REMOTE LEARNING EXERCISES/WORKSHEETS
LEARNER’S GUIDE
Accounting
GRADE
10
TOPIC (S)
Term Two topics
Week (s)
Week 11-19
TERM
WEEK
Two
SUBJECT:
TOPICS
11-12
Debtors and Creditors Reconciliation
13-14
Salaries and Wages Journals
15-19
Year-end Adjustments
6. RECONCILIATION OF DEBTORS AND CREDITORS
DEBTORS LIST, CREDITORS LIST AND CONTROL ACCOUNTS
Control accounts are a summary of the individual debtor/creditors accounts. Reconciliation between
control accounts and lists is drawn up monthly to ensure that the entries in the debtors/creditors list agree
with the entries in the control account.
 Both balances of control accounts and lists must
agree to each other.
 Control accounts act as an independent check on
the accuracy of the totals of the balances in the
Debtors and Creditors ledgers.
 Control accounts assist the business in detecting
errors/omissions in their books.
 Information needed to prepare the Creditors Ledger
comes from Creditors Control Account.
Control
Accounts
Debtors/
Creditors
List
WHAT ERROR CAN BE DETECTED BY CONTROL ACCOUNTS
Control accounts can detect the following errors amongst many: Casting errors (errors of addition)
 An error can arise if a transaction is recorded in the control account and not in the individual
account, or vice versa.
 Error of omission – a transaction is not recorded at all.
 Error of commission – an item is entered right and in the correct account but the value is wrong (it’s
added instead of being subtracted or vice versa).
Illustration of Creditors Control account and Creditors List
ABC
Wholesale
R500
XYZ
Wholesale
R1 200
Suppliers/Creditors List
VEE
Wholesale
R300
BOOZER
Stores
R2 000
Creditors Control
2
EXAMPLE
Creditors Ledger of Ivory for the month ending 31 March 2020
ABC Wholesale
Debit
Mar
1
Credit
Balance brought forward
Balance
500
XYZ Wholesale
Debit
Mar
1
Credit
Balance brought forward
Balance
1 200
VEE Wholesale
Debit
Mar
1
Credit
Balance brought forward
Balance
1 200
General Ledger of Boozer Stores for the month ending March 2020
CREDITOR’S CONTROL ACCOUNT
Mar
2020
1
Balance
b/d
2 000
3
EXAMPLE 1: DEBTORS RECONCILIATON AND INTERNAL CONTROL
SCHUMANN WHOLESALERS
The information below was taken from the books of Schumann Wholesalers.
REQUIRED
1.1
Prepare a correct Debtors Control account for 31 March 2019 after adjusting for all errors
and omissions and balance the account.
(14)
1.2
Prepare a correct list of debtors as at 31 March 2019.
(16)
1.3
Provide ONE reason why should the Debtors Control account and the Debtors List
always agree?
(2)
1.4
The owner Paul Schumann is worried that debtors are not paying on time. List THREE
measures that he can put in place to ensure debtors pay on time.
(6)
1.5
Refer to the Debtors Control account and answer the following:
4.5.1
If the discount allowed was R35 720, how much was received from debtors for
the month of March?
(2)
4.5.2
Apart from interest charged, what else could appear as a journal debit? Provide
ONE item or answer.
(2)
4.5.3
Provide TWO possible reasons for the debit of R300 in the Debtors control
account.
(4)
4
INFORMATION
GENERAL LEDGER OF SCHUMANN WHOLESALER
BALANCE SHEET ACCOUNTS SECTION
Dr
Mar
Apr
1
Balance
b/d
31
Sales
DJ
Bank
CPJ
Journal
debits
GJ
1
Balance
b/d
DEBTORS CONTROL
89 560 00 Mar 31 Bank and
discount
allowed
270 000 00
Debtors
allowances
300 00
Journal credits
720
00
360 580
00
91 390
00
Balance
List of debtors as at 31 March 2019
NAME
Cooper
Baloyi
Hope
Smith
Williams
Debit
17 900
16 380
14 400
21 900
18 200
00
00
00
00
00
88 780
00
CRJ
266 040
Cr
00
DAJ
1 200
00
GJ
1 950
00
c/d
91 390
00
360 580
00
Errors and omissions discovered during the month:
A
The Debtors Control opening balance was overcast by R6 000.
B
The total column of the Debtors Allowances Journal was undercast by R210.
C
A credit sales invoice for R2 900 issued to Baloyi was correctly entered in the Debtors
Journal, but was incorrectly posted to the account of Smith.
D
A credit note of R520 for Cooper was not recorded at all.
E
A cheque of R5 600 received from Hope in full settlement of his account of R6 000 was
recorded correctly in the subsidiary journal. However the bookkeeper forgot
to record the discount in the account of Hope.
F
A credit note of R1 600 was correctly entered to the Debtors Allowances Journal, but was
incorrectly recorded as an invoice in the account of Williams.
G
Charged Baloyi R300 interest on his overdue account of R8 000. No entry has been made.
Total Marks
46
5
EXPECTED SOLUTION : DEBTORS RECONCILIATION AND INTERNAL CONTROL
1.1 DEBTORS CONTROL ACCOUNT
GENERAL LEDGER OF SCHUMANN WHOLESALERS
BALANCE SHEET ACCOUNTS SECTION
Dr
DEBTORS CONTROL
Balance
[89 560 6 000]
30 Sales
b/d
83 560
00
DJ
270 000
00
Bank (R/D)
CP
J
GJ
300
Mar 1
Journal
debits
[720 +
300]
Apr
1
Balance
b/d
Cr
CRJ
266 040
00
DAJ
1 930
00
00
31 Bank and
discount
allowed
Debtors
allowances
[1 200 +
210+ 520]
Journal credits
GJ
1 950
00
1 020
00
Balance
c/d
84 960
00
354 880
00
354 880
00
84 960
00
Mar
1 mark if all folios inserted
14
1.2 LIST OF DEBTORS AS AT 31 MARCH 2019
NAME
Cooper (17 900 – 520)
Baloyi (16 380 + 2 900 + 300)
Debit
17 380
One part correct
Hope (14 400 – 400)
19 580
14 000
Smith (21 900 – 2 900)
One part correct
19 000
Williams (18 200– 1 600 – 1 600)
One part correct
15 000
One part correct
84 960
16
6
1.3
Provide ONE reason why should the Debtors Control account and the
Debtors List always agree?
Any relevant answer 


