Directorate: Curriculum FET

Grade 10 ACCOUNTING Term 1: Week 7

Topic: GENERAL JOURNAL (COMBINED CASH & CREDIT TRANSACTIONS)

You already know about …
• Cash Accounting cycle: source documents; CRJ, CPJ, PCJ; General Ledger; Trial Balance
• Credit Accounting cycle: source documents; DJ, CJ, DAJ, CAJ; General Ledger; Debtors' & Creditors’ Ledgers
• Double entry system in the ledger (debit one account; credit another account)
• Debtors & Creditors lists
The lesson will enable you to…
• Identify transactions that are applicable to the General Journal and correctly enter it in the GJ

Use your TEXTBOOK to read about: Alternative digital resources

GENERAL JOURNAL (GJ) Gr 10 Study& Master video & PPT
General Journal (Ch 10)
Pay special attention to: https://wcedeportal.co.za/eresource/117716
• types of general journal entries
Lucem Gr 10 Text book &Teacher Guide
• format/layout of the GJ
• authorising GJ entries by senior manager https://wcedeportal.co.za/eresource/117641
Chapter 3 (pg 52 - 82)

GENERAL JOURNAL - BASICS

• The General Journal (GJ) caters for transactions which do not occur frequently enough to
justify a special journal for it. These entries cannot be made in any other journal.
• A GJ entry shows the account debited, the account credited and a narration, which is a brief
description of the reason for the entry. It supports the internal and audit processes.
• The GJ caters for entries that include debtors and/or creditors – separate Debtors and Creditors columns
• Only the Debtors Control and Creditors Control columns are totaled. Totals are posted at month-end.

GENERAL JOURNAL TRANSACTIONS

• Bad debts written off
• Withdrawals of merchandise/other items by the owner
• Interest charged on overdue debtors
• Correction of errors
• Adjustment journal entries at year-end to prepare financial statements (COVERED in Term2 and 3)
BASIC STEPS TO COMPLETE A GENERAL JOURNAL ENTRY
1. Identify the two accounts affected
2. Decide which account to debit and which to credit (Use 'AOL' to help you in this process)
3. The account debited is entered FIRST, with the amount in the debit column
4. The account credited is entered SECOND, with the amount in the credit column.
5. If a debtor or creditor is involved, the 'control' column(s) on the right hand side ALSO need to show the
amount.

Gr 10 Accounting Term 1, 2021 1

EXAMPLES TO EXPLAIN GJ ENTRIES

1. Bad Debts written off

T. Terry, who owes R1 000, has been declared insolvent. His estate paid a dividend of 25c in
Transaction
the Rand. The balance of his account must be written off as bad debt.
A/c debited: Bad debts. A bad debt is an expense/loss which is ALWAYS debited.
A/c credited: The debtor’s account (Debtors are assets, which will decrease)
Explanation
Control column: Debtors' Control, credit.(triple entry principle)
[IF a debtor is credited, the amount is ALSO entered in the credit column of Debtors' control]
R750 will be recorded in the GJ – amount never to be received = Bad debts
Calculation
(1 000 – 250 = R750 OR 75c x 1 000 = R750) [R250 will be entered in the CRJ as receipts]
GENERAL JOURNAL – APRIL 2021 GJ 1
Debtors Control Creditors Control
Day Details Fol. DR CR
Dr Cr Dr Cr
Bad debts 750
T. Terry 750 750
(A/c written off as bad debts)

2. Owner withdraws stock or other NON-CASH items

Transaction B. Jones, the owner, took stock, marked at R450 (markup is 50%) for private use.
A/c debited: Drawings (The owner may withdraw cash and other items from his business; it will
decrease the owner's equity).
Explanation A/c credited: Trading stock (Stock is an asset that will decrease)
Control column: NO entries (No debtor or creditor was influenced)
Trading stock is ALWAYS entered at COST.
Calculation R450 (SP) x 100/150 = R300 cost
GENERAL JOURNAL – APRIL 2021 GJ 1
Debtors Control Creditors Control
D Details Fol. DR CR
Dr Cr Dr Cr
Drawings 300
Trading stock 300
(Owner took stock for own use)

3. Interest on OVERDUE debtors' accounts

J. Jonck, a debtor owes R1 200 for the past two months. Charged 3% per year interest on the
Transaction
overdue account.
A/c debited: J. Jonck (The debtor's account (asset) increases as a 'penalty' is added to the balance)
Explanation A/c credited: Interest income (The interest 'earned' is an income, so owner's equity(profit) will increase)
Control columns: Debtors Control is debited. (A debtor's account was debited)

Calculation R1 200 x 3/100 x 2/12 = R6

GENERAL JOURNAL – APRIL 2021 GJ 1

Debtors Control Creditors Control
D Details Fol. DR CR
Dr Cr Dr Cr
J. Jonck 6 6
Interest Income 6
(Charged interest on overdue a/c)

Gr 10 Accounting Term 1, 2021 2

 The GJ entry for the correction of errors will be determined by the type of error.
ALWAYS follow the suggested procedure.

