 lesson in our series on control accounts. The objectives of the series are to explain the use and advantages of control accounts in a business, to describe and differentiate between the terms debtors control account and creditors control account, and to draw up control accounts from totals in the debtors and creditors ledgers. The topic of today's lesson is debtors control account. After watching this video you should be able to identify different debtors transactions and know how to draw up a debtors control account. Yeah, Paula, you're just saying that because I'm your friend. Ah, come on Sarah, you know I'm serious. I've been around the block and by the way, you are the cheapest. How could you take less? I only opened it half past two. Good morning, ma'am. I urgently need to speak to Mrs. Freeman, please. I am Mrs. Freeman. Then I work for beauty supplies, which I have a minute of your time, please. Beauty supplier? Well, like I said... Mrs. Freeman, this is all about your account of being in a race. Here, please have a look. Why don't you just give me about 10 to 15 minutes so I can finish? I'm afraid not, Mrs. Freeman. I still have a few more clients to see today. Just be informed that you need to get back to us within 14 days. If not, we will be seeing you in a while. What? But, sir... Mrs. Freeman, make this easier on yourself. Just make sure that you come back to us before the race begins over. Thank you for your time, ma'am. Good day. Finding a notice, dear Mrs. Freeman, your outstanding balance is charged with interest to the amount of $680 million. Please pay the outstanding balance of $8,000 million plus the interest amount within 14 days of the receipt of this warning. Your credit has been stopped until payment is received from you. If the account is not paid up to date, the transaction will be taken. Sorry for keeping you waiting. Not too early, sir. Was that the credit? Yes. They want you to pay my account within the next two weeks. Otherwise, they'll take me to court. I will never get the money in time. Besides, where will I get it from? Get it from the people that owe you, girlfriend. A lot of clients owe you money, including me. Start filing. I sent to pay the account. Let's finish my hand, and I'll help you do this money hunt. That might just be my only solution. I like this. I've never been disappointed in this place. Okay. So, where do we start now? Okay, sir. Let's see. How much does your debtist owe you in total? Mommy. Not now, Sam. Mommy, the sneakers only cost $800. Can we please go buy it? $800. Did you hear this, kid? He wants me to pay $800 for a pair of sneakers. Sam, we'll talk about this later. Let's finish this, Paula. You're teenagers. Sarah, let's see. How much do your debtist owe you in total? I don't really know. I'll have to check my books. When I'm all the way here, keep record of your customer transaction to our demand. I do know a little bit. The customers that owe me money are my debtists, and the suppliers who don't owe money are my creditors. That's correct, Sarah. You can get money from your debtist to pay your creditors. Okay. So, where do we start then? Because I get my books. I think you should... This, this are the records of my customer's transaction. What kind of thing? Did you draw a customer account? Yes, I do have a card in which I record all the transactions. You mean you have a card for each customer? Mm-hmm. That's fantastic. You know what I think? You need to use this card to draw the debtist's control account. Now, what is that? And why should I draw up a debtist's control account? If you draw up a debtist's control account, you know exactly how much a debtist owe you. So, in the debtist's control account, we enter all the debtist's transactions in this column here. That's right. We collect the information of these transactions to our customer card. That's why it's called the debtist's ledger in the account. No, no, no, no. Now I'm confused. You are talking about debtist's ledger and debtist's control account. Is this the same thing? No, no, no, no. Look at me. Let me explain for myself. Debtist's ledger is where you open the individual debtist account. Like you have your customer card in the debtist's control account. It's the summary of all the debtist's transactions. I'll illustrate that process. Let's look at another foundation. Let's look at the different debtist's transactions. Show me your customer card. We'll use that customer card as a starting point to identify different debtist's transactions. Let me check quickly. You have all the transactions for April here. Yes, they're on the card. You can see the transactions that have taken place between you and the customer. Okay. Now let's identify the transactions. On the first, in this case, you render services like card, wash and blow. This is called current income transaction. Also, on the first, you have sales shampoo and conditioner. We call it a sales transaction. Then I return the conditioner on the sixth. When