1.4
The debtors control is a summary of the debtors list and the debtors list is
summary of the debtors ledger.
Both are prepared from the same source documents (transactions).
2
The owner Paul Schumann is worried that debtors are not paying on time.
List THREE measures that he can put in place to ensure debtors pay on time.
Any Three valid answers    (3x2)





Offer early settlement discounts.
Charge debtors interest on overdue accounts.
Sent letters of demand.
Send SMS’s.
Hand accounts over to debt collectors.
6
1.5.1
If the discount allowed was R35 720, how much was received from debtors
for the month of March?
R266 040 – R35 720 = R230 320
2
1.5.2
Apart from interest charged, what else could appear as a journal debit?
Provide ONE item or answer.
Any valid answer 


Transfer of a credit balance in the debtor’s ledger to the creditors ledger
Correction of errors
2
1.5.3
Provide TWO possible reasons for the debit of R300 in the Debtors Control
account.
Any two valid answers  


Refund to a debtor who over paid
A dishonoured cheque
4
Total Marks
46
7
ACTIVITY 1
The information below relates to Buhle Traders for October 2020.
REQUIRED:
1.1
Explain why the Creditors Control account balance and the Creditors list total should
be equal.
1.2
Refer to the Creditors Control Account (Information A) and Information C:
Show the corrections to the Creditors Control account by completing the table
provided. Use only positive figures in either the debit or credit column.
Calculate the correct Creditors Control balance on 31 October 2020.
1.3
Refer to Information B and C:
Prepare the correct Creditors List on 31 October 2020.
Show all workings next to the appropriate Creditor.
1.4
Buhle wants to improve the management of his creditors. Provide TWO internal
control measures that he can use to achieve his goal.
INFORMATION:
A.
The Creditors’ Control account before taking into account Information C:
Dr
GENERAL LEDGER OF BUHLE TRADERS
CREDITORS CONTROL
2020
Oct
31
Bank and discount
received
Total returns and
allowances
Journal debits
B.
CPJ
62 910
CAJ
3 510
GJ
2 250
2020
Oct
1
31
Balance
Credit
purchases
Journal credits
Cr
b/d
48 735
CJ
72 480
GJ
1 450
The incorrect Creditors' list on 31 October 2020:
CREDITORS
Green Stores
Becker Ltd
Suns Warehouse
Lamb Suppliers
Brown Stores
ZZ Distributors
Best Bakery
DEBIT
CREDIT
14 255
13 505
5 685
8 940
1 315
2 120
9 615
8
C.
ADDITIONAL INFORMATION
(i)
The total in the Creditors Journal was under-stated by R2 000.
(ii)
Due to a calculation error, the balance of Becker Ltd’s creditor’s ledger account
was reflected as R13 505 instead of R23 505.
(iii)
An invoice for goods bought from Suns Warehouse, R895, was recorded in the
Creditors' Journal as R985, and posted as such.
(iv)
A debit note of R960 was issued to Suns Warehouse for goods returned to them.
They did accept the returns but no entry was made in the books of Buhle Traders
for this transaction.
(v)
An invoice for R1 460 received from Brown Stores and correctly recorded in the
journals, was incorrectly posted to the creditors ledger account of Lamb
Suppliers.
(vi)
The Creditors’ Control column in the Cash Payments Journal included an amount
of R2 120 paid to ZZ Distributors for cash purchases.
(vii)
Merchandise of R1 285 was returned to Best Bakery and correctly entered in the
Creditors’ Allowances Journal. However, it was posted to Best Bakery's account
in the Creditors’ Ledger as a purchase.
9
ACTIVITY 2
The following information applies to Uzalo Traders on 30 June 2020. The debtors and creditors
control accounts were prepared by an inexperienced bookkeeper.
GENERAL LEDGER OF UZALO TRADERS
Dr.
2020
Jun
DEBTORS CONTROL ACCOUNT
01
30
Balance
Creditors
Allowances
b/d
22 880
CAJ
Cash Sales
2020
Jun
30
Cr.
CPJ
176
1 540
Bank (R/D)
Bank (Repayment to
debtors)
CPJ
88
CRJ
44 000
Sales
DJ
115 000
Bad debts
Bank (debtors
column)
GJ
440
Balance
c/d
58 476
CRJ
103 400
Sales Returns
DAJ
1 980
174 240
2020
Jul
01
Balance
b/d
Dr.
2020
Jun
174 240
58 476
CREDITORS CONTROL
30
Purchases
CJ
101 280
Journal debits
GJ
408
Balance
c/d
37 992
2020
Jun
01
30
Cr.
Balance
c/d
24 000
Discount column
Bank (Creditors
column)
CRJ
960
CPJ
99 120
Purchases
CPJ
15 600
139 680
139 680
2020
Jul
01
