TERM 1:

CONTENT AND METHODOLOGY

ACCOUNTING
GRADE 10

P. GOVENDER / P. FOUCHE / FREE STATE TEACHERS

SES: BCM SUBJECTS
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

TERM 1: PROGRAMME AS PER THE ANNUAL TEACHING PLAN

TIME TOPICS
WEEK 1 – 2 Introduction and Induction
Revision of content covered in GET (Grade 8/9)
WEEK 3 – 6 Cash Transactions:
Documents and Journals (CRJ, CPJ and PCJ)
General Ledger and Trial Balance
Accounting Equation
WEEK 7 – 10 Credit Transactions and Combined Activities.
Documents and Journals (DJ, DAJ, CJ, CAJ, CRJ, CPJ)
GJ – including corrections of errors
Debtors ledger, Creditors Ledger, General Ledger
Trial Balance and Accounting equation
Integration Indigenous bookkeeping, Internal controls and Ethics
Unit 1: Presentation
Formal Assessment
Unit 2: Controlled Test 1

IDENTIFYING THE GAPS

PRIOR KNOWLEDGE: EMS CONTENT

Grade 8:  Basic concepts, terminology

 Cash transactions of a service business
Financial Literacy  Documents, Journals, General Ledger, Trial Balance
 The Accounting Equation (A = O + L)
Grade 9:  Cash transactions of a trading business
 Journals, General Ledger, Trial Balance
Financial Literacy  Credit sales transactions: DJ, DAJ, CRJ, DL, GL
 Credit purchases transactions: CJ, CAJ, CPJ, CL, GL
 General Ledger, Trial Balance
 Accounting equation

Page. 2
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Assessing Prior Knowledge: Revision

Fee Income Net Worth

Assets
Sales Liabilities

Profit Trading Business

Expenses Capital
Owner’s Equity
Credit
Assets
Drawings Debit
Loss
Income Trading Stock
Service Business

Explain the terms/concepts in your own words

ACTIVITY 1:

Provide a suitable definition (explanation) for each of the following terms:

1.1 Fixed asset

1.2 Current liability
1.3 Debtor
1.4 Creditor
1.5 Gross profit
1.6 Cost price
1.7 Profit mark-up %
1.8 Investment
1.9 Transaction
1.10 Accounting

ACTIVITY 2:

Place the following items in the correct boxes:

NON-CURRENT NON-CURRENT CURRENT

CURRENT ASSET INCOME EXPENSE
ASSET LIABILITY LIABILITY

2.1 Sales 2.2 Creditors 2.3 Cash-float

2.4 Vehicles 2.5 Debtors 2.6 Wages
2.7 Bank Overdraft 2.8 Equipment 2.9 Rent Income
2.10 Stationery 2.11 Trading Stock 2.12 Telephone
2.13 Mortgage loan 2.14 Loan: BB Bank 2.15 Interest on loan
Page. 3
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 3: The Accounting Equation.

Calculate the missing amounts on the table provided:

NO OWNER’S EQUITY ASSETS LIABILITIES

3.1 325 550 * 125 600
3.2 * 752 850 352 800
3.3 579 750 878 950 *
3.4 688 000 * 276 000

ACTIVITY 4: Analyzing transactions.

Analyse the following transaction according to the headings on the ANSWER SHEET.
Note that the Bank balance is favourable for all transactions.

Example: Paid the water and electricity account by EFT, R2 360

ACCOUNT
NO JRL DOCUMENT ACCOUNT DEBITED ASSETS EQUITY LIABILITIES
CREDITED
E CP Water and
EFT record Bank - 2 360 - 2 360 0
g J electricity

TRANSACTIONS:

4.1 The owner contributed additional capital, R120 000. Made an EFT into business account.
4.2 Issued EFT to purchase a computer from BB Tech, R7 500.
4.3 Made an EFT payment to Telkom for the monthly telephone account, R1 240.
4.4 Service fees received from customers, for the week amounted to R7 730.
4.5 The owner use the business EFT to pay his personal insurance account, R260.
4.6 Bought files, paper and markers for office use, R330. Paid by EFT to CNB Stores
4.7 Received R6 500 from the tenant, for the monthly rent.
4.8 Issued EFT to RWT Traders , R12 540, for trading goods purchased.
4.9 Drew cash from ATM to pay wages, R500.
4.10 Cash sales, R6 000 (mark-up on cost, 50%)

Page. 4
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

INDIGENOUS BOOKKEEPING

 This topic is not for examination purposes. The content covered, especially the calculations, must be
integrated into all relevant topics of the syllabus.

The informal sector is part of our daily lives. In our communities, there are usually a people selling
something of need next to where we live, work, and entertain ourselves. We buy from flea markets,
spaza shops, from people selling outside schools, hospitals and on street corners.

Points for discussion:

1. Is there a need for the informal sector?
2. How is this sector different from the formal sector?
3. How does the government (your municipality) control this sector?

ACTIVITY 5: Calculations

Calculate the missing amounts in the table. Show all workings.

COST PRICE % MARK UP SELLING PRICE GROSS PROFIT

5.1 76 300 25%  
5.2 22 600  29 380 
5.3   62 300 26 700
5.4  50%  9 600
ACTIVITY 6:
Michael’s mother buys and sells fruits, as a street vendor. She employs one assistant who is paid R40
per day. During the week, the following records were presented to you.
Day Purchases Sales for the week
1 5 pockets oranges @ R36 a pocket. All the items purchased were sold, at the
120 bananas @ R20 per dozen following selling prices:
2 12 kg grapes at R22 a kg
2 boxes apples @ R 120 per box Oranges: 20 in a pocket at R3 each.
Bananas: R3 each
3 2 boxes pears @ R90 a box
Apples: 50 in a box at R3 each.
10 pockets oranges @ R40 a pocket
Pears: 40 in a box at R3 each.
4 NIL Grapes: R15 for 500 grams.
5 144 bananas @ R28 a dozen
3 boxes apples @ R120 per box

Calculate the week’s profit/loss. Show detailed workings.

Page. 5
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ETHICS, INTERNAL CONTROLS AND GAAP

 Most textbooks will devote entire chapters on these topics.

 Experience has shown that these topics are never tested on its own but is always integrated with
the different topics, were relevant and applicable.
 The revised ATP takes this into account, and does not allocate specific time for these topics.
 Teachers are expected to incorporate this at appropriate stages throughout the syllabus.
BRIEF SUMMARY:
Ethics: Guidelines designed to specify acceptable behavior; set of rules; knowing the
difference between what is right and what is wrong. Generally, a reflection of upbringing,
way of life; socially acceptable.
Internal controls: Processes/procedures applied by the business to ensure effective and efficient
operation of the different functions; complying with the laws of the country;
safeguarding assets and other business interests against theft, miss-use and
fraudulent activities; ultimately ensuring that financial statements are reliable.

The Accounting Cycle

Daily activities of buying, selling, ordering, paying, receiving, depositing,

Transactions
transferring, investing, cash, credit…..

Official record of transactions; evidence.

Documents
Source; original, duplicate

Book of original entry.

Completed on a monthly basis.
Journals
For specific types of transactions (special); CRJ, CPJ, CJ, DJ…..
General Journal.

General Ledger: Balance Sheet accounts and Nominal accounts

Ledger
Debtors Ledger and Creditors Ledger (Subsidiary ledgers)

Summary of General Ledger accounts.

