Grade 11 Accounting Term 2 | June Exam Paper 2 Creditors Reconciliation Part 1 of 2026

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[00:00:05]Hi guys. So in this video we are going to do a creditors reconciliation. So this is under reconciliation topic. So I'm going to try to make it as simple as possible. So guys this is part one which I'm going to post it together with part two. I'm going to post them same time. So after this one you must go and watch part two as well. It's going to help you a lot guys when we talk about reconciliation. This is the topic that you need to balance in accounting.

[00:00:37]It's not long it's very short uh question. So you must watch until the end. So if you are watching on Tik Tok guys please go on YouTube channel Accounting Solution SA so that you can watch the full video. Okay. So guys now let's check and before we start with this question we need to give a background on what is all about creditors reconciliation. When we talk about creditors guys you know that creditors is those who borrow us is our supply. So now when we reconcile is to when we say the reconciliation simply means that we want to correct something that was not done correctly. Okay. So credit reconciliation is about us as a business if you are talking about accounting solution as a company. It's about us as accounting solution and our uh supplier. Okay. And when we record uh reconcilation guys, it must be between me as accounting solution and one supply. If our supply is pick and pay, it must be between accounting solution and pick and pay only. Even if I also sometimes purchase at SPA, yes, SPA it is it is my supplier. But when I do reconciliation, I must not include two different companies. Only two companies are allowed to be reconciled at the same time. Okay? So in other words, I'm emphasizing that if you find that we have a transaction that contain a third party, just make sure that you cancel that transaction. It does not form part of the consolation that we are doing. It's between only two party. So this two party which is our business which we call it a creditor's ledger and our statement is our supplier simple it's between us as a business and our supplier okay both of us we can do mistake we don't only focus on the business that business is the one that is going to do mistake even our supplier can do mistake so if our supplier did mistake we rectify here if as a business we did mistake we rectify here. That's the principle number one that you need to know. Then principle number two guys this is this is what you need to listen very very carefully. Remember when we do reconcilation here guys we need to indicate a sign whether are we adding or subtracting. Okay. Number one you must understand what is the meaning of invoice. If they give you invaction and they say that there's an invoice, just know that as a business, we purchase from our supplier on credit.

[00:03:32]And if we purchase on credit, our liability is going to increase. When we purchase on credit, our liability will increase. This is the situation that you are going to find that h our liability is increasing. Number one, when we buy on credit, our liability is going to increase.

[00:03:55]Whether this side or this side, the sign are the same both side. Okay? In other words, if we purchase on credit and we never pay, our liability will increase here and will also increase here. Number two, what can makes us to use a sign plus? Maybe for example, if we were not paying in time and they decided to charge us interest, if they charge us interest, our liability is going to increase because now we are going to pay them more including those interest that they charge us. Okay? Then we also have to know a situation where h we will find that we're going to have a plus sign.

[00:04:40]Plus sign can also happen guys if maybe we over deducted discount or we over deducted payment when we reverse what was subtracted we're going to add back in accounting if you subtract by mistake when you rectify you add that's the situation where you're going to find a plus. So now let's check the situation where you're going to find a minus. Number one, if we paid our supplier, our liability is going to decrease. So, we must show a minus here or here depending on who didn't record. If we were the one who didn't record, we must record here.

[00:05:18]If our supplier are the one who didn't record our payment, we must record it here. If both of us who didn't record, we record on the boss side. Number two guys, what can makes us to use a minus? A situation where we are given a discount.

[00:05:38]If they give you a discount, they say that maybe you oweing 100 rand and they said I don't pay 50 rand that 50 rand is going to reduce liability because we are not going to pay them that discount that they gave us. Okay, another one. H before we go to the question paper, if we return a goods, a credit note or debit note, those two items they are referring to allowance where goods were returned and we are no longer owing those goods. So if we return something guys, we need to show a minus because we are not going to pay those goods anymore. Okay, so that's another example that you need to know. So now let's go and try to do this question paper together. So this is the answer book that is used mostly since 2020. They are using this answer book. Okay. So that's the same one that we are going to use on this question paper.