Balance
b/d
37 992
ADDITIONAL INFORMATION:
On 30 June 2020 the total of the list of debtors was R33 132 and the total of the list of creditors
R24 026. Accept that the opening balances of the control accounts were correct. In addition to
the obvious errors made by the bookkeeper in the control accounts above, an investigation
brought the following to light:
1. The creditors journal was overcast by R240.
2. An amount of R206 in the creditors journal was posted to the account of Bongani Suppliers
as R260 by mistake.
3. Transfer a credit balance of R40 on the account of G Gugu in the debtors ledger to her
account in the creditors ledger. (The bookkeeper had not done this yet).
10
4. A credit note for R110 was issued to F Fazlin in respect of merchandise returned by him,
but no entry has been made as yet.
5. Interest of R55 must still be charged on the overdue account of a debtor, S Shaun.
6. The receipts from debtors, R103 400 in the CRJ, included an amount of R44, recovered
from a debtor, R Rai, whose account had been written off as a bad debt during the previous
financial year. The error did not affect the debtors ledger however.
7. An entry in respect of sales returns of R132 was made correctly in the
debtors allowance journal, but posted to the debit side of the account of debtor L Lucas by
mistake.
11
7. SALARIES AND WAGES
DIFFERENCE BETWEEN SALARIES AND WAGES
SALARIES
Paid monthly, funds are transferred to the
employer’s bank account.

 The fixed salary is negotiated before the


employee starts his job.
 Usually there in no pay for overtime, but
employees can receive incentive bonuses,
housing subsidies or medical or car
allowance.

WAGES
Paid weekly, funds are transferred to :
o The employee’s bank account
o The employee can be paid in cash or
online using e wallet.
The rate is negotiated before the employee
starts his job and the following rates are
applicable :
o Hourly rate – paid for each worked
o Piece work rate – worker is paid according
to number of units produced.
Overtime is calculated added to the gross
wage.
Definition of Concepts for salaries and wages
Concept
Employer
Definition
A person or an institution that provides employment to others and pays
them for services rendered.
Employee
A person employed by the employer and paid for services rendered
Clock card
 A clock-card system is used to calculate the number of hours

worked.
Each employee is given a card which is inserted into a clock card
machine at the start and end of each working day.
Payslip/salary advice
A “payslip” is given to each employee, it reflects gross wage
(salary), deductions and net wage (net salary).
Rate of remuneration
Calculate an amount per hour/week at which an employee will be
remunerated, e.g. at a rate of R20 per hour.
Gross wage
It is the basic wage plus other payments such as overtime.
Net wage
Gross wage less deductions
Gross salary
It is the basic salary plus other payments such as bonuses.
Net salary
Gross salary less deductions.
Bonus /
13th cheque
 An employee can also receive a thirteenth cheque or bonus.
 The employer determines the bonus and it is usually calculated at a
percentage.
12
Contract of employment
It is a contract between the employer and employee it include:
o Personal information of employee
o
o
o
o
o Annual leave and sick leave
(name, ID number, home address)
Commencement date
Job title
Job description
Working hours
o
o
o
o
Salary scale
Contributions (pension fund, medical aid , etc)
Other allowances
Signature of employer and employee
Records to be kept by employer
Detailed records of each employee must be kept by the employer and they include :
o Records of work done (attendance registers, clock cards)
o Records of the calculation of gross and net pay
o Amount of tax deducted
o Employment contract
Employer has to register with the following institutions:
South African Revenue
Services (SARS)
 To pay SITE, PAYE, UIF and Skills Development Levy (SDL)
Department of Labour
 Regulate the South African labour market.
 Ensure that working environment is not harmful to the health and
well-being of those in the workplace.
DEDUCTIONS
PAYE
Pay As You Earn
 This tax is paid by the employee to the South African Revenue
Trade unions


