Accounting & Financial Principles (ACFP201)

Senior Lecturer: Dr Anrusha Bhana

TOPIC: Subsidiary Journal (CRJ & CPJ)

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 ACCOUNTING CYCLE

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 What are Subsidiary Journal?

• These are books that record the transactions of an organisation or

business.
• All transactions cannot be recorded in ONE book, so there is a need to
record transactions in different books.
• Recording of transaction in chronological order (order in which
transactions occur).
• After recording in the subsidiary journal it is posted to the General Ledger
(T – Account i.e. Accounting equation).
• This will make the General Ledger incredibly long. To make the recording
easier, similar transactions are grouped together and recorded in specific
journals.
• Manual accounting system.

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 GENERAL LEDGER (T – ACCOUNT)
(not part of ACFP201 syllabus)

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 Summary of Basic Accounting cycle

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 Four Subsidiary journals
• The sale of goods and the rendering of services on credit –
Debtors/Sales Journal.
• The purchase of goods and the acquisition of services on credit -
Creditors/Purchases Journal
• The receipt of cash – Cash Receipts Journal
• The payment of cash – Cash Payments Journal.

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 Subsidiary journals – Goods returned
• The return of goods and adjustments in relation to services rendered
– Debtors Allowances/Sales Returns Journal
• The return of goods purchased and adjustments in relation to the
services acquired – Creditors Allowances/Purchases Returns Journal.

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 Cash Receipts Journal (CRJ)
• Each cash amount received is recorded as a separate line item.
• When cash is received from a customer and a discount is allowed, the cash
received is entered into the Bank column.
-The discount allowed will be recorded in that same named column, and the
discount will be added to the Debtors column.
• If the Perpetual system is used, then the cost price of the goods sold for cash
will be entered in the Cost of Sales column. However, this column is not part
of the Double entry to record cash received.
• Receipts are the printed documents which are issued each and every time
cash is received for the sale of services or goods.
• At the end of each month, post the totals, except for the sundry items, to the
Bank account in the General Ledger.

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 Structure of a CRJ

Date Details Debtors Sales Cost of Discount Sundry Bank

sales
R R R R R R
1
6
20
22
25
26
27

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 Examples of CRJ transactions

• Cash received (Money) in any form – receipt

• Trade and other receivables – Payment by debtors
• Credit Sales (Sale to a Debtor) - invoice
• The benefits of recording cash receipts is to help accurately track
income.

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 Cash Payment Journal (CPJ)
• Each cheque drawn or a reduction in the bank balance (credit side) must be
recorded as a separate line item.
• It is a special journal which is used to record all payments made using cash.
• Post amounts paid to each individual supplier to the debit side of each
individual supplier account in the Creditors Ledger.
• At the end of each month, post the totals, except for the sundry items to the
Bank account in the General Ledger. Sundry items must be posted to the
debit side of that particular account in the General Ledger.

So, what are Sundry items ?

Small one-off costs may be allocated to sundry account if there is no
nominal or balance sheet (A = O + L) column to put them in.

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 Structure of CPJ
Date Details Inventory Creditors Discount Sundry Bank
5
6
7
8
9

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 Examples of CPJ transactions
• Cash purchases of inventories, supplies, vehicles, equipment or any
other asset.
• Cash payments for EXPENSES such as telephone, wages, bank
charges, salaries, rent, insurance etc.
• Drawings for personal use.
• Payments to creditors (trade and other payables e.g. suppliers etc.).
• The benefits of recording cash payments is to help accurately track
expenses.

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Accounting cycle – From CRJ/CPJ to General Ledger
• CRJ is used to record all cash received, and CPJ is used to record all cash paid.
• In the CPJ, the Bank account which is an ASSET is credited (right side) because
assets are decreasing.
• In the CRJ, the Bank account which is an ASSET is debited(left side) because
assets are increasing.

