ACCOUNTING GRADE 9 TERM 1 CASH RECEIPTS JOURNAL AND CASH PAYMENTS JOURNAL OF A SOLE TRADER COPYRIGHT©EASY! 2023 1 THE REASON FOR JOURNALS JOURNALS RECORD ALL TRANSACTIONS THAT TAKE PLACE IN A BUSINESS What is a transaction? oWhen money is exchanged between a buyer and a seller for a service rendered or a product bought. oA cash transaction is when the seller receives the payment immediately. oA credit transaction is when the seller receives the payment later. oAll transactions need to be recorded in a journal daily. oEffective control allows the company to stay afloat with a healthy cash flow. COPYRIGHT©EASY! 2023 2 CASH RECEIPTS JOURNAL THE REASON WE KEEP A CASH RECEIPTS JOURNAL: We have to know how much money is coming into the business. It helps to manage the budget. It enables managers to plan for the business and the future. A journal is a file or a book where we allocate transactions to specific accounts. Service businesses and retail businesses use different accounts to record the cash transactions: Service businesses receive current income. Retail businesses receive sales. Source documents must be used to record these transactions (cash receipts and cash register roll). Sales is the money received for the product when it is sold. Cost of sales is the cost of the product before it’s ready to be sold. The difference is profit/markup. COPYRIGHT©EASY! 2023 3 EXAMPLE OF CASH RECEIPTS JOURNAL OF A SERVICE BUSINESS Source documents receipts (numerical order/ cash register roll.) The day of the transaction . Doc Day Total of the receipt or CRR transaction. Details of the person who paid (name on the receipt). Details Fol Analysis of receipts 01 1 M Mogweng 50 000 CRR 5 Services Rendered 20 000 02 5 R Du Toit COPYRIGHT©EASY! 2023 At the end of every day, the analysis must be totalled. The total of all the money received on that day. Bank Income of the service business. Current income All other sources of income. Sundry accounts Amount 50000 Fol Details 50 000 Capital 3 000 Rent received 53 000 All columns must be totalled. 20 000 3 000 23 000 73 000 73 000 This 2 columns MUST balance. 20 000 All the other columns MUST balance with the bank. 4 EXAMPLE OF CASH RECEIPTS JOURNAL OF A RETAIL BUSINESS Source documents receipts (numerical order)/ cash register roll. The day of the transaction. Doc Day Details of the person who paid (name on the receipt). Details Total of the receipt or CRR transaction. Fol Analysis of receipts 01 1 M Mogweng 50 000 CRR 5 Sales 20 000 02 5 R Du Toit COPYRIGHT©EASY! 2023 At the end of every day, the analysis must be totalled. The total of all the money received on that day. Bank Sales of the business. Sales Cost of Sales of the business. Cost of Sales 50000 20 000 3 000 23 000 73 000 73 000 This 2 columns MUST balance. 20 000 All other sources of income. Sundry accounts Amount Fol Details 50 000 Capital 3 000 Rent received 53 000 All columns must be totalled. 10 000 10 000 All the other columns EXCEPT Cost of Sales MUST balance with the bank. 5 UNDERSTANDING THE CRJ (1) Source document numbers must be recorded correctly (DOC). Transactions are recorded daily – the date column will follow the calendar (DAY). The person paying and receiving the receipt’s name must be recorded (DETAILS). Folio column will be used when transactions are booked to General Ledger (FOL). Analysis of receipts is all the tickets or CRR received for the day and must be totalled and banked at the end of every day ( ANALYSIS OF RECEIPTS) and be underlined. Because receipts are banked every day, only the amount that has been banked reflect in the bank column (BANK). Income for a service business is recorded as Services Rendered(CURRENT INCOME). COPYRIGHT©EASY! 2023 6 UNDERSTANDING THE CRJ (2) All