Staff association


Services (SARS) and is calculated according to tax tables that
are issued by SARS.
The more he earns, the higher the tax rate.
A monthly contribution by employees to their respective unions
(Employers do not contribute towards this fund)
Association of employees that is formed to function as trade
unions it represents their members in discussions with the
management.
The associations aims at improving social engagement amongst
employees and at their professional growth or advancement.
(Employers do not usually contribute towards this fund)
A pension plan is a retirement plan in which an employer, and
often the employees, make contributions into a pool of funds set
aside for the workers' future benefit.
Compulsory deduction of 1% from the employees’
remuneration.
Pension Fund

Unemployment Insurance Fund
(UIF)

Medical Aid Fund
 Members belonging to a Medical Aid Fund make contributions
to the Fund and in return receive medical cover according to
the rules of the Fund
13
Contributions made by the employers :
Unemployment
Insurance Fund (UIF)
 The employer’s compulsory UIF, percentage contribution is currently

Medical Aid Fund
Contribution
1% of gross salary.
It is payable to SARS by the employer
(1% deducted from employee and 1% contributed by employer)
 The employer’s contribution to the Medical Aid fund according to the
employer’s policy.
 It is a compulsory scheme to develop the skills of the work force.. It
Skills Development Levy
(SDL)
encourages employers to train their staff.
 SDL is payable to SARS and is kept in a special fund.
(Only the employer contributes towards this fund – not
employees)
SALARY SCALES
 It shows the starting salary (notch) of the employee, annual increment and the future notch.
 The employee can see what his future increment and notches will be.
EXAMPLE 1 - SALARY SCALES.
Salary scale of H Kok
Notch: R80 000 X R3 000 – R92 000 X R4 500 – R105 500
EXPLANATION
Year 1 start with
Year 2 + R3 000 =
Year 3 + R3 000 =
Year 4 + R3 000 =
Year 5 + R3 000 =
Year 6 + R4 500 =
Year 7 + R4 500 =
Year 8 + R4 500 =
R80 000
R83 000
R86 000
R89 000
R 92 000
R96 500
R101 000
R105 500
R3 000 increase p.a. until R92 000 p.a. is reached
R4 500 increase p.a. until R105 500 p.a. is reached
ACTIVITY 1
Mogashoa Traders employed P Oka on 1 January 2016.
The following annual scale was agreed upon:
180 000 x 12 000 – 204 000 x 18 000 – 240 000
REQUIRED
Complete the following table:
Year
2016
2017
2018
2019
2020
Annual increase
Annual salary
Monthly salary
14
EXAMPLE 2
REQUIRED
Use the information to draw up the Wages Journal of Kgatle Traders for the week ended 9 April
2021.
INFORMATION

Kgatle Traders has a working week of 40 hours. Workers who work for more than 40 hours per
week are paid overtime at a rate of 1, 5 times the ordinary rate for the excess hours worked.


The basic rate for all workers is R20 per hour.
The employees worked as follows for the week ended 9 April 2021.
J Bronkhorst
46 hours
B Mpanza
35 hours
M.Qaka
43 hours
Deductions for the week ended 9 April 2021:
A. PAYE
20% of gross wage
B. Pension Fund
8% of the amount for normal time. Kgatle Traders contributes R1, 50 for each R1
contributed by the employees to Sizwe Pension Fund.
C. Medical Aid
Members pay R50 per week towards DOS Medical Aid Fund. Kgatle Traders contributes to
the medical aid on a Rand for Rand basis.
D. UIF
A deduction of 1% of normal wage is made by each employee and the business contributes
the same amount.
E. Trade union
All the employees are members of CTU trade union and R15 is deducted each week from all
employees.
15
Employee
J Bronkhorst
B Mpanza
M.Qaka
WAGES JOURNAL OF KGATLE TRADERS FOR THE WEEK ENDING 9 APRIL 2021
Normal time
Overtime
Deductions
Gross
Net
PenMediwage
Hrs
Amount Hrs
Amount
sion
PAYE cal aid
UIF
Union Total wage
40
800
6
180
980
64
196
50
8
15
333
647
35
700
0
0
700
56
140
50
7
15
268
432
40
800
3
90
890
64
178
50
8
15
315
575
2300
270
2570
184
514
150
23
45
916
1654
Employer’s contribution
PenMedision
cal aid
UIF
96
50
8
84
50
7
96
50
8
276
150
23
Overtime hours are multiplied by R30 (R20 X1.5)
This amount is
payable to
employees
The maximum norm time 40 hours
Pension deduction x1.5
= Pension contribution
64 x 1.5 =96
GENERAL LEDGER OF KGATLE TRADERS- 30 APRIL 2021
BALANCE SHEET SECTION
Pension Fund
Apr
9
Apr
30
Bank
CPJ
Total pension
of all the weeks
Apr
30
Bank
CPJ
Total medical
of all the weeks
Medical Aid Fund
Apr
9
Wages
Pension fund
contribution
WJ 184
WJ
276
Wages
Medical aid fund
contribution
WJ
WJ
5 790
2 700
8 490
SARS (UIF)
Apr
30
Bank
CPJ
Total UIF of all
the weeks
Apr
30
Bank
CPJ
Total SDL of
all the weeks
Apr
Apr
30
30
Bank
Bank
Apr
9
SARS (SDL)
Apr
9
SARS (PAYE)
Apr
9
CPJ
Total PAYE of
all the weeks
CPJ
Total PAYE of
all the weeks
Wages
SDL contribution
WJ
23
WJ1 No SDL in
this activity
Wages
Creditors for wages
Apr
9
Wages
WJ1
WJ1
514
1 654
NOMINAL ACCOUNTS SECTION
Wages
Apr
9
Sundry
Accounts
WJ1
2 570
Apr
9
Pension Fund
WJ1
Pension Fund Contribution
276
Apr
9
Medical Aid
Fund
WJ1
Apr
Apr
9
9
Medical Aid Contribution
150
UIF
Unemployment Insurance Fund contribution
WJ1
23
SDL
Skill Development Levy Contribution
WJ1
xxx
18
EXAMPLE 3
VAN NIEKERK TRADERS
REQUIRED
Use the information in the Salary Journal provided.