Trial Balance
Check the correct application of the double-entry principle (posting)

Income Statement (Statement of Comprehensive Income)

Financial Financial performance (Did we make a profit or a loss)
Statements Balance Sheet (Statement of Financial Position)
Financial position (Our assets, liabilities and equity)
Page. 6
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

CASH RECAP:
TRANSACTIONS

Cash Register Tape

Receipts Duplicate Receipt Cash Receipts Journal (CRJ)
Cash Bank Statement
Transactions EFTs
Payments Cash Payments Journal (CPJ)
Bank Statement
Credit ? ? ?

Points for discussion: * Recording procedure: format of the journals

*Types of accounts: Balance Sheet accounts and Nominal accounts
*Folio references.
Practice:

Mzwi Traders sells their products at a mark-up of 25% on cost price.

REQUIRED:
Record the following transactions in the Cash Receipts Journal and Cash Payments Journal.
Insert your own document numbers. Deposits are made once daily.
TRANSACTIONS FOR JANUARY 2019
1 The owner, Mzwi, deposited R600 000 into the current bank account of the business.
4 Purchased a Desk and Laptop form MM Designers and paid by EFT, R18 000.
Purchased Trading Stock from Mandla Stores for R14 000. Received a 10% trade discount,
7
and paid the amount due, by EFT.
10 Sold goods as per CRT1 for cash, R16 800
Received bank notification from Mzwi, R90 000, being additional capital contribution.
13 Drew cash from ATM to pay wages, R2 800
Purchased stationery for R400 from Eveline Papers and paid by EFT.
16 Purchased a new vehicle from Evan Motors and paid by EFT, R340 000
19 EFT payment to Telkom to pay the telephone for the business, R650 and the owner, R840.
22 Cash drawn to pay wages, R2 800
Purchased Trading Stock from Mandla Stores for R24 000. Issued EFT for the amount.
25 Received cash for trading stock sold, R32 000
Received an EFT from Winnie Gifts for rent for the month, R12 000.
31 Issued EFT to pay Buffalo Stores for files, pens and markers purchased, R2 400.
Paid the salary of the manager, J Matata, R15 000, via EFT.
.

Page. 7
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Points for discussion:

 Headings of Journals: Name of business, month, folio.

 Documents and details.
 Use of columns and sundry accounts sections.
 Transactions on same day.
 Calculations: cost of sales, trade discount.

Calculate the cost of sales: Sales, R21 700; mark-up%, 75%

Sales, R40 960; mark-up%, 60%

Calculate amount payable: Invoice total, R14 800; trade discount, 5%

Invoice total, R22 200, trade discount, 7,5%

Additional Cash
Transactions
In addition to the transactions covered in Grade 9, the following must be included:

Credit/Debit card CRJ Customers feel that this is a safe and convenient way to pay
for their cash purchases (Sales).
Bank Charges CPJ Such as service fees, cash deposit fees, levies, transaction fees
Interest on overdraft CPJ Interest on bank overdraft facilities (Bank has a credit balance)
Debit order payments CPJ Bank makes direct payment of monthly accounts.
Interest income CRJ Interest earned on favourable balance on current account.
Carriage on trading CPJ Transport cost to deliver goods to the store, or additional
goods purchased charges incurred to get the goods to the business.
Trade discount CPJ Discount on total invoice granted by suppliers usually for large
purchases or loyalty (good customer relations).
Loans received CRJ A non-current liability. Borrowed capital. Need of additional
funds.
Loans repaid CPJ Usually a fixed monthly instalment, including interest if
interest is capitalised.
Interest on loan CPJ Cost of borrowing – expense. Usually a percentage.
Capitalised for mortgage loans.
Fixed deposit - invested CPJ Investing additional funds to earn interest
Interest on fixed deposit CRJ Income earned by the investment. Usually a percentage
Fixed deposit matures CRJ Receiving the initial investment back at the end of its
investment period. It may be re-invested if funds not needed.

Page. 8
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Transactions involving Debtors and Creditors (to be discussed further under credit transactions)
Receipts from debtors CRJ Receipts from debtors (instalments) according to the credit
and discount allowed terms; in cash, cheques, EFTs
Payments to creditors CPJ Payments to creditors (instalments) according to credit terms.
and discount received Cheques or EFTs.
Reinforce:
 Emphasise the source documents:
 The use of additional columns, the Sundry accounts, names of ledger accounts.
 Discussion on modern trends: internet banking, EFTs, less use of cheques, accounting software.
ACTIVITY 7: Cash Journals
The following information was extracted from the records of Calibre Traders for May 2018.
REQUIRED:
Enter the following transactions Cash Receipts Journal and the Cash Payments Journal for May 2018.
Note that the necessary columns are already indicated in the journals.
Do not total the journals. Insert your own document numbers.
INFORMATION:
Transactions for May 2018:
2 Issued EFT to Telkom, to pay the April 2018 telephone account, R860.
3 Received a bank notification from Bella Bank for R60 000.
This was a loan negotiated in April 2018 at 11%p.a. interest.
4 Issued EFT to BBGT Suppliers for trading goods purchased, R12 400. This was subject to a
trade discount of 5%.
5 Invested R12 000 in a Fixed Deposit at 9 %p.a. interest, at Dwe Bank.
6 Cash sales for the week, R3 990 (goods marked up by 50% on cost)
Issued a receipt to X. Yonda for R1 500 being the monthly rent.
7 Issued EFT for R320 to BB Transport for the delivery of the goods purchased on the 4 th
9 Issued EFT to XL Bazaars for the following: Trading goods, R3 210 and a computer for office
use, R7 990.
12 Made an EFT to Bella Bank for R2 875. This was for the monthly instalment on the loan
received on 3rd above, together with interest for one month.
28 Statement received from Dwe Bank showed a deposited for interest on investment (see 5 th)
for one month.
29 Bank statement received from ST Bank, showed the following:
 Service fees, R35; cash deposit fees, R85; credit card levies, R25; Interest on overdraft, R50.
 Stop order payment to VV Insurers for the insurance on the owner’s car, R230.
Use additional activities from textbooks or study guides depending on level of understanding achieved.

Page. 9
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Posting to the Ledger

Concepts: Debit and Credit

The double-entry principle
Balance sheet accounts and Nominal accounts
The Accounting Equation
RECAP:
ASSETS = OWNER’S EQUITY + LIABILITIES

Owner’s Equity = Capital + Net Profit/Loss – Drawings

Net Profit/Loss = Income – Expenses
The expanded Accounting Equation:

ASSETS = OWNER’S EQUITY + LIABILITIES

= Capital + Income – Expenses – Drawings + LIABILITIES
ASSETS + Expenses + Drawings = Capital + Income + LIABILITIES
A+E+D = C+I+L
Debits Credits

List of Accounts under each category:

ASSETS QWNERS EQUITY LIABILITIES
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
Increase (+) Decrease (-) Decrease (-) Increase (+) Decrease (-) Increase (+)
Land and Building Drawings Loans
Vehicle Capital Mortgage Bonds
Equipment Income: Creditors control
Fixed Deposit Sales Bank overdraft
Savings account Rent Income
Trading stock Interest on fixed deposit
Debtors control Commission income
Bank Interest on current account
Cash float Interest on savings account
Petty cash
Expenses:
Cost of sales
Salaries and wages
Water and electricity
Stationery
Packing material
Rent expense
Insurance
Bank charges
Telephone
Interest on bank overdraft
Interest on loan

Add new accounts to the list as new topics are introduced.

