Balancing Off Accounts for debtors

When we sell something to customer on credit, we will debit the customer account (or better known as debtor account). Debtor is the term given to customer who owe the business money. When the customer make payment to for the item he has purchased, we will credit his account. Therefore, if the debtor has paid off all his debt, then the total credit should be same as the total debit. In this case, we can close off the debtor account at the end of the period by inserting the totals on both side of the account. Please note that in accounting, the total are always shown with a single line on top of the amount and a double line beneath the amount.

If the debtor still owe us for the goods taken, then total debit will be more than the total credit. In this case, you can need to enter another line at the credit side with the amount owed to us so that both side will have the same total. The entry date will be the last day of the month while the description will be Balance carried down (or balance c/d). Now, enter the total for both side. Both side should have the same total by now. Finally, enter another line at the debit side with the amount same as Balance carried down. The description for this new entry is Balance brought down (or balanced b/d).

Balancing off accounts are usually done at the end of eacy accounting period to summarize the condition of the account. The same principles apply to Creditor Account.