Balancing-off accounts

Chapter 5

Debtors owe us nothing

Dr CrK.Tandy a/c

Aug1 Sales 144 19 Sales 300

444

Aug22 Bank 144 28 Bank 300

444

In this account, the customer (K.Tandy) is no longer a debtor,

(she does not owe us any money now). So her account is

balanced-off. We say her account is closed off.

Debtor still owes us

Dr CrK.Wood a/c

Aug1 Sales 158 15 Sales 206 30 Sales 118

482

Aug22 Bank 158

158

This account does NOT balance. We need to balance-off the

account

Debtor still owes us

Dr CrK.Wood a/c

Aug1 Sales 158 15 Sales 206 30 Sales 118

482

Aug22 Bank 158

158

1. Find the difference between the two balances

2. Add the different on to the smaller side, so it will balance

Debtor still owes us

Dr CrK.Wood a/c

Aug1 Sales 158 15 Sales 206 30 Sales 118

482Sep1 Balance b/d 324

Aug22 Bank 158Aug31 Balance c/d 324

482

Balance carried down

Balance carried down

Enter the balance here so the two sides equal

Now the two sides equal

Enter the balance here to start the next month

Debtor still owes us

Dr CrK.Wood a/c

Aug1 Sales 158 15 Sales 206 30 Sales 118

482Sep1 Balance b/d 324

Aug22 Bank 158Aug31 Balance c/d 324

482

So the account shows us that K.Wood still owes us 324

The Balance c/d is the last day of the monthThe Balance b/d is the first day of the next month

We owe money to a creditor

Dr CrE.Williams a/c

Aug21 Bank 100 Aug31 Balance c/d 264

364

Aug2 Purchases 248 15 Purchases 116

364

Sep1 Balance b/d 264

1. Find the difference between the two balances

2. Add the different on to the smaller side, so it will balance