Page. 10
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 8:

J. Zulu started a business, JZ Stores. This is a general dealer selling convenience goods to the
residence of the community.

REQUIRED:

8.1 Complete the CRJ and CPJ for March 2018.

Detail columns are provided. Insert your own document numbers.

8.2 Post to ALL accounts in the General Ledger.

8.3 Prepare a Trial Balance to verify your posting.

TRANSACTIONS :
4 Cash sales for the week, R2 240 (cost of sales, R1 960)
6 Took delivery of stock purchased from Buggie Stores, R22 260. Issued EFT.
Issued EFT to Speedy Ltd for R1 200, for transport of the above goods.
7 Received an EFT from BB Bank for R30 000, being a loan that was negotiated earlier.
10 Cash sales for the week, R2 760 (cost of sales, R2 020)
The owner contributed R15 000 additional capital.
16 Cash withdrawn to pay wages, R2 400.
17 Issued an EFT to BNN Stores for stationery purchased, R1 520.
19 Purchased trading goods from NYT Traders and paid by EFT, after receiving a 5% trade
discount. Invoice total, R8 400 (before trade discount).
20 Bought the following from MYTO Traders, and paid by EFT:
 Computer, R4 220
 Files and clipboards, R320.
21 Cash sales for the week, R2 580 (goods are marked up by 20% on cost)
Received R2 450 from A. Brown for the monthly rent.
24 Cash withdrawn to pay wages. Workers receive a 10% increase from previous amount.
28 The bank statement from LK Bank showed the following additional entries:
Service fees, R40; cash handling fees, R65; ATM charges, R22 and credit card levies of R88.
30 Sent an EFT to BB Bank to pay R2 000 towards to loan as well as interest on loan for one
month at 12%p.a.
Invested R10 000 in a fixed deposit at 9%p.a. interest, at LK Bank, via EFT.

Page. 11
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Petty cash

Explanation and Reason:

A business may decide to keep a cash amount on hand to make minor (small) payments to certain
service providers that may not accept EFTs or do not have banking accounts. This may also be a
savings on bank charges (although it is low on online banking).
The way this is done:
 The business appoints a petty cashier who controls the cash and ensure that documents and a
journal is kept (PCJ).
 The source document is a voucher (supported by slips from service providers).
 Some expenses may require an authorization from a senior manager.
 A cash amount is determined for each month. Cash is withdrawn (from bank or ATM) – a CPJ
entry is necessary, and handed to the petty cashier. The business may decide on a fixed amount
each month, e.g. R500, or to use the IMPREST SYSTEM.
 The Imprest System means that the petty cash balance at the beginning of each month must be
the same (fixed), so if R478 of the R500 is spent, the petty cashier will receive R478 at the
beginning of the following month.
 Information from the PCJ is then posted to the General Ledger.

ACTIVITY 9:
REQUIRED:
Prepare the Petty Cash Journal of XM Traders for July 2018.
INFORMATION: Petty cash imprest amount, R3 500.
Transactions during July 2018:
Date Details Voucher Amount
4 Bought postage stamps 86 R250
7 Paid for transport on goods sold 87 R300
8 Paid casual wages 88 R270
10 Bought refreshments 89 R120
12 Paid for repairs to computer 90 R400
17 Donation to the local high school 91 R220
20 Bought wedding gift for typist 92 R280
21 Paid casual wages 93 R310
23 Paid for petrol for vehicles 94 R200
26 Bought envelopes 95 R80
28 Paid parking fine on behalf of the owner 96 R150
29 Bought detergents 97 R260

* Discuss the Petty Cash Account. Use additional activities from textbooks.
** Factor in the Internal control of cash and ethical issues at this point
Page. 12
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

INTERNAL CONTROL FOR CASH TRANSACTIONS

 Division of duties: Separate the duties of persons receiving from the person making payments.
 Cash received must be deposited/banked on a daily basis, to mirror the journals.
 Passwords for electronic payments must be safeguarded.
 Receipts and EFTs must be recorded promptly into the journals and posted accordingly.
 Journals should be totalled at the end of the month and reconciled with the bank statement.
 Documents must be signed by the person authorized, or authorising.
 Quotations must be received for large expenditure items.
 Communication with banks – regular notifications (SMS) of transactions.

INTERNAL CONTROL FOR STOCK

 Separation/Division of duties.
 Structured ordering procedures. Only authorized personnel.
 Procedure when goods are received: checked against the invoice received.
 Stock must be kept is a safe and secure environment.
 Stock must be physically checked on a continuous basis. Also against documents/records.
 Regular and random stock-take.

INTERNAL CONTROL OF ASSETS

 All assets purchased must be recorded in asset register.
 Assets must be stored/kept in a safe and secure environment.
 Regular checks must be done to ensure that they are in a good working condition.
 Service plans and maintenance contracts. Also control the use of the assets.

INTERNAL CONTROL OF PETTY CASH

 Appoint a petty cashier – assign responsibilities/duties.
 Ensure proper documentation (vouchers and supporting documents) are filed and controlled.
 Some transactions may require authorisation from a senior manager.
 An imprest system must be implemented. Payments must be made out only after the
reconciliation of the journals and vouchers.

Use scenarios from past exam papers

Have class discussions
To save time, provide learners with case-studies, assignments which they can do at home and then
discuss in class.

Page. 13
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

CREDIT TRANSACTIONS
ASH TRANSACTIONS

Credit Sales

Recap and Discussion:

 Reasons for selling goods on credit.
 Checking the creditworthiness of prospective debtors.
 Credit terms and credit limits (National Credit Act)
 Additional administration functions necessary and internal controls.
o E.g. New documents, application forms and screening of debtors, sending statements,
sms, additional employees.

Cycle of Activities:

TRANSACTION DOCUMENT JOURNAL LEDGER

Sale of goods on credit Credit sales Debtors Journal

(Debtors) Invoice (DJ)

Goods returned or Debtors Allowances

Credit note Debtors Ledger
allowances granted Journal (DAJ)
Debtors List
Receipts and discount Cash Receipts Journal General Ledger
Receipt
allowed (CRJ) Debtors Control

Interest income
General Journal
Bad debts Journal voucher
(GJ)
Posting errors

Class Discussion:

 Reasons for returns/allowances.

 Incentives to improve collection from debtors
 Reconciliation: Debtors List and Debtors Control Account

Page. 14
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 10: Debtors Journal and Debtors Allowances Journal

The following information was extracted from the records of Crazy Meats for August 2018.
REQUIRED:
10.1 Record the transactions in the Debtors Journal and the Debtors Allowances Journal.
10.2 Post to the Debtors Ledger accounts, and prepare a Debtors list.
10.3 Post to the General Ledger accounts as provided in Information A.