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 Other Subsidiary Journals
(next topic)
Creditors or Purchase Journal
Debtors or Sales Journal (Asset) (Liabilities)
• Each invoice is recorded as a line • Each invoice received from a supplier is
recorded as a separate line item.
item in the debtors or sales • The total amount owing will be recorded into
journal. the Accounts Payable column.
• The amount of each invoice is also • Whatever items are being charged on the
invoice, those items will be recorded in
posted (entered) to the Debit side columns like Purchases.
of each individual debtor (credit • The amount of each invoice is also posted
customer) account in the Debtors (entered) to the Credit side of each individual
Ledger. (NEXT TOPIC) supplier (creditor) account in the Creditors
Ledger.
• At the end of each month, the • At the end of each month, the total of these
total of these transactions will be transactions will be posted (entered) to the
posted (entered) to the Debtors Creditors account in the General Ledger.
• Except for Sundry items (usually once-off
account in the General Ledger. items) which will be posted to the debit side
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of the appropriate General Ledger account.15
 GENERAL LEDGER (T – ACCOUNT)

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 Other Returns subsidiary journals
(next topic)
Sales Returns Journal Purchases return Journal
• Each credit note (a reduction in • Each credit note received from a
the amount owing by a customer) supplier must be recorded as a
must be recorded as a separate separate line item. The total
line item. amount of the credit note must be
entered into the Control column.
• Post the amount of each credit • Post the total of each credit note
note to the credit side of each to the debit side of each individual
individual customer account in the supplier account in the Creditors
Debtors Ledger. Ledger.
• At the end of each month, post • At the end of each month, post
the total of these transactions to the totals, except for sundry items,
the Debtors control account in to the Creditors control account in
the General Ledger. the General Ledger. Sundry items
must be posted to the debit side
of that particular account in the
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General Ledger 17
Lecture Example
The following are certain transactions that took place at Dhlomo Traders during the month
of September 2022:

2022
Sep 1 Received R 30 000 from J Dhlomo as additional capital contribution to
the business. (Receipt 901).
6 Received R 120 000 loan from Axe Bank, receipt 902.
9 Sold goods to X Jabu for R 12 000, invoice D10.
14 Sold goods to B Able for R 24 000, invoice D11.
15 Sold goods to C Xhoza for R 21 000, invoice D12.
20 Sold goods for R 1 300 cash, receipt 903.
22 Sold goods for R 1 700 cash, receipt 904.
25 X Jabu paid the amount owed by them, less 10% cash discount, receipt 905.
26 Received R 9 000 on account from C Xhoza, receipt 906.
27 Received R 12 000 on account from B Able, receipt 907.
28 Received damaged goods returned from B Able. Sent a credit note
C 910 for R 660.

Additional Information

(1) Ignore VAT.

(2) All goods are sold at a mark-up of 25 % on cost price.

Required
Prepare the Cash Receipts Journal of Dhlomo Traders for the month of September 2022:
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Lecture example
• Sep 1 Received R 30 000 from J Dhlomo as additional capital
contribution to the business. (receipt 901).
Sept 6 Received R 120 000 loan from Axe Bank, receipt 902.

Sept 20 Sold goods for R 1 300 cash, receipt 903.

Sept 22 Sold goods for R 1 700 cash, receipt 904.

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Lecture example
Sept 25 X Jabu paid the amount owed by them, less 10% cash
discount, receipt 905.
Sept 26 Received R 9 000 on account from C Xhoza, receipt 906.
Sept 27 Received R 12 000 on account from B Able, receipt 907.

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Solution to Lecture example…continued
Sept 20 Sold goods for R 1 300 cash, receipt 903.
Sept 22 Sold goods for R 1 700 cash, receipt 904.

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If the mark-up is on Cost price…then Cost = 100%
Calculate the CP if the Selling price = and mark-up is
25%.
• Cost……………………… 100 % - X = ???
Mark-up………………. 25 % -
Selling price…………. 125 % - R 1 300

• Cost……………………… 100 % - X = ???

Mark-up………………. 25 % -
Selling price…………. 125 % - R 1 700

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 CRJ Solution
Cost of
Date Details Debtors Sales Discount Sundry Bank
sales
R R R R R R

1 Capital 30 000 30 000

6 Loan 120 000 120 000

26 Debtors (C Xhoza) 9 000 9 000

27 Debtors (B Able) 12 000 12 000

33 000 3 000 2 400 1 200 184 800

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