Cash Payments Journal (Grade 10 NSC Matric Accounting): Revision Notes

Cash Payments Journal

What is a cash payments journal?

A Cash Payments Journal (CPJ) is a special accounting record used by sole traders to track all payments made by the business using cheques or bank transfers. Think of it as an organised diary that shows who you paid, when you paid them, and what you paid for. This journal is one of several subsidiary journals (also called books of first entry) used to record daily transactions before they are posted to the ledger accounts.

The Cash Payments Journal helps the business owner keep detailed records of all money flowing out of the bank account. This is essential for managing cash flow, tracking expenses, and preparing accurate financial statements at the end of the accounting period.

Purpose of the cash payments journal

The Cash Payments Journal serves several important functions in the accounting system:

• Records all outgoing payments: Every cheque written or bank payment made is documented in one place
• Analyses expenses: Different columns help you see exactly what types of expenses you're paying for (stock, wages, creditors, etc.)
• Saves time: Instead of posting each payment transaction individually to the ledger, you can post totals at the end of the month
• Reduces errors: Having all payments in one journal makes it easier to spot mistakes or missing transactions
• Provides an audit trail: You can trace any payment back to its source document (the cheque or payment slip)

Structure of the cash payments journal

The Cash Payments Journal is organised into several columns, each serving a specific purpose. The journal heading includes three key pieces of information:

1. Name of the subsidiary journal: "Cash Payments Journal"
2. Business name: For example, "Enough Traders"
3. Time period: The specific month being recorded, such as "May 2010"
4. Folio reference: Abbreviated as "CPJ" with a page number in brackets

Here's what a typical Cash Payments Journal looks like:

Doc	Day	Name of payee	Fol	Bank	Trading stock	Creditors control	Discount received	Debtors control	Wages	Sundry accounts
										Amount

Understanding each column

Column 1: Doc (document number)

This column records the source document reference number. For most cash payment transactions, this will be the cheque number issued by the business. Source documents provide proof that the transaction actually occurred.

Column 2: Day

This column shows the specific day of the month when the payment was made.

Column 3: Name of payee

This is the person or business receiving the payment.

Column 4: Fol (folio reference)

This shows the page in the Creditors' Ledger where the supplier's account is found.

Column 5: Bank

This column records the total amount paid out from the bank account.

Column 6: Trading stock

Used when the business buys stock for cash.

Column 7: Creditors control

Records the total amount by which the creditor’s account decreases (bank amount + discount).

Column 8: Discount received

Records discounts received from creditors.

Column 9: Debtors control

Used when recording dishonoured cheques (R/D).

Column 10: Wages

Records wages or salaries paid to employees.

Column 11: Sundry accounts

Used when payments do not fit other columns (e.g., telephone, repairs, drawings).

---

Discount received from creditors

There is a relationship between the three values when discount applies:

$\text{Bank} + \text{Discount received} = \text{Creditors' control}$

Worked Example 1

A business owes SNA Distributors R4 000. A 5% discount is offered for prompt payment.

• Creditors’ control: R4 000
• Discount (5%): R200
• Bank payment: R3 800

Recording in CPJ:

Bank	Creditors' control	Discount received
R3 800	R4 000	R200

---

Worked Example 2

A business owes Small Traders R6 800. A 5% discount applies.

• Discount: R340
• Bank payment: R6 800 − R340 = R6 460

Record in CPJ:

Bank	Creditors' control	Discount received
R6 460	R6 800	R340

---

Dishonoured cheques (R/D)

When a cheque from a debtor bounces, the original receipt must be reversed.

Example:

A debtor (M. Naidoo) paid R380 for a debt of R400, receiving R20 discount. The cheque is returned R/D.

Record in CPJ:

Name of payee	Bank	Debtors' control
M. Naidoo (R/D)	380	380

The discount must be cancelled in the General Journal, not the CPJ.

---

---

Tips for exam success

1. Check the date
2. Identify the transaction type
3. Use the formula: Bank + Discount = Creditors’ control
4. Remember R/D cheques go in the CPJ
5. Use sundry accounts for anything without its own column
6. Doc = cheque number
7. Folio references must be correct

---

Common transactions in the CPJ

• Paying creditors
• Buying stock for cash
• Paying wages
• Business expenses (telephone, repairs, stationery)
• Drawings
• Increasing petty cash
• Loan repayments
• Bank charges and interest

---

Remember!