INFORMATION:
A. Balances/totals on 1 August 2018 General ledger:
Debtors Control R 9 600
Trading Stock R12 800
Sales R39 200
Cost of Sales R24 500
Debtors Allowances R 1 100

B. Debtors List on 1 August 2018:

B. Xego R3 200
D. Postman R4 100
S. Caleni R2 300

C. Transactions for August 2018:

4. Issued credit invoice no 113 to S. Caleni, R1 536 (cost of sales, R960).

10. Issued credit note 23 to S. Caleni for damaged goods returned, R190 (cost of sales,
R110).
11. Received D. Postman’s order. Issued invoice for R1 440. Mark-up is 60% on cost.
14. Sold goods on credit to B. Xego, R512 (cost of sales, R320).
18. Delivered goods as per credit invoices to:
D. Postman ................R1 700 (cost of sales, R700)
S. Caleni………..............R1 000 (cost of sales, R500)
20. Invoice issued to D. Postman on the 18th was incorrectly totaled.
An allowance of R200 was approved.
21. Dispatched goods together with credit invoice to D. Postman, R800 (Mark-up; 50%)
22. Received D. Postman’s debit note for R100 together with merchandise not according
to sample. Claim approved. (see No. 21 above)

Page. 15
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Practice: Receipts from Debtors and Discount Allowed

Record the following transactions in the Cash Receipts Journal of Waldon Traders for June 2018.

TRANSACTIONS:

1. Received an EFT for R500 from P. Python in part payment of his account of R5 200.
2. Issued receipt in favour of B. Blight for R420 in settlement of an account of R450.
3. Received R288 from R Reg. Allowed him R12 discount.
4. B Black owed R200. Received his EFT in full settlement of his account after allowing a
discount of 5%.
5. W White settled his account. A discount of 10%, amounting to R20 was allowed.

ACTIVITY 11:

The following information was taken from the records of Premium Stores for March 2018.

REQUIRED:

11.1 Prepare the following journals:

 The Cash Receipts Journal. (10)

 The Cash Payments Journal. (10)
 The Debtors Journal. (7)
 The Debtors Allowances Journal (5)

11.2 Post to the following accounts in the Debtors Ledger:

 A. Apple (DL1) (5)

 B. Banana (DL2) (5)

11.3 Post to the following accounts in the General Ledger:

 Trading Stock (8)

 Debtors Control (7)
 Sales (5)
 Cost of Sales (5)
 Debtors Allowances (3)

Page. 16
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

INFORMATION:
A. General Ledger balances on 1 March 2018:
Trading Stock B4 21 340
Debtors Control B5 6 780
Sales N1 20 990
Cost of Sales N2 15 710
Debtors Allowances N3 540

B. Debtors List on 1 March 2018:

A. Apple DL1 2 150
B. Banana DL2 ?
C. Carrot DL3 1 410

C. Transactions for March 2018:

1. Received an EFT of R3 000 from B. Banana in settlement of his balance on the

1 March.
3. Sold goods on credit to A. Apple, R1 320 (cost R860)
Issued a credit invoice to C. Carrot for goods sold, R1 800 (profit mark-up: 25%)
4. Cash sales as per CRT, R5 430 (cost, R3 110)
5. Issued an EFT to VB Traders for the purchase of the following:
 Trading Stock, R10 250
 Stationery, R420
10. Received R2 500 was M. Julius for the February 2018 rent.
12. Sold goods on credit to B. Banana, R750 (cost, R430)
15. Damaged goods, valued at R230, sold to A. Apple on 3 March were returned.
The cost of these goods was R110.
20. A. Apple paid R750 by EFT, as part payment of his account.
21. Granted B. Banana a 6% allowance on the goods sold to her on 12th. She
complained about the inferior quality of the goods sent to her.
22. Issued an EFT to pay the telephone account, R520.
27. The bank statement reflected R75 bank charges and R90 interest on favourable
current account balance.

Page. 17
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Credit
Purchases

Recap and Discussion:

 Reasons/Advantages for buying on credit. Note not only trading stock is bought on credit.
 Explore possible suppliers offering credit.
 Credit terms and credit limits.
 Additional administration functions necessary and internal controls.
Cycle of Activities:
TRANSACTION DOCUMENT JOURNAL LEDGER

Purchase of goods on
Creditors Journal
credit Credit Invoice
(CJ)
(Creditors)

Goods returned or Creditors Allowances Creditors Ledger

Debit note Creditors List
allowances granted Journal (CAJ)
General Ledger
Payments and Cash Payments Journal Creditors Control
EFT
discount received (CPJ)

Interest expense General Journal

Journal voucher
Posting errors (GJ)

ACTIVITY 12: CJ and CAJ

Record the following transactions in the CJ and CAJ of Raman Traders for July 2018
TRANSACTIONS FOR JULY 2018:
3 Purchased trading stock from Vrys Stores and R12 300. Received invoice 213.
Re-numbered to 112.
6 Returned damaged stock to Vrys Stores, R420. Issued debit note 14.
8 Received invoice A218 from Velo Suppliers for:
 Trading stock, R8 740
 Stationery, R1 810
12 Took delivery of computer and office desk purchased from Bunt Ltd, R13 600, on credit.
15 Returned stock not according to order to Velo Suppliers, R430 and damaged stationery valued
at R280.
18 Bunt Ltd omitted to deduct the 5% trade discount on the goods purchased on 12 th. Sent debit
note for the amount.

Page. 18
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Practice: Payments to creditors and discount received.

Enter the following transactions in the Cash Payments Journal of Goodwill Traders for June 2018:

1. Issued an EFT of R4 280 to Suppliers Ltd. in part payment of account.

2. Issued EFT in favour of Brown Stores for R2 632 in settlement of an account of R2 660.
3. Paid Reddy Wholesalers R2 345 per EFT. Received R155 discount.
4. Downtown Ltd was owed R7 200. Issued EFT in full settlement after receiving 5% discount.
5. Settled our account with Mite & Sons per EFT. A discount of 7,5%, amounting to RR450 was
received.
6. Settled amount of R8 600 owing to Goodwood Stores, less 10% discount.

ACTIVITY 13:
The following transactions were extracted from the records of Targus Traders for July 2018.
Provide your own document numbers for the transactions. Note that the business re-numbers all invoices received.

REQUIRED :
13.1 Complete the journals for the month.

13.2 Post to the Creditors Ledger Accounts of:

13.2.1 CD Traders
13.2.2 BY Wholesalers

13.3 Post to the Creditors Control account in the General Ledger

INFORMATION :

A. Creditors List as at 1 July 2018:

CD Traders CL1 2 540

BY Wholesalers CL2 5 550
HG Maintenance CL3 3 110

Page. 19
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

B. TRANSACTIONS FOR JULY 2018:

2 Purchased merchandise from CD Traders on credit and received their invoice for R5 320.
5 Took delivery of the following from BY Wholesalers together with their credit invoice:
 Stationery R 630
 Packing material R 760
 Computer R 6 200
8 Returned goods not according to order, to CD Traders, R350. Issued debit note 122
9 Cash withdrawn to pay wages, R800.
12 Bought trading goods from PK Stores and paid by EFT, R2 150
Returned damaged packing material to BY Wholesalers worth R130. See 5 th
13 Took delivery of equipment purchased on credit from BY Wholesalers for R7 500.
15 Issued an EFT to CD Traders in part-payment of our account, R2 000.
16 Received stationery purchased from XSA Stationers bought on credit, R580.
17 HG Maintenance performed minor repairs and renovations to the existing buildings.
R1 000 was paid by EFT to them and the balance of R6 300 will be paid over the next three
months.
Issued EFT for R3 560 to Bunty Stores (a creditor) in full settlement of our outstanding
balance of R3 700.
18 BY Wholesalers omitted the trade discount of 4% on the equipment purchased on 13 th.
Issued debit note for the amount.
20 Drew cash to pay wages, R780
22 Bought trading stock from CD Traders on account, for R4 200 less 5% trade discount.
24 Issued an EFT for R1 500 to BY Wholesalers to pay our account, and received a 5% discount.

