Summary
Highlights
This lesson focuses on combining the posting of the Cash Receipts Journal (CRJ) and the Cash Payments Journal (CPJ) to the General Ledger. The video will provide practical examples for Grade 8 EMS Financial Literacy students. Key steps include recording opening balances, recording journals, and balancing accounts at the end of the month. The instructor emphasizes that there will be question marks in some examples, which will be worked through together.
The Capital account is the first to be recorded. It begins with an opening balance of 30,000 Rand on the credit side, following the 'DEADCLIC' accounting acronym (Capital increases on the credit side). An additional capital contribution of 20,000 Rand on March 1st is also recorded. Each transaction that occurs on a sundry account should be posted on the day it occurred, and the new balance recorded at month-end.
The Drawings account begins with an opening balance of 300 Rand. Any further drawings for the month of March are also recorded, followed by the final balance at the end of the month.
The Bank account, being a current asset, starts with a debit balance of 19,000 Rand. Total receipts from the CRJ (40,400 Rand) are debited, and total payments from the CPJ (57,000 Rand) are credited. To balance the account, total lines are drawn, the larger side (59,400 Rand) is summed and placed on both sides, and the difference (2,400 Rand) is recorded as 'Balance CD' (carried down) on the smaller side. This balance is then brought down as 'Balance BD' (brought down) on the opposite side for the next month. A credit balance would indicate an overdraft.
Equipment, an asset, has an opening debit balance. A transaction from the CPJ for 19,000 Rand on March 3rd is recorded, with 'Bank' as the Contra entry and 'CPJ 4' as the journal reference. The account is then balanced by summing the debit side to 28,000 Rand.
Current Income is an income account and therefore increases on the credit side. The opening balance is 11,000 Rand. A column total of 14,400 Rand (calculated by subtracting other CRJ columns from the bank column) is posted at month-end, with 'Bank' as the Contra entry and 'CRJ 4' as the journal. The final balance is 25,400 Rand.
Rent Income, an income account, has an opening balance on the credit side. A specific transaction on the 10th is recorded from the sundry accounts column, with 'Bank' as the Contra entry and 'CRJ 4' as the journal. The account is then balanced by simply adding the amounts.
Wages, an expense account, has its balance brought down on the debit side because expenses increase on the debit side. A column total of 4,000 Rand is posted at month-end, with 'Bank' as the Contra entry and 'CPJ 4' as the journal. The new balance is 6,000 Rand.
The Advertisements account has its balance already recorded. The amount for journal posting (4,000 Rand) is calculated by doing a reverse calculation from the bank column: Bank Total (57,000 Rand) - Wages (4,000 Rand) - Stationery (49,000 Rand) = 4,000 Rand. This demonstrates that all columns should add up to the bank column.
Stationery is an expense, and its transaction on the 20th is recorded, with 'Bank' as the Contra entry and 'CPJ 4' as the journal. The balance becomes 700 Rand. Electricity is also an expense and is recorded on the debit side for a transaction on the 9th, with 'Bank' as the Contra entry and 'CPJ 4' as the journal. The account is balanced by adding the amounts to 5,000 Rand.