Creditors Allowances Journal (Grade 10 NSC Matric Accounting): Revision Notes
Creditors Allowances Journal
What is a creditors allowances journal?
The creditors allowances journal is a special subsidiary journal used by a sole trader to record all returns and allowances relating to creditors (suppliers). When you return goods to a supplier or receive an allowance for damaged or incorrect goods, this transaction is recorded in the creditors allowances journal rather than in the general journal.
This journal is important because it helps you track reductions in the amounts you owe to suppliers. Every entry in this journal reduces your liability to creditors.
Why we use this journal
When you buy goods on credit and later need to return them or receive an allowance, you issue a debit note to the supplier. This debit note serves as source documentation and is recorded in the creditors allowances journal. Common reasons for issuing debit notes include:
- Returning damaged goods
- Returning goods that don't match the order
- Receiving an allowance for faulty items
- Correcting overcharges or pricing errors
Critical Concept: A debit note is always issued when returning goods to creditors or receiving allowances. This document serves as the source documentation for entries in the creditors allowances journal and must be numbered sequentially.
Structure of the creditors allowances journal
The creditors allowances journal has a specific structure with multiple columns:
| Doc | Day | Creditor | Fol | Creditors control | Trading stock | Stationery | Sundry account (Amount / Fol / Details) |
|---|
Understanding each column
Column 1: Document (Doc) — the debit note number
Column 2: Day — the day of the month
Column 3: Creditor — supplier name
Column 4: Folio — page number in creditors ledger
Column 5: Creditors control — total reduction in amount owed
Column 6: Trading stock — value of stock returned
Column 7: Stationery — value of stationery returned
Columns 8–10: Sundry — items that don’t fit other categories
Analysis columns break down the creditors control amount to help with inventory and reporting.
How to record transactions
Worked Example: Lonely Traders – June 2010
Transaction 1 (6 June)
Returned trading stock to RN Wholesalers for R800 less 20% discount. Debit note 45.
- Discount: R800 × 20% = R160
- Net amount: R800 − R160 = R640
Record:
- Doc: 45
- Day: 6
- Creditor: RN Wholesalers
- Creditors control: R640
- Trading stock: R640
Transaction 2 (14 June)
Return packing material valued at R80 to Davido Traders. Debit note 46.
Record:
- Doc: 46
- Day: 14
- Creditor: Davido Traders
- Creditors control: R80
- Sundry amount: R80
- Details: Packing material
Transaction 3 (19 June)
RN Wholesalers failed to give 20% discount on goods previously bought for R14 000. Issue debit note 47.
- Discount: R14 000 × 20% = R2 800
Record:
- Doc: 47
- Day: 19
- Creditor: RN Wholesalers
- Creditors control: R2 800
- Trading stock: R2 800
Transaction 4 (30 June)
Returned damaged stationery valued at R120 to Sam Distributors. Debit note 48.
Record:
- Doc: 48
- Day: 30
- Creditor: Sam Distributors
- Creditors control: R120
- Stationery: R120
The complete creditors allowances journal
| Doc | Day | Creditor | Fol | Creditors control | Trading stock | Stationery | Sundry account (10) | ||
|---|---|---|---|---|---|---|---|---|---|
| Amount | Fol | Details | |||||||
| 45 | 6 | RN Wholesalers | 640 | 640 | |||||
| 46 | 14 | Davido Traders | 80 | 80 | Packing material | ||||
| 47 | 19 | RN Wholesalers | 2,800 | 2,800 | |||||
| 48 | 30 | Sam Distributors | 120 | 120 | |||||
| Totals | 3,640 | 3,440 | 120 | 80 |
Verification: The creditors control total (R3,640) equals the sum of all analysis columns (R3,440 + R120 + R80 = R3,640).
Important points about posting
Daily posting:
Each creditors control amount is posted to the debit side of the individual creditor’s account.
Monthly posting:
At month-end, totals are posted to the General Ledger:
- R3,640 → Debit Creditors control
- R3,440 → Debit Trading stock
- R120 → Debit Stationery
- R80 → Debit Packing material
Analysis columns explained
Analysis columns help identify which goods are being returned and why.
Record the amount in both creditors control and the correct analysis column. Use the sundry section for anything that doesn't fit.
Exam tips
Key Points to Remember:
- Always issue a debit note (source document).
- Deduct trade discounts before recording.
- Creditors control total must equal all analysis columns.
- Use correct analysis columns (trading stock, stationery, sundry).
- Post to individual creditors daily.
- Returns reduce your liability → debit creditor accounts.
Common mistakes
Avoid:
- Recording gross instead of net
- Missing sundry details
- Confusing debit vs credit notes
- Not balancing totals
- Incorrect folio numbers
Summary
Essential Takeaways:
- The creditors allowances journal records all returns to suppliers and allowances received.
- Every entry must have a debit note.
- It reduces the amount owed to creditors.
- Creditors control = sum of trading stock + stationery + sundry.
- Post daily to creditors ledger; post totals monthly to general ledger.