GRADE 10 ACCOUNTING CASH RECEIPTS JOURNAL AND CASH PAYMENTS JOURNAL Session Outcomes. • Understand the purpose of the cash receipts and cash payments journal (definitions). • Understand the columns in the cash receipts journal. • Understand the columns in the cash payments journal. • Key words used in transactions . • Importance of inventory systems. • Calculating creditors discounts. • Calculating cost of sales and sales • Accounting for discounts • Accounting for dishonored cheques Definition of cash receipts and cash payments journal. CASH RECEIPTS JOURNAL CASH PAYMENTS JOURNAL • This is a journal where we record all the cash received by the entity. • The money can be received as cash, deposited into our bank account or through EFT. • This is a journal where we record all the cash paid by the entity • The money paid can be paid out in cash, cheque written out, or by EFT. KEY WORDS USED IN TRANSACTIONS. CASH RECEIPTS JOURNAL CASH PAYMENTS JOURNAL • Receipt: we issue a receipt if we have received money. • Receipt: when we receive a receipt, we have bought something and therefore paid money. • Received: money is received by us. • Cheque: we issue a cheque when we are paying money • Cheque: when we receive a cheque, we have been paid for something. • Paid : we have paid money to someone • Bought: we bought something, therefore paid out money • Lend: when we lend money, we are giving someone else our money • Sold: we receive money for selling • Borrowed: when we borrow money, we receive money. Given to you or write in numerical order The day in which the transaction took place We record cash that has been received any other reason besides sales, e.g. capital, loan, etc. these amounts have no columns in the CRJ The name of the person/entity that has given us cash Lethabo electronics Cash Receipts Journal-July 2023 Doc No Day Details Fol Analysis of receipts Bank We record the cash that the entity has physically received or handled All amounts under the analysis of receipts also go under bank Sales Sundry Accounts Amount Fol The amount received Money that we receive from selling to a customer Details What is the cash received for, is it capital, loan etc. Example 1: complete the CRJ using the below transactions. Background information: Lethabo’s Electronics is a company that sells various electronics, from cellphones to laptops. The below transactions occurred in the month of July 2023. 1. Lethabo X, the owner of Lethabo’s electronics, invested R30 000 in the business. Issued receipt D10. 2. Paid the months rent by cheque, R3 000. Cheque no.01 was issued. 3. Received rent from a tenant, Karabo M, R1 500. Receipt no D11. 4. Paid insurance by cheque, R1 200. 5. Sold inventory on credit to Lettie M , R500. 6. Bought inventory on credit from Apple Store, R3 000. 7. Inventory was sold for cash as per receipt D12, R12 000. 8. Paid wages by cheque, R1 800. 9. Borrowed R15 000 from FNB Bank and deposited the cheque. Receipt O13. 10. Bought equipment from Incredible Connection by cheque, R7 000. Lethabo electronics Cash Receipts Journal-July 2023 Doc No Day Details Fol Analysis of receipts Bank Sales Sundry Accounts Amount Fol Details D10 1 Lethabo X 30000 30000 30000 Capital D11 3 Karabo M 1500 1500 1500 Rent Lethabo electronics Cash Receipts Journal-July 2023 Doc No Day Details Fol Analysis of receipts Bank Sales Sundry Accounts Amount Fol Details D10 Lethabo X 30000 30000 30000 Capital D11 Karabo M 1500 1500 1500 Rent D12 Sales 12000 12000 D13 FNB Bank 15000 15000 15000 Loan:FNB 58500 58500 12000 12000 46500 Lethabo electronics Cash Receipts Journal-July 2023 Doc No Day Details Fol Analysis of receipts Bank 900 Lethabo sold an Iphone 11 for 10000 on credit to Karabo. Lethabo gave Karabo a 10% discount. Full debt (1000)- debtors control Discount (1000*10%)- discount allowed Net amount (1000-100)- bank Sales 24000 Cost of sales Debtors control 16000 1000 For how much did we buy the inventory that we have sold. Discount allowed Sundry Accounts Amount Fo Details l 100 Amounts that we have received from previous people that we sold to on credit. The full