other income is separately recorded in SUNDRY INCOME and specified. ANALYSIS OF RECEIPTS and BANK must balance (be the same amount). BANK must balance with all the other columns (be the same amount). In a Retail business, the COST OF SALES is not calculated with other columns to balance with the BANK. Income for a retail business is recorded under sales (SALES), and the Cost of Sales must be calculated and recorded. In a CRJ, an amount is entered three times: Analysis of receipt column. The Bank column. The account column. COPYRIGHT©EASY! 2023 7 KEYWORDS FOR TRANSACTIONS FOR THE CRJ DEPOSITED RECEIPT RECEIVED ISSUED RECEIPT CASH REGISTER SLIP/ROLL DUPLICATE RECEIPT COPYRIGHT©EASY! 2023 8 WORKING EXAMPLE OF CASH RECEIPTS JOURNAL OF A SERVICE BUSINESS DAY AMOUNT DETAILS OF TRANSACTION DETAILS OF TRANSACTION SOURCE DOC TRANSACTION: 1 Jan: Receive R50 000 cash from the R Rooi (Owner) for a capital contribution. Issue Receipt 001. Cash Receipts Journal of Rooi Services for Jan 2023 Doc 001 Day 1 Details R Rooi COPYRIGHT©EASY! 2023 Fol Analysis of Bank receipts 50 000 Current income Sundry accounts Amount Fol Details 50 000 50 000 50 000 50 000 Capital 9 WORKING EXAMPLE OF CASH RECEIPTS JOURNAL OF A SERVICE BUSINESS DAY SOURCE DOC AMOUNT DETAILS OF TRANSACTION TRANSACTION: 11 Jan: Receive R5000 cash from the cash register roll for services rendered. Cash Receipts Journal of Rooi Services for Jan 2023 Doc CRR Day 15 Details Services Rendered COPYRIGHT©EASY! 2023 Fol Analysis of Bank receipts Current income 5000 5000 5000 5000 5000 Sundry accounts Amount Fol Details 10 WORKING EXAMPLE OF CASH RECEIPTS JOURNAL OF A RETAIL BUSINESS DAY DETAILS OF TRANSACTION SOURCE DOC AMOUNT TRANSACTION: 11 Jan: Receive R2000 cash from the cash register roll for sales. Cost of sales for this transaction is R1200. DETAILS OF TRANSACTION : Cost of Sales Cash Receipts Journal of Rooi Services for Jan 2023 Doc Day CRR 11 Details Sales COPYRIGHT©EASY! 2023 Fol Analysis of receipts Bank Sales Cost of Sales 2000 2000 2000 1 200 2000 2000 1200 Sundry accounts Amount Fol Details 11 CASH PAYMENTS JOURNAL THE REASON WE KEEP A CASH PAYMENTS JOURNAL: We must know how much money is going out of the business. It helps to manage the budget. It enables managers to plan for the business and the future. A journal is a file or a book where we allocate transactions to specific accounts. Source documents must be used to record these transactions: Payment Advice Cash Debit card Credit card EFT (Electronic funds transfer) COPYRIGHT©EASY! 2023 12 EXAMPLE OF CASH PAYMENTS JOURNAL OF RETAIL BUSINESS Source documents EFT (numerical order). The day of the transaction. Doc Day Details of the person who is getting paid (name on the payment advice). Details Total of the money paid per transaction. Fol Bank Money spends on trading stock. Trading Stock Expenses of the business. Consumables Creditors Control Creditors of the business. All other expenses. Sundry accounts Amount 01 1 FNB 50 000 EFT 5 FX Traders 20 000 02 5 R Du Toit 3 000 73 000 Fol Details 50 000 Mortgage 50 000 All columns must be totalled. 20 000 3 000 20 000 COPYRIGHT©EASY! 2023 3 000 All the other columns MUST balance with the bank. 13 UNDERSTANDING THE CPJ Source document numbers must be recorded correctly (DOC). Transactions are recorded daily – the date column will follow the calendar (DAY). The person that receives the payment/ the name on the payment advice (DETAILS). Folio column will be used when transactions are booked to General Ledger (FOL). All payments from the bank account must be recorded in the bank column(BANK). All other payments are recorded in separate columns or specified in the sundry accounts. BANK must balance with all the other columns (be the same amount.) In a