Sundry debtors and sundry creditors are words frequently used in the business world. These phrases describe the sums of money that a company owes to its suppliers and clients respectively. Business owners and managers should be aware of these words and how they affect their organisation’s financial statements.
Sundry creditors are the liabilities of the firm because the firm is supposed to pay the outstanding amount in future as per terms and conditioned agreed upon by both the parties. But at the time of preparing the final accounts, the amount payable to the creditor is shown as sundry creditors. 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.
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. Sundry creditors are the creditors to whom the company owes a sum as a result of purchasing goods and services on credit….
A person who gives goods or services to the business in credit or does not receive the payment immediately from the business and is liable to receive the payment from the business in future is called a Sundry Creditor. At the time when payment is made by the creditor below entry is recorded. As per the golden rules of accounting, Sundry Creditor A/c is a personal account.
Sundry Creditors in Trial Balance
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. They represent the sums that a company owes its suppliers for goods or services that were acquired on credit. In other words, when a business purchases products or services from a supplier on credit, the supplier’s debt to the firm is converted into a miscellaneous creditor.
Which side is sundry creditors?
Sundry creditors will show up on the right side of the credit side of the firm's balance sheet because they are listed as a liability for the company.
A company’s working capital is significantly impacted by various debtors. They serve as a representation of the money that the company anticipates receiving soon and can be used to cover ongoing expenses. Sundry debtors are typically listed under “current assets” on a company’s balance sheet. So, one should be very careful to deal with the payment of suppliers.
Related to Sundry Creditors
This policy should outline a procedure for determining a customer’s creditworthiness, establishing credit limits, and keeping track of outstanding debts. A company can avoid bad debts and maintain a healthy cash flow by managing its many debtors effectively. I suspect that the term sundry was more common when bookkeeping was done manually. 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 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.
Following is the Receipts and Payments Account of Bharti Club …
Typically, sundry creditors arise from core business operations, such as the purchase of goods or services. Sundry debtors could be referring to a company’s customers who rarely make purchases on credit and the amounts are not significant. Businesses must establish a credit policy that is suited to their business in order to manage various debtors effectively.
Who are sundry creditors and debtors?
Sundry debtors. An account for individuals or businesses who owe money to a company and whose information and accounts are recorded. Sundry creditors. A business or an individual to whom there is money owed.
The typical nature of these creditors is short-term, which means that they are anticipated to be repaid within a year. 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. Credit purchases refer to the purchase of goods and services on account, which result in the postponement of the payment for the goods and services, as an extension is provided by the supplier called credit period. The journal entry debits the inventory or the purchases and credits the accounts payable or creditors, being a current liability.
Difference Between Sundry Debtors and Sundry Creditors
E.g. The above purchase will be recorded as follows in the books of PQR since Company C is a sundry creditor. The term ‘Creditor’ refers to a person or entity to that you owe money for management accounting goods or services purchased 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.
They represent the sums of money that clients of a company owe for goods or services rendered on credit. In other words, when a company provides customer goods or services on credit, the money that the customer owes the company is classified as a sundry debtor. Typically, these debtors are short-term in nature, which means that they are anticipated to be repaid within a year.
What are items for sundry?
- Home improvement items (e.g. mirrors, door bells).
- Fixing and finishing materials.
- Consumables (e.g. abrasives, masking tape, sandpaper).
- Ironmongery items (e.g. hinges, locks, handles).
- Industrial items (e.g. pallet racking systems).