amount of the debt. Discount amounts we have given to our debtors Calculating the selling price (sales) and the cost price (cost of sales). If a business sells goods for R24 000 and the profit margin is 50%, determine the cost price. Cost price + profit margin = selling price 100% 50% 150% Cost price + 50% What you have Cost price = 24000 * 100% 150% = 16000 = 24000 Cost price is always 100% Divide by the from number Multiply by the to number Given or write in numerical order Day in which the transaction took place. Amounts that do not have a column. Any amount that is not purchases, creditors, discount or wages. The name of the person we are paying to or payment by cash Lethabo Electronics Cash Payments Journal- July 2023. Doc No. Day Details All amounts paid out Fol Bank Purchases Creditors Discount received Payments made to creditors (settlement All amounts used amount) Discount to buy inventory, from merchandise or creditors stock Wages Sundry Accounts Amount Amounts paid as wages to our workers Fol Details Name of the sundry account Amount paid to sundry account Example 2: use the transactions below and complete the cash payments journal. The company uses a periodic inventory system During July 2023, the following transactions took place: 1. Lethabo X, the owner of Lethabo’s electronics, invested R30 000 in the business. Issued receipt D10. 2. Paid the months rent by cheque, R3 000. Cheque no.01 was issued. 3. Bought inventory from Incredible Connection by cheque, R2 500. cheque 02. 4. Bought inventory on credit from Apple Store. R1000 5. Received rent from a tenant, Karabo M, R1 500. Receipt no D11. 6. Paid insurance by cheque, R1 200. 7. Sold inventory on credit to Lettie M , R500. 8. Bought inventory on credit from Apple Store, R3 000. 9. Inventory was sold for cash as per receipt D12, R12 000. 10. Paid wages by cheque, R1 800. 11. Borrowed R15 000 from FNB Bank and deposited the cheque. Receipt O13. 12. Bought equipment from Incredible Connection by cheque, R7 000. 13. Issued a cheque to Apple Store in full settlement of account after deducting 10% discount. Periodic inventory system- purchases of trade stock goes under purchases Perpetual inventory system- purchases of trading stock goes under inventory Lethabo Electronics Cash Payments Journal- July 2023. Doc No. Day Details F Bank ol Purchase s Credito rs Discount received Wages Sundry Accounts Amount Fol Details Lethabo Electronics Cash Payments Journal- July 2023. Doc No. Day Details F Bank ol 01 1 Cash 3000 3000 Rent 02 2 Cash 1200 1200 Insurance 03 3 Incredible connection 2500 04 4 cash 1800 05 5 Incredible connection 7000 7000 equipment 06 6 Apple store 2700 18200 Purchase s Credito rs Discount received Wages Sundry Accounts Amount Fol Details 2500 1800 2500 3000 300 3000 300 1800 11200 Lethabo Electronics Cash Payments Journal- July 2023. Doc No. Day Name of payee F Bank o l 380 The net amount = creditors control – discount received Trading stock Credit ors contro l Discoun Debtors t control received Wage s Sundry Accounts Amount Fo Details l 380 The total amount This is the discount we we owe to our receive from our creditors creditors when we purchase from them This column is for cheques that are returned back to us from the bank (dishonored cheques) Dishonored Cheques. If the business received R380 from M. Naidoo (a debtor) in settlement of his account of R400, this transaction will be entered in the CRJ. If the bank returned the cheque to the business with the remark “R/D – insufficient funds”, a reversal of the transaction in the CRJ must be done. Remember that when this transaction happened, we recorded it in the Cash Receipts Journal. Now we have to reverse this because the bank has told us that the debtor, M.Naidoo does not have enough money is her bank account to pay out this cheque. Meaning we will no longer receive this money (R380) To reverse this transaction we have to reverse it in the Cash Payments Journals R380 The discount of R20 will be accounted in the GJ After session Concepts well understood. Homework Concepts not understood or partially understood.
