Hi

I have a trade debtor/trade creditor question.
In 2013, my client has trade debtor of $50,000 and trade creditor of $100,000.
When we do 2013 tax return, we claimed these income and expenses (even though they were not paid or received).

In 2014, my client still has trade debtor of $100,000 and trade creditor of $200,000.
I looked inside the MYOB Account - and it looks like the 2013 trade debtor / 2013 trade creditors have been paid / received in the 2014 year.

Question - in 2014 year, what is the correct way to treat the trade debtor / trade creditors? Do we reverse 2013 trade debtor / 2013 trade creditors?
If we do it that way, would it mean that we reverse 2013 trade debtor/2013 trade creditor TWICE? (one is by journal entry, and second, the client has put through the payment in the respective debtor/creditor accounts).

Please help.

Thanks.

Rachel

If you have a trade debtor who paid the full sum then the amount you received extinguishes that balance similiary with the trade creditor if you paid the full amount then that balance is extinguished and no adjustment is made in the income statement

The 2014 amounts are income and expenses in that year with the balances carried forward