[00:06:38]Okay. You are provided with the information from the record of SH trader for June 2024. SH trader buy goods on credit to Dragon Supply. So now we have identified the name of our business. The name of our business is called Shark Traders.

[00:06:59]Okay. Our supplier is called Dragon Supply.

[00:07:06]So in other words, if we find any other company which is not part of this one that we listed H simply means that we are going to cancel those transaction because third part like I said at the beginning they are not allowed at all.

[00:07:23]You must know that guys. Okay. So now um 3 1.3.1 show the changes to the credits ledger account here and on the statement which is here and you have to indicate whether the amount is a plus or minus. Okay, this is the answer book that was given.

[00:07:49]Okay, then the last one we're going to do it after everything which is 1.3.2.

[00:07:55]Okay. Number A. They say that the balance of Dragon supplier in the Catus ledger account is 174 640 and is credit amount. So in other words, our liability increase on the credit because creat ledger is our books which means that our liability increase on the credit which means that here we have a plus uh 174 uh 6T statement does opposite with that which means that if our books we have a plus here and minus here which means that Our supplier have a opposite with that they have a plus minus like this.

[00:08:40]Okay. So this amount is positive because it's credit and our supplier have a debit which is positive and it's going to be 19800.

[00:08:51]So that's the principle that you need to know to check whether amount it was a plus or minus. Okay. Supplier side increase on the debit. But guys I always tell my student that h when we talk about creditors here we are talking about liability is our supplier.

[00:09:10]So if this amount is negative it simply means that our supplier owe us. How come that situation is very rare to find because once it become negative simply means that they are no longer a creditor they are now data and here we are doing ctor reconciliation.

[00:09:29]So this amount usually always positive.

[00:09:33]So you must know that. Okay. Now guys uh the next part let's go and read this transaction one by one and record them.

[00:09:43]At the end of the day when we calculate them as balance a payment of 13,000 by shark as we make a payment and was omitted in the credit ledger account in our books it was omitted. omitted simply means that it was never recorded at all.

[00:10:01]Okay? And on the statement received, in other words, it was omitted in our books and in our supplier side. Because we make a payment, liability must decrease.

[00:10:14]That's why we're going to say minus3,000 -3,000 because we paid h our supplier dragon supplier so it must be minus minus the reason we record both side is because in our books was not recorded and they said even on the supplier side was not recorded so we must record on the boss book okay number two invoice in other words when they said invoice think about when we purchase on credit invoice for 26 28,600 received from Dragon supplier was correctly recorded by Sharks as we don't have any issue in this transaction. We correctly recorded amount of 28,600 but the statement account reflected 26. In other words on the supplier because it's invoice and invoice is added because it's increasing liability. We purchase we didn't pay supplier side they recorded 26. They recorded lower amount instead of higher. They recorded 26 instead of 28. So we need to calculate different between 28 and 26 so that we can go and edit here because this one is the one who did mistake in our site.

[00:11:35]They said we recorded everything correctly. Okay. So it's going to be uh let me calculate plus [snorts] 1,00 800 plus 1,800.

[00:12:03]Okay, so that's how uh we recorded this one. We find the different and because it was under recorded, we just add if if it was over recorded, we subtract. Okay. Then the next one, SH trader correctly recorded discount of 1,600 for early payment and this was not shown on the statement.

[00:12:28]Okay. SH traders correctly recorded discount but our supplier uh didn't record. This was not shown on the statement which mean that statement is the one who is wrong. So we must go and record because it's discount. Discount reduce liability. So it must be minus 1.6. It reduce liability.

[00:12:51]Okay.

[00:12:53]Then number four, SH trader recorded a debit note of 2.5 in the ledger account of Dragon supplier in error and this was good return to another supplier.