CPJ, an amount is entered twice: The Bank column The account column COPYRIGHT©EASY! 2023 14 KEYWORDS FOR TRANSACTIONS FOR THE CPJ PAYMENT PAYMENT ADVICE MAKE PAYMENT DUE TO SETTLE ACCOUNT EFT COPYRIGHT©EASY! 2023 15 WORKING EXAMPLE OF CASH PAYMENTS JOURNAL OF A RETAIL BUSINESS DAY SOURCE DOC AMOUNT DETAILS OF TRANSACTION DETAILS OF TRANSACTION TRANSACTION: 30 Jan: Pay R10 000 cash to Traders Co for trading stock. Issue EFT 011. Cash Payments Journal of Rooi Services for Jan 2023 Doc 011 Day 30 Details Traders Co COPYRIGHT©EASY! 2023 Fol Bank Trading stock 10 000 10 000 10 000 10 000 Telephone Sundry accounts Amount Fol Details 16 SALES AND COST OF SALES Retail business is buying products from suppliers and selling them at a higher price to consumers or other businesses. It is sold at a higher price to make a profit. The original price the business pay is called the Cost of Sales. The price the business sells the products for is called Sales. The difference is called profit/markup. The business can calculate profit at any reasonable percentage and will enable the product to sell. PROFIT= SALES – COST OF SALES COPYRIGHT©EASY! 2023 17 CALCULATE COST OF SALES(COST PRICE) SELLING PRICE (SP) 100 _______________________ (100 + MARK UP (mu) COST PRICE(CP) Calculate the Cost of Sales of an item if the Selling Price is R5000 and the mark- up is 40% R 5000 (SP) 100 _____________________ (100 + 40(mu) COST PRICE(CP) R 5000 (SP) 100 _____________________ 140 R 3571.43 (CP) COPYRIGHT©EASY! 2023 18 CALCULATE OF SALES(SELLING PRICE) COST PRICE (CP) 100 + MARK UP (MU) _______________________ 100 SELLING PRICE(SP) Calculate the Sales of an item if the Cost Price is R3000 and the mark- up is 20% R 3000 (CP) 100 + 20 (MU) _____________________ 100 SELLING PRICE(SP) R 3000 (CP) 120 _____________________ 100 R 3600 (SP) COPYRIGHT©EASY! 2023 19 THE ACCOUNTING EQUATION MUST STILL BALANCE WHEN DOING THE CRJ AND CPJ OWNERS EQUITY ASSETS THE OWNERS INVESTMENT IN THE BUSINESS ITEMS THAT HAVE LONG TERM VALUE COPYRIGHT©EASY! 2023 LIABILITIES ANY DEBTS OF THE BUSINESS 20 THE ACCOUNTING EQUATION IN DIFFERENT FORMS OWNERS EQUITY ASSETS LIABILITIES ASSETS OWNERS EQUITY LIABILITIES ASSETS OWNERS EQUITY COPYRIGHT©EASY! 2023 21 LIABILITIES OWNERS EQUITY The total investment the owner has in the business. It starts with the capital he puts into the business when it opens. It increases if the business grows and it decreases if the business does not grow. INCOME increase owners equity Money from sales Rent received from tenants Interest from investments Money from providing a service EXPENSES decrease owners’ equity Salaries and wages Rent paid Water and electricity Telephone transport OWNERS EQUITY = CAPITAL + PROFIT - DRAWINGS COPYRIGHT©EASY! 2023 22 ASSETS The items owned by the business that have value. It could be converted into cash. Two types of assets. FIXED ASSETS • It has long term value. • It is used to generate income. • Are not expected to be converted into cash. • Examples: • Land and building • Machinery • Equipment • Vehicles CURRENT ASSETS • Items of value that are expected to be turned into cash. • Examples: • Stock • Debtors • cash COPYRIGHT©EASY! 2023 23 LIABILITIES Also known as debts. It has to be repaid at some stage in the future. Two types of liabilities. LONG TERM LIABILITIES • Payable after a period of one year. • Example: Mortgage loan CURRENT LIABILITIES • It has to be repaid within one year. • Example: Creditors COPYRIGHT©EASY! 2023 24 THE ACCOUNTING PROCESS Accounting does not end with journals (CPJ and CRJ). It follows a process, first, master the journals, and then we will move to the rest of the accounting process. TRANSACTIONS JOURNALS LEDGERS INCOME STATEMENT BALANCE SHEET COPYRIGHT©EASY! 2023 25
