Accounting Journals Overview

Overview

This lecture explains the four main accounting journals—Cash Receipts Journal (CRJ), Cash Payments Journal (CPJ), Debtors Journal (DJ), and Creditors Journal (CJ)—and demonstrates how to record typical business transactions in each, using Sunshine Glass Traders as an example.

Types of Journals

• Cash Receipts Journal (CRJ): Records when the business receives money immediately (e.g., sales, rent income).
• Cash Payments Journal (CPJ): Records when the business pays money out immediately (e.g., expenses, purchases via EFT).
• Debtors Journal (DJ): Records when customers buy on credit (business invoices the customer).
• Creditors Journal (CJ): Records when the business buys on credit from other businesses.

Key Transaction Examples

• Owner increases capital by depositing money: CRJ, capital.
• Paid for water and electricity by EFT: CPJ, sundry expenses.
• Bought materials with trade discount via EFT: CPJ, materials at net price.
• Received merchandise on credit: CJ, trading stock.
• Purchased stationery/computer on account: CJ, stationery/equipment.
• Cash sales of merchandise: CRJ, sales; calculate cost of sales using markup formula.
• Sold goods on credit to customers: DJ, sales and cost of sales.
• Paid salary and wages via EFT: CPJ, salaries (sundry)/wages.
• Customer pays part of account: CRJ, debtors control.
• Paid creditor in full by EFT: CPJ, creditors control.

Journal Completion and Balancing

• Only add up the relevant columns (never analysis of receipts in CRJ).
• In CRJ, total of sales, debtors control, and sundry must equal the bank total.
• In CPJ, sum all expense columns and ensure the total matches bank payments.
• Use correct columns for each transaction (e.g., drawings for owner’s personal expenses).
• Double-check totals for correctness before finalizing.

Calculating Cost of Sales

• Cost price = Selling price × 100 / (100 + Markup %).
• Always record cost of sales alongside sales in journals.

Key Terms & Definitions

• Debtor: Customer who owes money to the business for goods bought on credit.
• Creditor: Supplier from whom the business has bought on credit.
• Markup: Percentage added to cost price to determine selling price.
• EFT: Electronic Funds Transfer, indicates immediate payment.
• Drawings: Owner’s personal withdrawals from the business.
• Sundry: Miscellaneous or non-regular items/expenses in journals.

Action Items / Next Steps

• Practice entering transactions into each journal using the example provided.
• Download the exercise linked in the lecture for extra practice.
• Review how to transfer journal totals to the general ledger in future lessons.