Transfer funds electronically on 28 February 2021 to settle the outstanding amounts.

Record the amounts in the Cash Payment Journal.
INFORMATION
SALARY JOURNAL OF VAN NIEKERK TRADERS FOR FEBRUARY 2021
SJ11
Gross
Deductions
salary
Net salary
Employee
Pension
PAYE
Medical
UIF
Total
Fund
aid
L Lindon
11 400
570
3 898,80
1 930
114
6512,80
4887,20
V Valley
17 100
855
5 848,20
1 930
171
8804,20
8295,80
K Kruger
12 800
640
4 377,60
1 930
128
7075,60
5724,40
41 300
2 065
14124,60
5 790
413
22392,60
18907,40
Employer’s contributions
Medical aid
Fund
900
900
900
2700
Pension fund
570
855
640
2065
UIF
114
171
128
413
SDL
114
171
128
413
Total
1698
2097
1796
5591
ANSWER
Doc
EFT
EFT
EFT
EFT
EFT
EFT
CASH PAYMENT JOURNAL OF VAN NIEKERK TRADERS FOR FEBRUARY 2021
day
Name of payee
f
Bank
Sundry accounts
Amount
f
Details
28
AA Pension Fund
4 130
4 130
AA Pension Fund
MM Medical Aid
8 490
8 490
MM Medical Aid Fund
Fund
SARS
15 363,60
826
SARS (UIF)
UIF+SDL+PAYE
413
SARS (SDL)
14 124, 60
SARS (PAYE)
Sundry employees
18 907,40
18 907,40
Creditors for salaries
CALCULATIONS
AA Pension Fund = R2 065 + R 2 065 = R4 130
MM Medical Aid Fund = R5 790 + R2 700 = R8 490
Payable to SARS
PAYE
UIF
UIF = R413 + R413 = R826
SDL
19
ACTIVITY 2
KOK TRADERS
Use the following information to prepare the salaries journal of Kok Traders for February 2021.
INFORMATION
Gross salaries per year:
B.Mpanza
R136 800
The following deductions were made:
Pension fund
5% of gross salary
Mahomed
R205 200
PAYE
36% of gross salary after pension
fund has been deducted
N.Naidoo
R153 600
Medical Aid
fund
UIF
R1 930 per month
1% of gross salary
The following contributions were made by KokTraders
Pension fund
Rand-for-rand basis
Medical aid fund
contributes R900 for each employee
UIF
1% of gross salary
SDL
1% of gross salary
20
QUESTION 3: CONCEPTS, SALARIES AND WAGES AND ETHICS
(21 marks; 13 minutes)
3.1 CONCEPTS
Indicate whether the following statements are TRUE or FALSE.
3.1.1
The acronym SDL stands for Skills Development Levy.
3.1.2
SDL is paid by employers whose payroll exceeds R300 000.
3.1.3
UIF is normally 1% of the net salaries.
3.1.4
Net salaries are also known as creditors for salaries.
3.1.5
PAYE must be paid over to the Treasury.
3.2
SALARIES AND WAGES
You are provided with information extracted (taken) from the Wages Journal and
Salaries Journal of Ndebele Dealers for May 2021.They have employees that are
paid weekly and monthly.
REQUIRED
3.2
3.3
3.4
Calculate the missing amounts in the Wages and Salaries Journal for May 2021.
(10)
Answer the following questions:
3.3.1
Provide the double entry for the Pension Contributions in the Wages
Journal.
(2)
3.3.2
The net salary calculated in 3.2.5 of the Salaries Journal would be posted to
Salaries Account in the ledger and which other account?
(1)
The owner Mr Thomas Ndebele decided that he would not pay the money over for
PAYE this month as he needed the cash, he will make a double payment the next
month. Why are you against the decision he took? Provide consequences (result)
for this action in ONE point.
(3)
INFORMATION A
WAGES JOURNALS OF NDEBELE DEALERS FOR MAY 2021
Week
ended
Gross
Wage
DEDUCTIONS
Pension
Fund
Medical
Aid
Fund
UIF
PAYE
Total
21 May
2021
R2 874
R160
R240
R28.74
R809
3.2.1
28 May
2021
R3 078
R164
R240
R30.78
R882
Net
Wage
EMPLOYERS CONTRIBUTIONS
Pension
Fund
Medical
Aid
Fund
UIF
SDL
3.2.2
R320
R240
3.2.3
R28.74
R320
R240
R30.78
21
INFORMATION B
SALARIES JOURNAL OF NDEBELE DEALERS FOR THE MONTH ENDED 31 MAY 2021
Gross
Salary
DEDUCTIONS
Pension
Fund
Medical
Aid
PAYE
UIF
Total