The Trial
Balance

At this stage, we have covered all the General Ledger accounts relevant to Term 1 content. It is an
appropriate time to further explain and reinforce The Trial Balance.

 RECAP: It is a summary of all the account balances and totals from the General Ledger
It confirms the accuracy of the posting (double-entry)
It differentiates between Balance Sheet accounts and Nominal accounts.
Errors in posting can be identified and corrected.
Some errors (compensating/omitted) will not be picked up by the trial balance.

Page. 20
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 14:

REQUIRED:

Using the balances/totals from the list of accounts given, prepare a trial balance for Maxi Traders for
the year ended 30 April 2018.

Calculate the missing bank balance. State if it is favourable or unfavourable.

INFORMATION

(Note that the information below is a list of balances and does NOT represent debit and credit amounts.)
Bank ? Packing material 7 200
Capital 65 000 Petty cash 500
Cash float 300 Rent income 9 000
Cost of sales 42 750 Salaries and wages 12 800
Creditors control 7 220 Sales 67 280
Debtors control 8 880 Sundry expenses 1 230
Drawings 12 200 Telephone 4 500
Equipment 21 210 Trading stock 8 430
Loan : AB Bank 52 500 Vehicles 40 000
Water and electricity 6 440

General Journal

 All journals discussed above (CRJ, CPJ, CJ, DJ, CAJ, DAJ, PCJ) are used for a specific purpose,
having their specific source documents.
 Certain transactions and corrections of errors will not be accommodated by any of the above
journals. Also, at the end of a month, financial period, the journals may be closed off and
certain transactions may arise and must be attended to.
 The accounting cycle prescribes the process that all transactions must be recorded in a journal
before posting to the ledger.
 Hence the General Journal is introduced to take care of this process.
Source document is a journal voucher (internal authorization) and since every transaction might
be for a different reason, a narration or brief explanation is provided at the end of each entry.
The double entry principle must apply to ALL transactions. This is specified by each entry.

Page. 21
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

GENERAL FORMAT:

GENERAL JOURNAL OF MONRO TRADERS – MARCH 2018 GJ3

Debtors control Creditors control
J/V D Details Fol Debit Credit
Debit Credit Debit Credit
12 4 F. Brown D1 12 12
Interest income N8 12
Interest charged on overdue
account at 16% p.a.

TRANSACTIONS TO BE COVERED:

Interest income Charged to debtors’ accounts that are overdue. This will have the
effect of increasing the amount due by them (+ Asset)
Dr: Debtor Cr: Interest Income
Interest expense Charged by creditors on accounts overdue. This will have the
effect of increasing the amount due to them (+ Liability)
Dr: Interest expense Cr: Creditor
Discount allowed cancelled Discounts previously granted to debtors must be cancelled if their
cheques are dishonoured by the bank.
Dr: Debtor Cr: Discount allowed
Bad debts Accounts of debtors written off as irrecoverable after all attempts
to recover the money has failed.
Dr: Bad Debts Cr: Debtor
Drawings (non-cash) The owner takes stock, stationery, consumable stores
Dr: Drawings Cr: Trading stock, stationery….
Donations (non-cash) Stock, equipment donated to some organisation.
Dr: Donation Cr: Equipment…..

Correction of errors in posting  Posting to the wrong accounts in DL, CL, GL.
 Posting of the incorrect amounts*

Transfer from DL/CL In cases where a debtor is also a creditor.

Year-end procedures Adjustments and closing transfers (for later).

* An entry omitted from a specific journal can also be done in the

GJ. Example. Bank and Bad debt recovered (a CRJ entry).

* Add examples to the list (if necessary). Use many examples from textbooks.
Attempt Activity 14 after explaining each example above with appropriate examples.

Page. 22
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 15:
REQUIRED:
Record the following transactions in the General Journal of Mambi Traders for July 2018:
TRANSACTIONS:

4 Charge L. Nadia (a debtor) interest on her overdue account at 12% p.a. Her balance of R560
was three months overdue.

6 Mambi, the owner took trading goods from stock for his personal use. The selling price of the
goods was R780 (goods are marked up by 50% on cost).

7 The account of X. Zola (a debtor) of R1 280 must be written off as a bad debt.

8 Charged the following debtors interest on their overdue accounts at 12% p.a. interest:

Debtor Amount overdue Months overdue

K. Johan R2 400 4 months
J. Prieanka R3 200 13 months
9 Mambi used stationery valued at R180 from the office to complete his son’s assignment.

11 Creditor BV Suppliers informed the business that interest of R230 will be added to the next
statement due to our account being overdue.

12 It was discovered that a payment of R1 500 received from debtor J. Nandi was posted in error
to the debtors’ ledger account of J. Mandi.

15 A repair to the building valued at R2 450 was posted in error to the Land and buildings
account in the General Ledger.

20 The manager authorised that that following debtors’ accounts be written off:
 V. Naughty R3 210
 R. Sally R1 660
24 Damaged goods valued at R650 was returned to Noble Dealers (a creditor). The bookkeeper
recorded this transaction in the Creditor’s Ledger account of Noble Suppliers in error.

27 Sly Sally (a debtor) was declared insolvent. Received R1 050 from his insolvent estate. This
was 60% of his outstanding balance. The amount received was deposited. The balance must
be written off as irrecoverable.

Use additional activities to reinforce the double entry principle, the General Ledger accounts and
the special columns for Debtors control and Creditors control

Page. 23
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Posting to the General Ledger from ALL

journals

Although it is important to clearly explain the principles of posting (see the Expanded Accounting
Equation), it is sometimes helpful to use the following “rules” as a starting point to mastering this
skill before moving on to analyzing and interpreting ledger accounts:

JOURNAL ACCOUNT/S DEBITED ACCOUNT/S CREDITED

Cash Receipts Journal Bank (+ A + / - L ) ALL accounts included in the Bank total
Sales (O +)
Debtors control (A -)
In Sundry: (examples)
Capital (O +)
Rent Income (O +)
Loan: Bank (L +)
Cost of sales (expense) (O -) Trading stock (A -)
Discount Allowed (O -) Debtors control (A -)
Cash Payments Journal ALL accounts included in the Bank total Bank (A - / L +)
Assets (A +) trading stock etc
Expenses (O -) wages etc
Creditors control (L -)
In Sundry: (examples)
Assets (A +) equipment, fixed deposit
Expenses (O -)
Loan: Bank (L -) repayment
Creditors control (L -) Discount received (O+)
Petty Cash Journal ALL accounts included in the Petty cash Petty cash (A-)
total
Assets (A +) trading stock etc
Expenses (O -) stamps etc
In Sundry: (examples
Assets (A +)
Expenses (O -)
Debtors Journal Debtors control (A+) Sales (O+)
Cost of sales (O-) Trading stock (A+)
Debtors Allowances Journal Debtors Allowances (O-) Debtors control (A-)
Trading stock (A+) Cost of sales (O+)

Page. 24
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

JOURNAL ACCOUNT/S DEBITED ACCOUNT/S CREDITED

Creditors Journal ALL accounts included in the Creditors Creditors Control (L +)
Control total
Assets (A +) trading stock etc
Expenses (O -) stationery etc
In Sundry: (examples)
Assets (A +) equipment
Expenses (O -) repairs
Creditors Allowances Journal Creditors control (L -) ALL accounts included in the Creditors
Control total
Assets (A -) trading stock etc
Expenses (O +) stationery etc
In Sundry: (examples)
Assets (A -) equipment
Expenses (O +) repairs
General Journal Individual transactions are posted separately
Posting must be done to all balance sheet accounts and all
nominal accounts.
Totals must be posted to debtors control and creditors control
accounts; detail will be either sundry accounts or sundry
debits/credits or journal debits/credits.

