Trade Debts/Receivables

Trade debts/ receivables represent amounts receivable from customers against the sale of goods or rendering of services in the ordinary course of business.

Example:
A business sold goods worth USD 10,000 to a customer on credit terms i.e. the sales proceeds have not been paid by the customer. Following entry would be passed at the time of credit sale:

Description

Debit

Credit

Trade debts

10,000

 

Sales

 

10,000

The trade debts will appear on the balance sheet as receivable from the customer.

The trade debt amount will be knocked off once customer pays off the debt.

Description

Debit

Credit

Bank Account

10,000

 

Trade debts

 

10,000

One thought on “Trade Debts/Receivables”

Related Post