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Credit balance on debtor account in statutory accounts


My brain has gone home for christmas and I can't decide how to treat this simple scenario:

A company has 4 customers. 3 of the customers debtor balances total £60k.  the 4th account has a credit balance of £100k.  this is because this customer pays cash up front and as work is completed it is offset against the cash recieved upfront.

In the statutory accounts do I show this as

1) current assets 60k, current liability £100k    i.e the credit balance is stripped out and shown as a liability


2) current assets zero, current liabiltiy £40k  i.e the net balance of all debtors is a liability


3) current assets as a credit of £40k, current liability zero i.e net balance of debtors is still shown is CA alebit a credit balance

If it's option1 or 2 then in the accounts notes for current liabilities would I group the credit debtor balances in with normal trade creditors or would it be separately identified as a debtor with a credit balance.



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20th Dec 2012 16:14

Option 1

Unless there is a right to offset balances, which is unlikely where there are for different customers, then each balance should be looked at with the debtors included in trade debtors and the creditor in trade creditors. (see FRSSE 2008 para 4.2)

Thanks (1)
20th Dec 2012 16:28

Agree : Option 1

From my experience in industry, the Auditors strip out negative balances on both the sales and purchase ledgers and re-classify for the stats.

This case is unusual because the credit balance is greater than all of the debits on the sales ledger, however even if the amount was £10k rather than £100k it would still need to be re-classified.



Thanks (1)
21st Dec 2012 14:19


done 1.  I am in commerce and that exercise is always part of my statutory accounts prep, both ways.

Thanks (1)
02nd Jan 2013 09:56


thanks very much!

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