[00:13:09]Shers recorded a debit note. A debit note is when us as a business we did what? We return. So in other words guys here what happened it contain another supplier a third party must be cancelled we don't reconcile third party we cancel it so in other words shers subtracted because return we subtract shrers subtracted uh 2.5 in the reconation of these two and unfortunately that amount we can't say it we have to record it here because it's not for dragon it's for another party. So if it's another party, we must cancel what we did in our business.

[00:13:52]Okay, this was good return to another supplier. So because it was subtracted, when we cancel, we add it back plus uh 2.5, we add it back because it was a return and return was subtracted. We cancel it because it's for third party. Third party are not allowed. The next one, a credit note of 4,000 received from Dragon supplier for an allowance granted. So they grant allowance. In other words, they allowed us to reduce a liability by 4,000 was incorrectly recorded as invoice by Shak Trader. Us as a business guys, we were supposed to subtract but we added as invoice.

[00:14:43]Remember invoice we add because invoice increase liability. So this was added by mistake. It was supposed to be subtracted. What do we do? Because it was added. Now we have to subtract minus 4,000. Remember this 4,000 is cancelelling the first one which was initially added. Okay. So now because we also have to record which mean that this transaction we're going to record it twice. We also have to say again the first one is to cancel and the second one is to now record those allowance that we were given. It will be - 4,000 - 4,000 which is the same as - 8,000 - 8,000 because we record it twice. The first one to cancel, the second one to record the allowance which was cancelled. Okay, the next one very simple guys. I hope you are learning something. Uh number six, the statement account show the following item that were not recorded by she. The statement show this and this was not recorded by us which mean that now we're the one who have to record. Okay. Uh number one a delivery charge for the month. They charge us delivery which mean that liability is going to increase.

[00:16:10]The chargers delivery h this was on the statement which means that no need to record here we must record here because it was not on the record of sharks traders and invoice for goods purchased we have liability guys we purchase invoice of 4,800 so we must record it simple like that okay then the last one a payment of 10,000 made on 28 June 2024 by shake traders was recorded in the creditors ledger account of Dragon Supply and the statement was dated 26. In other words, uh we make a payment on 28 and this statement is only revealing up to 26 which means that it was not there.

[00:17:00]The supplier didn't record that we paid 10,000 because they released the statement earlier before we make a payment. So because it's a payment liability will decrease by 10,000.

[00:17:14]Okay. So this is how is done. And now we need to calculate uh totals while you are also verifying these totals guys. I want to remind you that our online extra class are still ongoing. And the lovely part now guys, we also introduce uh the option of attending four times a week if you want to balance paper one and Pepper 2 which is going to be available from now going forward even during June and July holidays. We will be operating guys because learning need time. H some of you you you are not quick when it come to learning. So we must keep teaching even when we are on holidays so that you will be able to catch up in time. So come and join us guys you will learn h good. So we have option of 100 that you know which you attend only two times a week. We have 150 option which you're going to attend three times every week. And we have a option of 200 if you want to attend four times a week which is going to be Sunday, Tuesday, uh, Wednesday and Friday. So if you want to balance obviously two days is for paper one, two days is for paper two for the option of 200. But if you want option of 100 which means that is paper one once a week, pepper two once a week. Okay. So you choose which one is best for you. But if you are struggling most guys I advise you to take option of 200 which you are going to learn more and more and more.

[00:18:57]Okay. So I hope you you have calculated this and on my side I'm getting 168,000 and 168,000.

[00:19:10]So you simply add everything which is positive and subtract everything which is negative.

[00:19:17]You you start from the balance. Same applies here. You're going to get this.

[00:19:22]Okay. So that's it for this video guys.

[00:19:25]Let's so let's keep subscribing guys. H we are keeping um we want to make sure that this channel keep reaching more and more milestone.

[00:19:36]So if you keep subscribing guys we appreciate you. H tell us on the comment section which province are you learning from and how is it going so far.

[00:19:47]Otherwise I'm going to see you on part two.

[00:19:51][snorts]