Net
Salary
CONTRIBUTIONS
Pension
Fund
Fund
R21 110
R1 480
R1 450
Medical
Aid
UIF
SDL
R2 111
3.2.6
Fund
3.2.4
R2 111
R13 261
3.2.5
R2 960
R2 175
INFORMATION C
 The employer contributes on a rand for rand basis towards UIF.
 The employer contributes 1% of gross salaries towards the SDL.
Total marks
21
22
8. CONCEPTS AND CASH TRANSACTIONS
YEAR-END PROCEDURE
Pre-adjustment trial balance
On the last day of the financial year a trial balance is drawn up from
the balances of the General ledger accounts. It is a summary of all
transactions during the financial year. It is drawn up before any
changes have been made
Adjustments
(General journal entries)
Changes are made to certain amounts to reflect the correct position
for the 12 months.
Post to
the ledger
Post-adjustment trial balance
It is a list of balances from the general ledger accounts after
changes (adjustments) have been made
Closing transfers
(General journal entries)
The accounts in the nominal accounts section are income and
expense accounts and are applicable for a specific financial year.
They are all closed off at the end of the financial year.
Post to
the ledger
Final accounts
All nominal accounts are closed off to the Final accounts.
Final accounts consist of:
Trading account
It is drawn up to calculate the
gross profit
Subtract the cost of sales from the sales.
Profit and Loss account
It is drawn up to calculate the
net profit
Add incomes to the gross profit and subtract the
expenses from this amount.
Net profit is transferred
to the Capital account
Post-closing trial balance
It is drawn up after all expenses and incomes have
been closed off.
It consists of only assets and liabilities.
(balance sheet accounts)
23
EXAMPLE 1:BAD DEBTS
REQUIRED
1 Show the following transaction in the General Ledger and General Journal
2 Show the effect on the accounting
INFORMATION
EXTRACT FROM PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2021
Debtors control
100 000
Bad debts
500
Adjustment
 The debt of S Smit, R200 must still be written off as irrecoverable.
ANSWER
GENERAL LEDGER OF ZIZI TRADERS
Feb 28 Balance
b/d
Debtors Control
100 000
Feb
28 Journal credits /
Bad debts
200
Bad Debts
Feb 28 Total
S Smit / Debtors
b/d
500
200
GENERAL JOURNAL OF ZIZI TRADERS
DEBIT
200
Bad debts
S Smit (Debtors control)
Write off the account of S Smit as irrecoverable
Account debit
Bad debts
Show the effect on the accounting equation
Accounting equation
Account credit
A
OE
Debtors control
-200
-200
CREDIT
200
L
24
EXAMPLE 2 :BAD DEBTS RECOVERED
REQUIRED
1 Show the following transaction in the General Ledger
2 Show the effect on the accounting equation
INFORMATION
EXTRACT FROM PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2021
Debtors control
100 000
Bank
7 000
Bad debts
500
ADJUSTMENT
An amount of R250 was received on 27 February from B Baloyi, a debtor whose debt had previously been
written off. The transaction has not yet been recorded.
ANSWER
GENERAL LEDGER OF ZIZI TRADERS
Bank
Feb
28
Balance
Bad debt
recovered
b/d
7 000
250
Feb
28
Balance
b/d
Debtors Control
100 000
Feb
28
Balance
b/d
Bad Debts
500
Bad Debts Recovered
Bank
Account debit
Bank
Show the effect on the accounting equation
Accounting equation
Account credit
A
OE
Bad debt recovered
+250
+250
250
L
The Bad debt account and Debtors Control account are not affected by the transaction – the
debt of the debtor has already been written of.
25
TRADING STOCK DEFICIT AND TRADING STOCK SURPLUS
 The business making use of the perpetual (or continuous) inventory system, keeps an ongoing (continuous)

