Tomamina Teaching - Lesson 2, Term 2: Debtors, Source Documents, and Journals

Introduction

• Focus on debtors, source documents, and journals.
• Recap: Credit sales involve debtors, who owe money to the business.
• Credit Invoice: The source document for credit sales.
• Debtors Journal (DJ): Records all credit sales for a month.

Credit Invoice

• Purpose: Serves as proof of credit sales.
• Issued to: Client (original), Business (duplicate).

Example of a Credit Invoice

1. Invoice Number: Essential for tracking.
2. Date: Transaction date (e.g., 20th March).
3. Client Information: Name and address.
4. Details of Goods Sold: Quantity, description, unit price.
5. Amount Calculation: Multiply quantity by unit price.
6. Total Amount: Sum of all amounts owed.

Debtors Journal (DJ)

• Use: When goods are sold on credit.
• Heading Requirements:
  • Name of the journal.
  • Name of the business.
  • Month and year.
  • Folio number (DJ1 for the first journal).

Columns in a Debtors Journal

1. Document Number: Source document, e.g., invoice number.
2. Day Column: Date of transaction.
3. Debtors Column: Name of the debtor.
4. Folio Column: For cross-referencing in the debtors ledger.
5. Sales Column: Total selling price of goods sold on credit.
6. Cost of Sales Column: Total cost of the goods sold.
7. Journal Number (DJ1): Specific number of the journal.

Practical Example with Ikasikovo Company

• Scenario 1: Goods sold to Femi Traders for 4,800 Rand on credit.

• Keywords: Credit, Invoice, Debtors Journal (DJ).

• Invoice Number: 57, Date: 4th.

• Cost of Sales Calculation:

  • Using grid method: Cost Price (CP) + 20% Profit Margin = Selling Price.
  • Formula: 4,800 Rand x 100 / 120 = 4,000 Rand.

• Scenario 2: Goods sold to Hakim Suppliers for 3,600 Rand on credit.

• Cost of Sales Calculation:

  • 3,600 Rand x 100 / 120 = 3,000 Rand.

Recording Payments from Debtors

• When Debtor Pays Off Account:
  • Business receives money, issues a receipt.
  • Original Receipt: Given to the customer.
  • Duplicate: Used as a source document by the business.

Receipt Layout Recap

1. Date: Of the receipt.
2. Receipt Number: Identifies the transaction.
3. Debtor's Name and Amount.

Example

• Transaction: Received 1,500 Rand from D. Takarei.
• Receipt Number: 34.
• Important Words: Received, Partial Payment, Receipt Number.

Conclusion

• Reviewed the debtors journal and related documents.
• Next lesson focuses on posting DJ into the general ledger.

• Resources: Self-marking assessment and Google Slides available for further study.