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Journal for Purchase and Sale

Why are banks...

Question

Why are banks called debtors as well as creditors?

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Solution

Debtor is a person who owes some amount of money and creditor is a person to whom money is owed.

A bank owes money to its depositors - that is why it is called debtor. On the other hand, a bank grants loans and all those who have taken loan owe money to banks. That is why a bank is also called creditor. A bank is a debtor for its depositors and creditor for its loan holders.

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Q. Extract of trial balance of Mr. Q is as follows.

Particulars	Dr. Rs.	Cr. Rs.
Sundry debtors	$1, 00, 000$	-
Sundry creditors	-	$78, 000$

Additional information:
Included in sundry debtors Rs.

5, 000

due from Mr. A. Included in sundry creditors Rs.

2, 000

payable to Mr.A.
Sundry debtors and creditors will appear in balance sheet at __________ & Rs. ___________.

Q. Following information is obtained from the books of Vinay, who maintained his books of account under Single Entry System:


I. Receipts for the year ended 31st March, 2018:	₹
From Debtors	88,125
Cash Sales	20,625
Paid by Vinay	12,500
	1,21,250
2. Payments during the year:
New plant bought	3,125
Drawings	7,500
Salaries	5,625
Wages	33,625
Interest paid	375
Rent paid	6,625
Light and power	2,375
Sundry Expenses	10,625
Sundry Creditors	38,125
	1,08,000

Vinay banks all receipts and makes payments by means of cheque.


Assests and Liabilities	As at 31st March,2017 (₹)	As at 31st March, 2018 (Rs)
Sundry Creditors	12.625	12,000
Sundry Debtors	18,750	30,625
Bank	3,125	?
Stock	31,250	15,625
Plant	37,500	36,575

From the above information, prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as on that date.

Q. Extract of trial balance of Mr. Q is as follows:

Particulars	Dr. Rs	Cr. Rs
Sundry debtors	1,00,000	-
Sundry creditors	-	78,000

Additional information:
Included in sundry debtors Rs 5,000 due from Mr A. Included in sundry creditors Rs 2,000 payable to Mr. A.
Sundry debtors and creditors will appear in balance sheet at Rs _________ & Rs ____________.

Q. Irrecoverable part of debtors is called as ______.

From the following details, find the amount of Capital:

Particulars	Amount
Cash balance	10,000
Furniture	20,000
Stock	25,000
Creditors	10,000
Debtors	25,000
Loan from bank	10,000

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