Creditors Allowances Question

by Mo
(South Africa)

Q: Where does the creditors allowances go?



A:
Let's first clarify what this means. Creditors allowances is basically all instances where creditors (people we owe money to) have allowed us to return items we purchased from them on credit.

The "creditors allowances" (returns of items purchased on credit) is recorded in the
creditors allowances journal .

The
creditors allowances journal is simply a book that is kept to record all instances that your business has returned items it purchased on credit. It would be the opposite of the creditors journal.

The
creditors journal is similar to the purchases journal, with the difference being that the purchases journal only includes purchases of inventory on credit (also known as goods, stock), while the creditors journal includes all items purchased on credit (e.g. equipment, inventory, consumables, etc.).

An entry in the creditors allowances journal is passed once our business issues a
debit note , which is a document created by a buyer when goods that were bought on credit are being returned.

From what I understand this type of journal (accounting book) is not used everywhere around the world, only in certain regions.

Is the creditors allowances journal used in your part of the world?

Do you have more info or questions about the creditors allowances journal?

If so, leave us a comment below.

Best,
Michael Celender
Founder of Accounting Basics for Students


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Comments for Creditors Allowances Question

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creditors control
by: Anonymous

When you do income statement, where does creditors allowances go?

Creditor Allowances
by: Babar Khan

I guess it goes in the Sales location as a sales allowances/discounts, allocated on your Income Statement.

It is discounts and allowances are offered by the Creditor/lending party to the Debtor/borrower party to motivate the borrower party for payments.

Creditor Allowances means he/she is offering type of allowances/discounts to the borrower party or buyers on product and services.

The information you receive should move to Sales Allowances and Discounts Journals.

You will show this Discounts as a Profit in Cost of Goods Sold if you are a Merchandiser, and as a Loss in Net Sales if you are Sales Agent.

So this amount is due/accrued as an Account Receivable. To adjust the bad debts, allowances/discounts rates are offered by the Lending Party to the Borrower Party.

answe
by: Anonymous

It goes where l also need to know

Creditors allowances
by: Lindiwe

When you do income statement, where does creditors allowances go?

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