the customer returns goods, we call it sales return transaction. On the 20th, I've paid part of my account. When the customer's paid for account, it is called the debtist payment transaction. Then it gives us four different transactions. Service remit on credit, current income transaction. Sales of goods on credit, sales transaction. Shampoo and conditioner's return refers to sales return transaction. Debtist payment. Do you have any other transactions? Oh, yes. Some of your customers never pay their account. Oh, debtist will don't pay their account and disappear. And we just write their account. Back then, another problem I'm also having is when customers pay by check and their banks send their business checks back to me without paying any money to me. You mean their banks just use to pay out their check? I hope you charge interest on debtists over your account. That's true, Paula. I never charge them extra money if they don't pay their account. And now I have to pay interest on my own debt or account. You should. And you can let them about giving discounts when debtists pay their accounts on time. Maybe they will be paying more regularly. That is a good idea. I'll have to do that more in the future. Remember earlier we spoke about this transaction that we have? We can now add more transactions to our list. When the debtists pay, you can allow discounts for front payment. When debtists pay by check and the banks dishonest their check. If the debtists don't pay their account and then you charge interest on the overdue amount. If the debtists don't pay their accounts, then you write it off as a bad debt. Now that is the information in the class to draw up the debtist control account. This is interesting, Paula. But let me quickly get us on duty. Paula, is this going to take long? Not at all. Because I have another client in about 10 to 15 minutes. Sounds okay. Okay. Now let's start. The debtist control account has two sides. Double side and credit side. The first thing to remember is that we debit the debtist account if the amount always increases. And credit it when the amount always decreases. Just like you do with your customer card. And you may be. I think so. Let's take my account and enter the transactions in the debtist control account. The transactions that increase my account will be entered on the debit side of the account. And those that decreases my account will be entered on the credit side of the account. Like this. Let me show you. To give us the amount, the debtists call you. So how do I balance the account? We add the amount on each side and write it on the script paper. Let's see. The total on the debit side is 100 plus 60 plus 150 will give us 110. The credit side total is 25. This is 150 which will give us 175. The biggest amount of the two, 310, is then entered in total columns of both sides. The difference between the two total, 310 minus 175 is 155. Is then the balance of my account. Is that it? I think I'll be able to do it. Thank you, Paul. Okay, Sarah. We have entered the transactions to my card here just to show you how to do the debtist control account. But you have more debtists than just me. The debtist control account is normally drawn to give a summary of the entries of all debtists. All the entries are going to be on the last day of the month. Accept the balance brought down at the beginning of the month. To draw the debtist control account, you normally enter the transactions like this. On the debtist side, you enter transactions. The opening balance, there is a balance. Sales end all current income. Discount allowed on this owner checks, canceled. Interest received. And on the credit side, we enter sales returns, debtist payments, discount allowed, and bet debts. I've got it. So on the debit side, we enter the transactions that increase the debtist account. And on the credit side, transactions that decreases the debtist account. That's for it, Sarah. The advantage of drawing up a debtist control account is that you can see it against all the transactions that are in the debtist, as well as what we owe at the beginning of the month, and at the end of the month. Thank you so much, Paula. Oh, this is my appointment. Oh, but don't worry. I will get the outstanding debtist amount right evening now. It's not that I don't think. Or we should get help there. I will definitely come. Let's summarize what we have learned today. Debtists refer to customers who owe the business money. Examples of debtist transactions include current income transactions, sales transactions, debtist payments and discount allowed transactions, sales returns transactions, just on a check transactions, bear debt transactions, and charging a debtist overdue account with interest. The debtist control is drawn up to give a summary of all debtist transactions for a month. This brings us to the end of today's lesson. The topic of the second lesson in the series is creditors control. Please make sure that you watch our next lesson. Goodbye.