Other procedures to note:

Totals from journals are posted on the last day of the month.
 The detail in one account is usually the name of the contra account.
 Where the amount is made up of a number of different accounts, we use details such as
 Total Receipts (CRJ), Total Payments (CPJ/PCJ), Total purchases (CJ), Total allowances (CAJ) or
Sundry accounts in place of all the other details.

Posting from Sundry Accounts Section is done on the date of the transaction.
 Details and folio will tell us about the journal, E.g. From the CRJ, the detail will be Bank.

ACTIVITY 16:
The following information was taken from the records of Mnguni Stores for April 2013.
REQUIRED:
Post to the following accounts in the General Ledger. Balance the balance sheet accounts.
15.1 Bank (7)
15.2 Trading stock (17)
15.3 Debtors control (15)
15.4 Creditors control (11)
15.5 Sales (5)
15.6 Cost of sales
Page. 25
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

INFORMATION:

A. Balances and totals on 1 April 2013:

Bank 17 220
Trading stock 10 870
Debtors control 10 100
Creditors control 18 970
Sales 67 770
Cost of sales 3 4 330

B. Totals from the journals on 30 April 2013:

(i) Cash Receipts Journal
DEBTORS CONTROL
SUNDRY
BANK SALES COST OF SALES DISCOUNT
RECEIPTS AMOUNTS
ALLOWED
? 12 675 5 230 7 680 350 5 500
(ii) Cash Payments Journal
CREDITORS CONTROL
TRADING STATIO- SUNDRY
BANK DISCOUNT
STOCK NERY PAYMENTS AMOUNTS
RECEIVED
27 480 ? 1 350 15 880 1 120 8 220
(iii) Creditors Journal
CREDITORS PACKING SUNDRY
TRADING STOCK EQUIPMENT
CONTROL MATERIAL AMOUNTS
? 21 500 4 500 3 180 2 220
(iv) Creditors Allowances Journal
CREDITORS PACKING SUNDRY
TRADING STOCK EQUIPMENT
CONTROL MATERIAL AMOUNTS
8 420 ? 450 720 1 200
(v) Petty cash Journal
POSTAGE AND DEBTORS SUNDRY
PETTYCASH TRADING STOCK
STATIONERY CONTROL AMOUNTS
1 820 980 320 ? 450
(vi) Debtors Journal
SALES COST OF SALES
12 680 ? The profit mark-up on credit sales is 60% on cost.
(vii) Debtors Allowances Journal
DEBTORS
COST OF SALES
ALLOWANCES
980 460

Page. 26
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

INTERNAL CONTROL OF DEBTORS

 Proper procedures and credit policy designed and explained to all personnel concerned.
 Screening of debtors before allowing credit – control the application forms.
 Flow of information: Documents should be properly entered and recorded in the journals and
posted to the general ledger and the subsidiary ledgers.
 Regular contact with debtors through monthly statements and reminders such as SMS.
 The debtors account must be balances and reconciled against the debtors list on a monthly basis.
 Authorised personnel to check on receipts from debtors, credit limits and defaulting debtors.
 Action to be taken against defaulting debtors must be clear, such as legal action, charging
interest, reporting to credit bureau.
 Authorization to write off debtors’ accounts.

INTERNAL CONTROL OF CREDITORS

 Appoint different personnel for the different tasks (division of duties) such as ordering clerks,
receiving clerks, payments of accounts, handling returns. May not always be practical in a small
sole trader business. Rotation can be achieved to ensure that the same person is not doing too
many related functions.
 Documents received and written out must be accurately recorded in the journals and posted the
general ledger and subsidiary ledger.
 The creditors control account must be properly balanced and reconciled against the creditors list
on a monthly basis. Can also be checked against statements received from creditors.
 Negotiate practical credit terms and terms that benefits the business. Such as payment periods,
discounts for early payments and bulk buying discounts.
 Pay creditors promptly as per terms, to avoid penalties such as interest, bad reputation (image).

Page. 27
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 1
The following information was taken from the records of Premium Stores for March 2019.

REQUIRED:

1. Prepare the following journals:

All necessary columns are provided in the answer sheets. You must provide your own document numbers.

1.1 The Cash Receipts Journal. (10)

1.2 The Cash Payments Journal. (10)
1.3 The Debtors Journal. (7)
1.4 The Debtors Allowances Journal (5)

2. Post to the following accounts in the Debtors Ledger :

2.1 A. Apple (DL1) (5)

2.2 B. Banana (DL2) (5)

3. Post to the following accounts in the General Ledger:

3.1 Trading Stock (8)

3.2 Debtors Control (7)
3.3 Sales (5)
3.4 Cost of Sales (5)
3.5 Debtors Allowances (3)
[70]
NFORMATION:
1. General Ledger balances on 1 March 2019:

Trading Stock B4 21 340

Debtors Control B5 6 780
Sales N1 20 990
Cost of Sales N2 15 710
Debtors Allowances N3 540

2. Debtors List on 1 March 2019:

A. Apple DL1 2 150

B. Banana DL2 3 220
C. Carrot DL3 ?

Page. 28
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

3. Transactions for March 2019:

1. Received an EFT for R3 000 from B. Banana in settlement of his account balance on
the 1 March 2019.
3 Sold goods on credit to A. Apple, R1 320 (cost R860)
Issued a credit invoice to C. Carrot for goods sold, R1 800 (profit mark-up: 25%)
4 Cash sales as per CRT, R5 430 (cost, R3 110)
5 Issued an EFT to VB Traders for the purchase of the following:
 Trading Stock, R10 250
 Stationery, R420
10. Received R2 500 was M. Julius for the February 2019 rent.
12. Sold goods on credit to B. Banana, R750 (cost, R430)
15. Damaged goods, valued at R230, sold to A. Apple on 3 March were returned. The
cost of these goods was R110.
20. A. Apple paid R750 by EFT, as part payment of his account.
21. Granted B. Banana a 6% reduction on the goods sold to her on 12. She complained
about the inferior quality of the goods sent to her.
22. Issued an EFT to pay the telephone account, R520.
27. The bank statement reflected R75 bank charges and R90 interest on favourable
current account balance.

Page. 29
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 2
The following information was taken from the records of Mnguni Stores for April 2016.
REQUIRED:
1.1 Calculate the amounts denote by (a) to (e) in the journal totals provided below (16)
1.2 Post to the following accounts in the General Ledger. Balance the balance sheet accounts only.
1.2.1 Bank (8)
1.2.2 Debtors control (13)
1.2.3 Creditors control (13)
INFORMATION:
A. Balances and totals on 1 April 2016:
Bank 11 970 (Dr)
Debtors control 13 750
Creditors control 21 870

B. Totals from the journals on 30 April 2016:

Cash Receipts Journal
DEBTORS CONTROL
SUNDRY
BANK SALES COST OF SALES DISCOUNT
RECEIPTS AMOUNTS
ALLOWED
(a) 12 675 5 230 7 680 350 5 545

Cash Payments Journal

CREDITORS CONTROL
SUNDRY
BANK TRADING STOCK STATIONERY DISCOUNT
PAYMENTS AMOUNTS
RECEIVED
27 500 (b) 1 350 7 550 1 120 4 260

Creditors Journal
CREDITORS
TRADING STOCK EQUIPMENT PACKING MATERIAL SUNDRY AMOUNTS
CONTROL
(c) 21 500 4 500 3 180 2 220

Creditors Allowances Journal

CREDITORS
TRADING STOCK EQUIPMENT PACKING MATERIAL SUNDRY AMOUNTS
CONTROL
8 420 3 050 (d) 720 1 200

Debtors Journal
SALES COST OF SALES
(e) 8 800 The profit mark-up on credit sales is 75% on cost.

