Credit balance in sundry debtors-crediting to p&l

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anilwyd (Querist)
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09 April 2012 Hi,

In one T?B which I am finalizing now; there are lot of sundry debtors accounts with credit balances [ reason includes- giving discounts, excess payments etc.] there is a rare possibility that we will call and pay back the same to sundry debtors.

What is the recommended accounting treatment ?
Is there any 3 year criteria involved?
Any AS deals with this?

Ours is a listed company.

Shall I credit the said credit balances to P&L ?

Reagards
anil.india

CA Rakesh Goenka

CA Rakesh Goenka (Expert)
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09 April 2012 Listen its depend upon amount because if credit balance is huge then company should carry forward the Credit balance of Debtor for 2 year and if within 2 year any debtor did not ask for anything or any further transaction did not happens with same customer within these two year then Debtor should be write off in P/L......entry should be I) Debtor A/C..........DR.
TO, Debtor write off A/C
II) Debtor write of A/C .... Dr.
TO P/L
and IF amount is not that huge then Company can write of entire amount this year in P/ L a/c

CMA Ashutosh Kumar Gupta

CMA Ashutosh Kumar Gupta (Expert)
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09 April 2012 Following is recommended:
* Do ageing of Credit Balances
* Do marking of open amount and reco. to sure being exclusive debtors, as feasible
* Obtain Customer Balance Certificates as is prescribed as an accounting norm.
* Unclaimed balances to be written back thereafter per company norms/sop.

anilwyd

anilwyd (Querist)
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09 April 2012 Credit balances range from Rs 10 to Rs 90000 and is less than 3 years balances. Party does not know and will not claim the same.
Total turnover is about 5 Cr.( about 50 parties accounting to approx Rs 4 lacs)

regards

anil

Vishal Sharma

Vishal Sharma (Expert)
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10 April 2012 On the basis of prudence concept probable loss must be provided in books but income is accounted if it 95 to 100% sure will accrue in that year. Therefore make sure that party will not claim the amount and if there is possibility of claiming the amount by party at the time of preparing books of accounts then defer it to future years.

Also to obtain balance confirmation certificate from customer.

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