4. Correction of errors, e.g. wrong amount entered / posted to wrong account / posted to wrong side
of correct account, etc. It is essential that you READ the transaction carefully.
Follow this procedure:
• Establish which TWO accounts are affected by the error
• Determine which account was incorrectly debited or credited
• Determine which account should have been debited or credited
• Make the correction entry in the GJ
Stationery bought on credit from Ream Stationers for R350 was posted from the CJ to the
Consumable stores account. The error must be corrected.
Transaction TWO accounts: Stationery & Consumable stores
Incorrectly debited: Consumable stores
Entry SHOULD be: Stationery debited
A/c debited: Stationery (An expense account is debited; owners' equity (profit) decrease
A/c credited: Consumable stores (Another expense is credited; owners' equity (profit) increase
Explanation (Consumable stores a/c was overstated, and Stationery understated due to this error;
no effect on the profit)
Control columns:. NONE (No debtor or creditor was influenced)
Calculation No calculation necessary
GENERAL JOURNAL – APRIL 2021 GJ 1
Debtors Control Creditors Control
D Details Fol. DR CR
Dr Cr Dr Cr
Stationery 350
Consumable stores 350
(Correction of posting to incorrect a/c)

ACTIVITY 1
REQUIRED
Record the following transactions in the General Journal of Larah Traders for February 2021.
Larah Traders apply 100% mark-up on trading stock.

TRANSACTIONS: FEBRUARY 2021

3 Write off the account of I. Owe as irrecoverable, R500.
9 B. Good (debtor) is declared insolvent. His insolvent estate paid a first and final dividend of 20 cents in
the rand per EFT(electronic funds transfer), R292. Write off the balance as irrecoverable.
14 The owner withdrew stock, marked at R1 500, for personal use.
16 Charged debtor A. Andy 10% p.a. interest on her overdue account of 3 months. She owed R600
19 The owner donated stock, R990 (cost price) to the Children’s Home. It was mistakenly debited to
Drawings.
21 Transfer M. Salah’s credit balance, R400 from the Debtors Ledger to the Creditors Ledger.
24 Received an EFT payment from AB Bank for R11 000, for a fixed deposit of R10 000 that matured on
30 January 2021. The full amount was entered in the Fixed Deposit account. Correct the error.

Gr 10 Accounting Term 1, 2021 3

ACTIVITY 1: ANSWER SHEET
GENERAL JOURNAL OF LARAH TRADERS FOR FEBRUARY 2021 GJ 1
DEBTORS’ CREDITORS’
D DETAILS FOL DEBIT CREDIT CONTROL CONTROL
DEBIT CREDIT DEBIT CREDIT

ACTIVITY 2 GENERAL JOURNAL, GENERAL LEDGER AND INTERNAL CONTROL

The following information relates to Kolisi Traders for October 2020. Kolisi Traders maintain a gross profit
mark-up of 50% on cost.

REQUIRED:
2.1 Refer to INFORMATION C: Enter the transactions in the General Journal.
Narrations are not required.
2.2 Use the information from the journals to complete the following accounts in the General Ledger:
(Only close off the Statement of Financial Position accounts)
• Trading stock
• Creditors control
• Stationery
2.3 What can the owner of Kolisi Traders do to ensure that stock is not stolen by his employees? State
THREE internal control measures.

Gr 10 Accounting Term 1, 2021 4

INFORMATION:
A. Balances / Totals in the General Ledger on 1 October 2020:
Trading stock 28 000
Creditors control 15 430
Stationery 670

B. Totals of journals on 31 October 2020:

Cash Receipts Journal
Debtors Control
Sundry
Bank Discount Sales Cost of Sales
Received Accounts
allowed
? 8 540 300 19 200 ? 4 500
NOTE: Stationery to the value of R330 was bought and paid for on 23 October 2020.
Cash Payments Journal
Creditors Control
Trading Sundry
Bank Wages Discount
Stock Payments Accounts
received
21 040 3 800 ? 7 040 340 4 200

Debtors Journal Debtors Allowances Journal

Sales Cost of sales Debtors allowances Cost of Sales
15 300 ? 390 200

Creditors Journal
Sundry
Creditors Control Trading Stock Equipment Stationery Packaging
Accounts
12 200 7 800 1 600 700 1 300 800

Creditors Allowances Journal

Sundry
Creditors Control Trading Stock Equipment Stationery Packaging
Accounts
2 400 900 600 300 200 400

General Journal
Debtors Control Creditors Control
Debit Credit
Debit Credit Debit Credit
490 236 630 300

C. Transactions to be recorded on 31 October:

• Siya Kolisi, the owner, took stationery (R130) and trading stock (selling price R960; cost price) for
personal use.
• C. Candice, a debtor owing R430, must be written off as irrecoverable.
• Kolisi Traders failed to pay their account of R8 820 with NO.1 Dealers on time. Interest for two
months at 10% p.a. must be brought into account.
• Repairs of R20 000 was done to the roof of the building. This was entered in the Land and
Buildings account in error.
• B. Patient, whose account was previously written off as bad debt, returned from overseas and
settled his outstanding account of R1 250. This receipt was entered in the Debtors Control column
of the Cash Receipts Journal in error.

Gr 10 Accounting Term 1, 2021 5

ACTIVITY 2: ANSWER SHEET
2.1 GENERAL JOURNAL OF KOLISI TRADERS - OCTOBER 2020
Debtors Control Creditors Control
Day Details Dr Cr
Dr Cr Dr Cr
1 Totals 490 236 630 300

2.2
DR GENERAL LEDGER OF KOLISI TRADERS CR
TRADING STOCK (B)

Gr 10 Accounting Term 1, 2021 6

 CREDITORS CONTROL (B)

STATIONERY (N)

2.3 What can the owner of Kolisi Traders do to ensure that stock is not stolen by his employees?
State THREE internal control measures.

Solutions:

https://wcedeportal.co.za/eresource/192421

Gr 10 Accounting Term 1, 2021 7