Debtors Allowances Journal

DEBTORS
COST OF SALES
ALLOWANCES
980 460
50

Page. 30
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY: 3
The bookkeeper of Samsung Stores completed the Debtors Control account in the General ledger for May
2020 together with the Debtors List, but noticed that the balances did not agree.
REQUIRED:
1.1 Explain why the owner was concerned that the Debtors control account and the Debtors List
does not agree. Provide TWO points. (4)

1.2 The owner feels that it is a waste of time to reconcile the 2 balances as the errors will be
corrected in time. Explain to him why this is not a good policy and briefly discuss 2 negative
implications for the business if they do not complete the reconciliation and correct any
differences. (6)

1.3 Calculate the correct balance as per the Debtors Control account. (5)

1.4 Make General Journal entries to correct the entries for the individual debtors’ accounts. (16)

1.5 Calculate the correct balance on each debtor’s account and work out the new Debtors’ List
total. (11)

INFORMATION:

A. Debtors control showed a debit balance of R15 260 on 31 May 2020, before the investigation.

B. The Debtors List showed the following (before the errors/omissions below):
J. Rhodes DL1 8 400
M. Buthelezi DL2 2 600
N. Nair DL3 3 700

C. An investigation revealed the following errors/omissions:

 The Sales total in the Debtors Journal was overstated by R560 and posted to the Debtors control as
such.

 Goods bought on credit by J. Rhodes R880 was mistakenly entered this in the account of N. Nair.

 Goods returned by M Buthelezi, R340, was by mistake entered in the account of J. Rhodes.

 The bookkeeper corrected an error made earlier by debiting M. Buthelezi and crediting N. Nair
with R760. The amount, however, was R670. This difference must be rectified.

 Old equipment was sold on credit to N. Nair for R1 600. The bookkeeper, however, failed to make
any entries to record this transaction.

Page. 31
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Page. 32
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY 4

The information relates to Mafusa Dealers.

REQUIRED:
1.1 Provide the missing information denoted by (a) to (d) in the Debtors Control account (4)
below.
1.2 List the source documents for the entries of R11 420 and R22 000 on the credit side of the
Debtors Control account. (2)
1.3 Give a different reason (explanation) for the following entries:
 The entry of R9 500 on the credit side of the control account. (2)
 The entry of R4 700 on the debit side of the control account. (2)
1.4 Explain why the balance on the Debtors Control Account in the General Ledger should be
the same as the total on the Debtors’ List. (2)
1.5 Refer to Information B.
Show how each entry would affect the Debtors Control account and/or the Debtors List.
Indicate the change by showing the increase (+) or decrease (-) and the amounts, in the (8)
table provided.
INFORMATION:
A. GENERAL LEDGER OF MAFUSA DEALERS
DEBTORS CONTROL
2020 2020 3
May
1 Balance b/d 35 000 May (c) DAJ 11 420
1
31 Sales (b) 80 000 Bank (d) 22 000
(a) CPJ 8 000 Discount allowed CRJ 580
Sundry accounts GJ 4 700 Sundry accounts GJ 9 500
Balance c/d ?

June 1 Balance b/d ?

B. i The journal total for credit sales were under-cast by R2 400.
ii A discount of R410 granted to B. Grape (a debtor) for early payment of account
was not recorded in the respective journal.
iii Goods valued at R670 returned by B. Zuma was posted in error to the Debtor’s
Ledger account of L. Julius,
iv Goods sold to L. Julius for R3 210 was recorded as R2 310 in the correct journal,
and posted as such to the ledger accounts.

Page. 33
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

The Trading Stock account below appeared in the general ledger of Bill Book Store for February
2019. The business sells goods at a profit mark-up of 50% on cost.

GENERAL LEDGER OF BILL BOOK STORE

TRADING STOCK
2019 2019
Feb 1 Balance b/d 32 188 Feb 28 Creditors control (d) 5 196
28 Bank (a) 54 220 Cost of sales CRJ 22 430
(b) CJ 34 640 (e) DJ 18 580
Cost of sales DAJ 642 Stationery GJ 224
(c) PCJ 520 Balance c/d 75 780
122 210 122 210
Mar 1 Balance b/d (f)

Questions:

2.1 Provide appropriate details for (a) to (e) in the account presented. (5)

2.2 In which section of the General Ledger will this account appear? (1)

2.3 What type of account is trading stock in terms of the accounting equation and the balance
sheet? (1)

2.4 Calculate the percentage of credit purchases returned during the month. (3)
Comment on this calculation. (2)

2.5 Provide a suitable explanation for the entry of R224 on the credit side of this account. (2)

2.6 The owner took goods with a selling price of R690 from stock for his personal use. This was
not recorded. Provide the general journal entry for this transaction.

2.7 Calculate the value of (f) after taking into account Question 2.6. (8)

ACTIVITY: 5
Page. 34
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Reconciling the Creditors Control Account with the list of Creditors.

The information appeared in the books of Karl Traders for April 2020.
REQUIRED:
1.1 Calculate the correct journal totals and post these to the Creditors Control account.
1.2 Prepare the correct Creditors List on 30 April 2020. Show all workings.
INFORMATION:
A. Balance on the Creditors Control account on 1 April 2020, R48 735
B. Totals extracted from the journals for April 2020 (before errors and omissions below):
Total credit purchases CJ R 72 480
Total payments to creditors CPJ R 62 060
Total discount received from creditors CPJ R 850
Total returns and allowances CAJ R 3 510
Sundry journal debits (Creditors control) GJ R2 250
Sundry journal credits (Creditors control) GJ R1 450
C. Creditors List on 30 April 2020 (before errors and omissions below):
Groen Stores R 14 255
Bender Ltd R 13 505
Sunday Warehouse R 5 685
Lambie Suppliers R 8 940
Geel Stores R 1 315 Debit
GHT Distributors R 2 120 Debit
Tasty Bakery R 9 615
D. ERRORS AND OMISSIONS NOTED:

(i) The opening balance in the Creditors' Control account is under-stated by R2 000.
(ii) Due to a calculation error, the balance of Bender Ltd.’s creditor’s ledger account was
reflected as R13 505 instead of R23 505.
(iii) An invoice for goods bought from Sunday Warehouse, R895, was recorded in the
Creditors' Journal as R985.
(iv) A debit note of R960 was issued to Sunday Warehouse for goods returned to them.
They did accept the returns but no entry was made in Karl Traders' books to date.
(v) An invoice for R1 460 received from Geel Stores and correctly recorded in the journal,
was incorrectly posted to the creditors ledger account of Lambie Suppliers.
(vi) The Creditors’ Control column in the Cash Payments Journal included an amount of
R2 120 paid to GHT Distributors for cash purchases.
(vii) Merchandise of R1 285 returned to Tasty Bakery and correctly entered in the CAJ was
posted to Tasty Bakery's account in the Creditors’ Ledger as a purchase.

