Grade 9 EMS Lesson 5: Posting CRJ and CPJ to the General Ledger

Introduction

• Previous Lesson Recap: Lesson 4 covered CPJ (Cash Payments Journal) and CRJ (Cash Receipts Journal) of a trading business.
• Current Lesson Overview: Focus on posting CRJ and CPJ to the General Ledger and balancing it.
• Lesson Division: This lesson (5) is split into two parts – Lesson 5.1 covers CRJ posting; Lesson 5.2 will cover CPJ posting later.

General Ledger Structure

• Main Accounts:

  • Balance Sheet Accounts:
    1. Equity Accounts (Capital and Drawings)
    2. Assets
    3. Liabilities
  • Nominal Accounts:
    1. Income Accounts
    2. Expenses Accounts

• Posting Order:

  • Equity, Assets, Liabilities, Income, Expenses (DALICE acronym).

DALICE Acronym

• Purpose: Understand which side (debit or credit) accounts increase or decrease.
• Explanation:
  • Drawings, Assets, Expenses increase on the Debit side, decrease on the Credit side.
  • Liabilities, Income, Capital increase on the Credit side, decrease on the Debit side.

Double Entry Principle

• Definition: For every entry on the debit side, there must be a corresponding entry on the credit side.
• Balance Requirement: Debits must equal credits for each transaction.

Golden Rules of the General Ledger

1. Column totals in journals are posted on the last day of the month.
2. Sundry accounts in journals are posted on the day the transaction occurs.

Practical Application

• Example 1:

  • Transaction: Purchase of trading stock for 5,500 Rand by EFT.
  • Posting:
    • Bank: Credit - because it's a current asset decreasing (money out).
    • Trading Stock: Debit - because it's an asset increasing.

• Example 2:

  • Transaction: Sold goods for cash (4,500 Rand), cost price (3,000 Rand).
  • Posting:
    • Bank: Debit - because it's an asset increasing (money in).
    • Trading Stock: Credit - because it's an asset decreasing (stock out).
    • Sales: Credit - increases owner’s equity.
    • Cost of Sales: Debit - decreases owner’s equity (expense).

Activity: Establishing Company

• Scenario: End of June 2021 transactions provided.
• Task: Open general ledger accounts, post, and balance them.

CRJ Posting Reminder

• Procedure:
  • Bring Down Balances: Apply DALICE and golden rules.
  • Account Examples:
    • Capital: Increase on credit side.
    • Bank: Asset, increase on debit side.
    • Trading Stock: Asset, decrease on credit side (sold).
    • Sales and Rent Income: Income, increase on credit side.
    • Cost of Sales: Expense, decrease on debit side.

Conclusion

• Next Lesson (5.2): Will cover CPJ posting to the general ledger.

Note: Practice these concepts and review the examples to become comfortable with the material. Use the DALICE framework to guide ledger postings effectively.