It is common for buyers to deal with the same suppliers on a regular basis. Suppliers send a statement to their customers to show all of a buyer’s transactions over a period of time (i.e. goods purchased and payments made).
The statement will show the balance owed by the buyer at the end of the period in question and when the amount is due to be paid.
When received, the statement should be checked by the buyer to make sure the details are correct.
Example
Gym Supply sends Zone Fitness a statement at the end of December 2016. It shows a zero balance outstanding as Zone Fitness paid in full the amount owed to Gym Supply.
To: Leanne Crosby Purchasing Manager Zone Fitness Westfield Retail Park Drogheda Co. Louth
Date Details
15 Nov 2016 Invoice no. 445 12 Dec 2016 Bank transfer 00213
Debit €20,172 20,172
No.: 228
VAT no.: IE2315565 30 December 2016
Credit Balance
€20,172 €0
If a buyer has only paid part of an invoice, the balance is the amount that is still due to be paid to the seller of the goods.
If Zone Fitness had only paid €10,000 of the amount owed on 12 December, what balance would the end-of-month statement show?
We will learn more about a business prepares accounts in
chapters 21 to 28. A GO
All of the documents sent and received by the buyer and the seller should be kept on file. These documents will be referenced when the businesses prepare their accounts.
What order?
Go to page 130 of your Activities and Accounts Book to arrange the business documents into the order they are sent in.