record of all stock items purchased and sold.
Therefore, the balance of the Trading stock account at the end of the financial year represents the cost
price of the trading stock on hand.
An example of a Trading Stock account
Opening balance
Mar 1
Balance
31 Bank
Creditors control
Cost of sales
b/d
CPJ
CJ
DAJ
Apr
c/d
1
Balance
TRADING STOCK
300 000 Mar 31 Drawings
10 000
Cost of sales
20 000
Creditors control
2 000
Cost of sales
Balance
332 000
Closing balance
239 000
GJ
DJ
CAJ
CRJ
c/d
10 000
50 000
3 000
30 000
239 000
332 000
 Our stock on hand on 31 March according to records is R239 000
 The business should conduct physical stock count to verify if the actual stock agrees with the balance
reflected in the trading stock account.
Stock Deficit
When the physical count is less than the physical count, the shortage is called a deficit and it is a loss to the
business.
Possible reasons for a deficit :
 errors made during the year (like incorrect mark-ups)
 theft of stock
 damage / broken stock
 stock destroyed
 errors in stock-taking
Stock surplus
When the physical count is more than the physical count, the surplus in stock will be regarded as income
Possible reasons for a surplus :
 errors made during the year ( incorrect mark-ups)
 errors in stock-taking
 omissions of stock purchases in the Trading stock account
26
EXAMPLE 3 :TRADING STOCK DEFICIT
REQUIRED
1 Show the following transaction in the General Ledger and General Journal
2 Show the effect on the accounting equation
INFORMATION
EXTRACT FROM PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2021
Trading stock
63 800
Adjustment
No entry has been made for an invoice received from Ntini Stores for goods purchased on credit, R1 080.
Physical count showed stock for R63 000.
SOLUTION
Feb 28 Balance
Creditors control
b/d
Mar
c/c
1
Balance
Feb 28 Trading stock
Trading Stock
63 800
Feb
28 Trading stock deficit
1 080
Balance
64 880
63 000
??
c/c
1 880
63 000
64 880
Trading Stock Deficit
1 880
GENERAL JOURNAL OF ZIZI TRADERS
DEBIT
CREDIT
Trading stock
Ntini Stores / Creditors control
Goods purchased on credit
Trading stock deficit
Trading stock
Trading stock deficit as per stock count
Show the effect on the accounting equation
Account debit
Trading stock
Trading stock deficit
Account credit
Creditors control
Trading stock
Accounting equation
A
OE
L
+1080
+1080
- 1880
- 1880
27
EXAMPLE 4:TRADING STOCK SURPLUS
REQUIRED
1 Show the following transaction in the General Ledger and General Journal
2 Show the effect on the accounting equation
INFORMATION
EXTRACT FROM PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2021
Trading stock
63 800
ADJUSTMENT
A credit note received from creditor B Baloyi Stores for goods returned, R700 has not yet been entered.
Physical count showed stock for R64 000.
ANSWER
Feb 28 Balance
Trading stock surplus
(unknown amount )
Mar 1
Balance
b/d
??
b/d
Trading Stock
63 800
Feb 28 Creditors control
Balance
(given)
900
64 700
64 000
c/d
700
64 000
64 700
Trading Stock Surplus
Feb 28 Trading stock
GENERAL JOURNAL OF ZIZI TRADERS
DEBIT
B Baloyi Stores / Creditors control
700
Trading stock
Credit note for goods returned to creditor
Trading stock
Trading stock surplus
Trading stock surplus as per stock count
Account debit
Creditors control
Trading stock
900
CREDIT
700
900
900
Show the effect on the accounting equation
Accounting equation
Account credit
A
OE
L
Trading stock
- 700
- 700
Trading stock surplus
+ 900
+ 900
28
CONSUMABLE STORES ON HAND
 When a business buys packing material, stationery and consumables, they are treated as expenses.
 According to the accrual principle, only the value of the stationery, packing materials and consumables

