in advance, like insurance or rent	2,000
Liabilities
- Current Liabilities	Due within 1 year
- Accounts payable (creditors)	Money owed to suppliers for purchased goods or services	32,000
- Trade creditors (suppliers)	28,000
- Other creditors (short-term loans)	4,000
- Accrued expenses	Expenses incurred but not yet paid, like salaries or utilities	5,000
- Short-term loan	Loan due within 1 year from a bank or lender	10,000
Shareholder Equity	Owner's investment and retained earnings	43,000
	Total	120,000

Debtors:

• Typically shown under "Accounts Receivable" in the current assets section.

Creditors:

• Shown under "Accounts Payable" in the current liabilities section.

Conclusion

Here in this post, we add debtors and creditors in the balance sheet example so if you are learning to account then you should learn debtors and creditors.