Mr.

Motlhatlhana Mokgokone
FAC1502 Study unit 5
 Processing accounting data
Purpose of this lecture:
Understand books of first-entry (Subsidiary journals) that are
used to record different types of transactions.
Important concepts
Value Added Tax
Do class exercise
 Types of subsidiary journals or books of first entry

CASH JOURNALS
Cash Receipts Journal (CRJ) – Record all individual cash
received by the business.

Cash Payments Journal (CPJ) – Record all individual cash

payment made by the business.
 Types of subsidiary journals or books of first entry
CREDIT JOURNALS
There two inventory system, namely Periodic inventory
system and perpetual inventory system.
At this stage just know that merchandise purchased on credit
is debited to purchases account because we using periodic
inventory system.
Purchases Journal (PJ) – All trading inventory (merchandise)
purchased on credit by the entity is recorded in the PJ of
the entity.
Purchases Returns Journal (PRJ) – All trading inventory
(merchandise) returned to the seller by the entity is recorded in
the PRJ of the entity. Only merchandise that was purchased on
credit, if returned is recorded in PRJ.
 Types of subsidiary journals or books of first entry
CREDIT JOURNALS.
Sales Journal (SJ) - All merchandise sold on credit is
recorded in SJ.
Sales Returns Journal (SRJ) - All merchandise that was
sold on credit, if returned it is recorded in the SRJ.
General Journal (GJ) - All transactions that cannot be
entered in one of the journals we have discussed above, are
entered in the GJ. Examples are credit losses (bad debts) that
are written off, interest on debtors‘ accounts, errors that are
corrected and year-end adjustments.

NB!! Purchases and sales of goods, other than merchandise,

are recorded in the GJ for the purposes of this module.
 Important concepts before doing class exercise
 Debtors – Customers who owes entity money as a result of
credit sales made to them.
 Creditors – Suppliers who have sold good or rendered
services to entity on credit.
 Settlement discount granted-refers to settlement discounts
offered to debtors, in order to encourage early settlement of
their debts.
 Settlement discount received – refers to settlement
discounts offered by creditors in order to encourage quick
settlement of entities’ outstanding accounts.
 Value Added TAX
 VAT can only be charged by persons who, in terms of the
Value-Added Tax Act, are registered as VAT vendors.
 Current VAT rate is 15% in South Africa.
 OUTPUT VAT is the tax levied (charged) by the entity on
sales of good or services rendered by the business.
 INPUT VAT is the tax paid (or payable) on goods delivered
and/or services rendered to the entity.
 Deductions for input tax will only be allowed if a proper tax
invoice is received and kept.
 If Output VAT is more than Input VAT, the difference is
payable to SARS.
 If Output VAT is less than Input VAT, the difference is
refundable to the entity by SARS.
 Value Added TAX
 If the amount is VAT inclusive, it means the vat of 15% is
already included in the amount.
 Therefore, the following calculation will be performed in
order to determine:
VAT amount= Amount including VAT X 15/115

 If the amount is exclusive of VAT, it means that vat of 15%

is NOT included in the amount.
 Therefore, the following calculation will be performed in
order to determine:
 VAT amount= Amount excluding VAT X 15/100
 Types of taxable supplies
Standard rate, Zero – rated, Exempt supply.
Zero-rated: Examples includes; milk • eggs • cake flour • brown bread•
samp • maize meal • mealie rice,(refer to page 34 of study unit 5)
Exempt: Examples includes financial services • interest received •
interest paid • educational services(refer page 34 of study unit 5)
 Revision 5.11 on study unit 5
REQUIRED
(1) Record the above transactions in the following subsidiary
journals, properly totaled, of Sunshine Glass Traders for February 20.4:
(a) Cash receipts journal (analysis columns for bank, sales, VAT output, trade
receivables control, VAT input (Dr), settlement discount granted and sundries).

(b) Cash payments journal (analysis columns for bank purchases, trade
payables control, settlement discount received, Wages,VAT input, VAT output (Cr)
and sundries).

(c) Sales journal (analysis columns for VAT output, sales and trade receivables
control).

(d) Purchases journal (analysis columns for VAT input, purchases and trade
payables control).
 Revision 5.11 on study unit 5
REQUIRED conti…..
(e) Sales returns journal (analysis columns for VAT output, sale returns and
trade receivables control).

(f) Purchases returns journal (analysis columns for VAT input, purchases
returns and trade payables control).

(g) General journal

 Revision Exercise 5.11 on study unit 5
TRANSACTIONS FOR FEBRUARY 20.4
Feb 1
The owner, S Shine , made a direct payment into the bank account of the
business to increase his capital contributions R15000.
Made an EFT to the City Council for water and electricity R3 105.
Feb 3,
Purchased merchandise from Glasco Ltd and paid by an EFT directly into the
bank account of Glasco Ltd R8 855.
Purchased merchandise on credit from Ferguson Limited R9 200.
Sold trading inventory on credit to J Janson R13 800.
Feb 4,
Purchased a desk on credit from City Furnitures R3 565.
Feb 6,
Purchased receipt books and pens from Pencil and paid by credit card R230.
 Revision Exercise 5.11 on study unit 5
TRANSACTIONS FOR FEBRUARY 20.4 conti…….
Feb 6,
Drew cash to pay the weeks wages R954
Feb 8,
Made an EFT to Glasco Ltd pay their account R3 990.
Received discount from Glasco Ltd R230.
Feb 10,
Cash sales of merchandise R3 910.
Feb 12,
Issued a credit note to J Janson for an overcharge on the 3 rd R115.
Drew cash to pay the weeks wages R940.
Feb 15,
Cash sales R2 415
J Jason paid money directly into the bank account of the business R5 985
 Revision Exercise 5.11 on study unit 5
TRANSACTIONS FOR FEBRUARY 20.4 conti…….
Feb 15,
Settlement discount granted to him R345.
Feb 18,
Sold goods on credit to F Brown R4 600.
Cash purchases of trading inventory R2 760.
Purchased glassware on credit from Glasco Ltd R5 750.
Feb 20,
Returned damaged goods to Glasco Ltd R575.
Feb 21,
Drew cash to pay wages R989.
Received damaged goods returned by F Brown and issued a credit note
R230.
Feb 25,
Cash sales R6 210.
Revision Exercise 5.11 on study unit 11
TRANSACTIONS FOR FEBRUARY 20.4 conti…….
Feb 25,
Received an EFT from F Brown R2 550.
Settlement discount granted to him R230.
Feb 26,
Drew cash to pay wages R945.
Made an EFT to Telkom to pay the telephone account R575.
Received an account from Printo Limited for the printing of documents R805.
Feb 27,
Purchased inventory on credit from Glasco Ltd R3 450.
Made an EFT to Ferguson Ltd and received R299 discount R5 476.
Feb 28,
Made an EFT to HP Bank to pay the owners house instalment R2 500.
Z Zittace made a direct payment into the bank account of the business to pay his rent 920.
Solution: Revision Exercise 5.11
Solution Revision Exercise 5.11
Solution Revision Exercise 5.11
Solution Revision Exercise 5.11
Solution Revision Exercise 5.11
Solution Revision Exercise 5.11
Solution Revision Exercise 5.11