USED during the year, may be shown as expenses when calculating the net profit for the financial year.
At the end of the financial year the trial balance will indicate total expenditure for the financial year for
stationery, packing material and consumables.
 At the end of financial period when the stock count is conducted, the consumables that have not been
used and cannot be shown as expenditure in this financial year. It will only be used in the next
financial year.
 The consumables, stationery and packing material not used is called consumable stores on hand. It
means that these consumable stores on hand which was part of expenses, are now converted to assets.
EXAMPLE 5
REQUIRED
1 Show the following transaction in the General Ledger and General Journal
2 Show the effect on the accounting equation
3 Show how these accounts will appear in the Financial statements
INFORMATION
EXTRACT FROM PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2021
Packing material
1 960
ADJUSTMENT
Physical stock count showed packing material of R180 on hand.
29
ANSWER
1 Show the transaction in the General Ledger and General Journal
GENERAL LEDGER OF ZIZI TRADERS
Expense account
Feb 28 Balance
b/d
Feb 28 Packing material
Packing material
amount packing material
USED
Packing Material
1 960
Feb 28 Consumable stores
on hand
Profit and loss acc
1 960
***1 780
1 960
Balance sheet account (Asset )
Consumable Stores on Hand
180
Profit and Loss
***1 780
GENERAL JOURNAL OF ZIZI TRADERS
DEBIT
Consumable stores on hand
180
Packing material
Packing material on hand as per stock count
2
180
CREDIT
180
Show the effect on the accounting equation
Account debit
Consumable stores on hand
Account credit
Packing material
Accounting equation
A
OE
+180
+180
L
0
3 Show how these accounts will appear in the Financial statements
NOTE 4 - INVENTORIES
Trading stock
Consumables stores on hand
xxx
180
30
CAPITALISED INTEREST ON LOAN
LOAN FROM BANK
 When the bank grants a loan to the business, the interest rate and monthly repayments are
agreed upon.
When the loan amount is received:
Debit - Bank account (Cash Receipt Journal)
Credit - Loan account
Assets increase
Liabilities increase
Interest
 The bank calculates monthly interest, which is added directly to the loan account - that is called
the “capitalization of interest”
 Interest on a loan is a finance cost – therefore an expense for the business.
Monthly instalments
 The monthly instalments include the capital repayments and the interest.
When monthly loan repayments are made:
Debit - Loan account
Credit - Bank account (Cash Payment Journal)
Liabilities decrease
Asset decrease
Financial year-end
 At the end of the financial year, the loan statement is received from the bank. This statement
shows the capital amount of the loan, the repayments made during the year and the monthly
interest charged by the bank.
 Some of the banks can arrange to send the statement every three months or a period less than a
year which is regarded as suitable for the client or loan account holder.
Procedure for determining and recording the amount of interest
 Reconcile the Loan account in the General ledger with the Loan statement received from the
bank.
 Recording of interest in the General Journal as follows:
Debit - Interest on loan
Credit - Loan account
Expense increases – Equity decrease
Liabilities increase
31
EXAMPLE 6
Zizi Traders received a loan on 1 March 2020 from ABC Bank for R200 000 at an interest rate of
10% p.a.
The loan repayments amount to R5 000 per month payable on the 30th of each month, starting 31
March 2020.
Loan statement received from ABC Bank on 28 February 2021.
ABC BANK
Loan statement of ZIZI TRADERS for the period 1 March 2011 to 28 February 2021
DATE
DEBIT
CREDIT
BALANCE
01/03/2020
Balance
240 000
31/03/2020
Interest
2 000
238 000
Deposit
5 000
233 000
30/04/2020
Interest
1 942
234 942
Deposit
5 000
229 942
30/05/2020
Interest
1 916
231 858
Deposit
5 000
226 858
30/06/2020
Interest
1 890
228 748
Deposit
5 000
223 748
30/07/2020
Interest
1 865
225 613
Deposit
5 000
220 613
30/08/2020
Interest
1 838
222 451
Deposit
5 000
217 451
30/09/2020
Interest
1 812
219 263
Deposit
5 000
214 263
30/10/2020
Interest
1 786
216 049
Deposit
5 000
211 049
30/11/2020
Interest
1 759
212 808
Deposit
5 000
207 808
30/12/2020
Interest
1 732
209 540
Deposit
5 000
204 540
31/01./2021
Interest
1 705
206 245
Deposit
5 000
201 245
28/02/2021
Interest
1 677
202 922
Deposit
5 000
197 922
INFORMATION
Information from the Trial balance of Zizi Traders
Trial balance on 28 February 2021
Debit
Loan: ABC Bank
Credit
180 000
ADJUSTMENT
Determine the amount of interest paid on the loan from ABC Bank. The loan statement from the
bank showed a closing balance of R197 922 on 28 February 2021. Zizi Traders made monthly
repayments of R5 000 each.
32
CALCULATIONS
LOAN: ABC BANK
Feb
Feb
28
28
Bank
(12 x R5 000)
Balance
Loan: ABC
Bank
60 000
197 922
257 922
c/d
Mar
1
INTEREST ON LOAN
17 922
Feb
28
Balance
Interest on loan
b/d
Balance
c/d
Profit & loss
240 000
17 922
257 922
197 922
17 922
OR
240 000 -60 000 0R (5 000x12) =180 000
Balance
c/d
LOAN: ABC BANK
197 922
Mar
1
Balance
Interest on loan
b/d
Balance
c/d
197 922
Feb
28
Loan: ABC Bank
INTEREST ON LOAN
17 922
Feb
28
Interest on loan
PROFIT AND LOSS
17 922
Profit & loss
Closing transfer
180 000
17 922
197 922
197 922
17 922
GENERAL JOURNAL OF ZIZI TRADERS
Interest on loan
Loan: ABC Bank
Interest on loan brought into account
DEBIT
17 922
CREDIT
17 922
33