ACTIVITY: 6
Page. 35
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

OK. We need to start with the YEAR-END ACCOUNTING PROCEDURES.

But before we get there, let’s have a look at the Accounting Cycle

TRANSACTIONS

DOCUMENTS

JOURNALS

ACTIVITY: 5

TRIAL BALANCE

FINANCIAL STATEMENTS

Cash and credit transactions takes place daily; these are first recorded in documents, before being
recorded in specific journals, prepared on a monthly basis. At the end of the month, information
from the journals are posted to the ledger (General Ledger; Debtors Ledger; Creditors Ledger). A trial
balance is extracted from the General Ledger, usually at the end of an accounting period, the
financial year, before Financial Statements are prepared.

Tying up loose ends!!!

Not so simple. A lot to DO before preparing those Financial Statements.
That Trial Balance (above) is called a PRE-ADJUSTMENT TRIAL BALANCE
Adjustments must be taken into account (General Journal entries)
These must then follow the accounting cycle: Posted to Ledger

New trial balance: POST-ADJUSTMENT TRIAL BALANCE

At this stage, let’s reflect on the General Journal. You need to understand this well before moving on
to the ADJUSTMENTS.

The General Journal is based on the DOUBLE-ENTRY principle. You must record the account to be
debited and the account to be credited, for each entry; and because they are all for different
reasons, we must also note a reason for making the entry (narration).

Page. 36
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Examples of transactions to be recorded in the General Journal:

 Interest charged on overdue accounts (debtors and creditors)
 Cancellations of discounts given when cheques are dishonoured
 Writing off bad debts
 Bad debts recovered (if cash then it can be entered in the CRJ)
 Drawings of goods by the owner
 Donations of goods
 Corrections of errors (debtors, creditors, general ledger posting)
 Debtors / Creditors transfers

ACTIVITY:
RECORD THE FOLLOWING TRANSACTIONS IN THE GENERAL JOURNAL

TRANSACTIONS FOR MARCH 2020

2 The account of B. Brown (a debtor) must be written off as a bad debt, R3 100.

4 Charged S. Smith interest on his overdue account at 8% p.a. His balance of R4 200 was overdue for
three months.

8 The owner, George, took goods from stock for his personal use. The selling price of the goods was R600.
Goods are sold at cost plus 50%.
He also took stationery valued at R320 for his son’s school project.

10 W. Skelm (a debtor) was declared insolvent. Received 45% of his outstanding balance of R1 840, and
recorded this in the CRJ. The balance of his account must be written off as irrecoverable.

12 M. Mouse (a debtor) paid R1 500 towards his account. This amount was posted in error to the account
of M. Mickey in the debtors’ ledger.

15 A cheque for R630 received from B. Biltong (a debtor) in settlement of his account of R700 was returned
by the bank because of insufficient funds. The bookkeeper only recorded the correct amount in the CPJ
to reverse the cheque.

17 Damaged stationery (valued at R180) returned to creditor, XB Suppliers was not recorded in the
respective journal.

24 A payment of R3 500 to BB Stores (a creditor) was posted in error to the account of BB Wholesalers.

28 A cheque issued to Bobby Builders for R134 600 was for the following:
 R120 000 construction of the storeroom
 The balance for repairs and maintenance
The bookkeeper posted the entire amount to the land and buildings account, in error

31 Statement received from HT Wholesalers (creditor) showed that the business was charged interest of
R220 on the overdue balance.

The manager’s salary of R14 380 was posted in error to the Wages account.

Page. 37
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

ACTIVITY: 7
SLAP-DASH STORES
This business sells comics and novelty items. Mickey Mouse Stores is a debtor.
On 1 May 2020, they owed Slap-Dash Stores R3 800.
REQUIRED:
Complete the Debtors Ledger account of Mickey Mouse Stores in the Debtors Ledger of Slap Stick.
TRANSACTIONS involving Mickey Mouse Stores, FOR MAY 2020:
03rd Issue invoice No. A135 for books sold on credit R1 600 (cost, R800)
07th Issued credit note No. 35 for books returned, R160. These books were not according to the order.
10th Receive an EFT for R3 496 from Mickey Mouse Stores in full settlement of the balance owing on
1 May 2020. Issue receipt 228.
20th Credit sales of books for R3 260 less 5% trade discount. Cost price R2 130. Issued invoice A190.
22nd Mickey Mouse Stores book books as follows:
 On credit, R? (cost R1 400; mark-up on cost, 80%). Issued invoice No. A219
 On credit for R1 224 (cost, R680). Issued receipt No. 417
28th Received a bank debit note informing us that the cheque received on 10 th was dishonoured due to
insufficient funds.
30th Mickey Mouse Stores made an EFT for R6 000

ANALYSING TRANSACTIONS:
Analyse the following transactions according to the columns on the table provided.
In the “Account” column, provide the name of the General ledger account and under “amount” show the
increase (+) or the (-). Assume that the Bank balance is favourable for all the transactions.
Example: The owner contributed R10 000 cash as additional capital.
TRANSACTIONS:

1. Purchased a motor vehicle from BG Garage on credit, R200 000

2. Issued EFT to pay the electricity account, R1 620.
3. Cash sales, R3 750 (goods are marked-up by 50% on cost).
4. Bought stationery on credit from TRX Stationers, R500.
5. Issued a EFT to BG Garage, R50 000 as part payment of account (See 1)
6. Paid BMG Transport R300 from petty cash for transport of trading goods purchased.
7. Received an invoice from Lulu Builders for:
Building the storeroom, R45 000
Repairs to windows, R2 700

MORE ANALYSIS OF TRANSACTIONS

Page. 38
2023 Accounting Grade 10 Term 1 Buffalo City/Free State

Analyse the following transactions according to the headings on the answer sheet.
Assume that the bank balance is positive, unless stated by the transaction.

EXAMPLE: Paid wages by EFT, R100

No Journal Account debited Account credited A OE L

E.g. CPJ Wages Bank -100 -100 O

2.1 Owner took goods from stock for private use. Selling price R720, cost price R480.

2.2 Received a loan from Betu Bank, R60 000. This must be paid over 60 months at 12% p.a. interest.

2.3 Receive R950 from the insolvent estate of debtor Ben Smith. This was 40 cents to the Rand owed by
him. The balance must be written off as a bad debt.

2.4 Buy goods on credit from Masego Wholesalers for R6 200 less 5% trade discount.

2.5 Returned damaged consumable stores to Mofokeng Suppliers. Receive a credit note for R325.

2.6 Charge the overdue account of debtor Molete, R25 interest.

2.7 Paid R1 425 to creditor Nzama Traders in full settlement of our account of R1 500.

2.8 Invested R20 000 in a fixed deposit at 8% p.a. interest.

2.9 Granted debtor Ben R200 allowance for damaged goods delivered to him.

2.10 Made an EFT payment to the Daily Dispatch for a 6-month advertising contract, R900.

2.11 The owner gave R50 donation from petty cash, to a learner engaged in fund-raising.

2.12 Received interest on a fixed deposit of R8 000 at 6% p.a. for 2 months.

2.13 Bank statement received reflected the following:

Service fees, R110
Cash deposit fees, R90
Transaction fee, R100
Interest on overdraft, R120
Direct deposit of R4 000 from the tenant for rent.

Note the bank balance was on overdraft at this stage.

Page. 39