On May 31 the account was balanced off and at this point Pepe's Pizza Parlour owned furniture to the value of £20,000.00.
The furniture account owes Pepe this figure. It is therefore his debtor and the account balance is carried down to the left hand side of the ledger.
The Debtor's ledger.
In the case of Pepe's Pizza Parlour the debtor's ledger will consist mainly of the accounts of businesses who purchase goods or services off Pepe i.e. sales. These goods and services are normally purchased on credit. Nearly all goods and services sold are paid for an agreed number of days after the transaction itself (i.e. 30 days, 60 days, 90 days etc.). During this period those parties purchasing the goods would be in debt to Pepe's Pizza Parlour. They are Pepe's debtors.
What this shows was that on May 01 Mr. P.Thompson owed Pepe £850.00.
On May 08 Pepe sold an outside catering service to him on credit at a cost of £500.00. Mr Thompson was the receiver of this service and his account is therefore debited.
On May 16 £700.00 fell due for payment to Pepe from Mr.Thompson and the amount was paid. In this case Mr. Thompson is the giver of money and his account is therefore credited.
On May 31 the account was ruled off and at this point Mr. Thompson owed Pepe's Pizza Parlour £650.00
He is Pepe's debtor and so the account balance is carried down on the left hand side of the ledger.
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.
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 Cash Book.
The cash book shows the amount of money flowing in and out of a business. It may be made up of several "accounts" i.e. There may be a separate account to show the amount of cash in the business and the amount at the bank. Receipts are shown on the left hand side of the ledger and payments shown on the right. Just like the other ledgers the cash book can be balanced off at any time.
What this shows was that on May 01 the balance in Pepe's Midley's bank account no. 7060440 was £1,945.77 overdrawn.
On May 10 a payment of £200.00 was made to Mr. Alberto. The account was a giver of money and is therefore credited.
On May 15 a payment of £305.23 was made from the account to Mr. R. Sandborne. The account was a giver of money and is therefore credited.
On May 16 £700.00 fell due for payment from Mr. Thompson and the amount was paid into the account. The account was a receiver of money and was therefore debited.
On May 23 a payment was made from the account to Ovens 'R' Us. The account was a giver of money and was therefore credited.
On May 31 the account was balanced off and was £2,000.00 overdrawn.
Pepe's Pizza Parlour owes the account this figure. It is therefore Pepe's creditor and the account balance is carried down to the right hand side of the book.
