Types of Cash Book – TaxDose.com

Types of Cash Book

(i) Single Column Cash Book: It is like an ordinary cash account. In this all cash receipts are recorded on the left hand side (real account – debit what comes in) and all cash payments are recorded on the right hand side (real account – credit what goes out).

(ii) Two (Double) Column Cash Book: It has two amount columns on both sides; one is for cash and another is for discount. Cash column is meant for recording cash receipts and payments while discount column is meant for recording discount received and allowed. The discount column on the debit side represents the discount allowed while discount column on the credit side represents the discount received.

Note: Discount columns do not serve the function of a discount account. Discount columns are merely memorandum columns. Discount allowed account and discount received account are opened in the ledger and the totals of discount columns are posted to these accounts.

Illustration 4:

Record the following transactions in Cash Book of Mr. Singh:

2012		Rs.
1-Apr	Mohan Lal commenced business with cash	1,00,000
” 2	Bought goods for cash	65,700
” 3	Sold goods for cash	4,320
” 6	Received cash from Fateh Singh	1,800
” 6	Allowed him discount	50
” 9	Paid cash to Shugan Chand	19,500
	Discount allowed by Shugan Chand	500
” 12	Paid for Office Furniture	5,680
” 18	Sold goods for cash	7,810
” 23	Received cash from Subramaniam	9,870
”	” Discount allowed to him	120
” 27	Paid for advertising	500
” 28	Cash paid to Asia Trading Co.	20,300
	Discount received	250
” 30	Cash sales	1,280
” 30	Cash received from Fateh Singh	2,850
	Discount allowed to him	100
	Salary paid in cash	3,150

Solution:

Mr. Singh

Dr. Cash Book Cr.

Date	Particulars	L.F	Discount Rs.	Cash Rs.	Date	Particulars	L.F	Discount Rs.	Cash Rs.
2012					2012
April					April
1	To Capital A/c			1,00,000	2	By Purchases A/c			65,700
3	To Sales A/c			4,320	9	By Shugan Chand		500	19,500
6	To Fateh Singh		50	7,810	12	By Furniture A/c			5,680
18	To Sales A/c			1,800	27	By Advertising			500
23	To Subramaniam		120	9,870	28	By Asia Trading Co.		250	20,300
30	To Sales A/c			1,280	30	By Salary			3,150
30	To Fateh Singh		100	2,850	30	By Balance c/d			13,100
	To Balance B/d		270	1,27,930				750	1,27,930
1-May				13,100

(iii) Three Columnar Cash Book: This type of cash book contains the following three amount columns on each side:

(a) Discount column for discount received and allowed;

(b) Cash column for cash received and cash paid; and

When triple column cash book is prepared, there is no need for a separate bank account in the ledger. The bank account maintained by the enterprise is a personal account and the cash account is a real account. For recording transactions in the bank column of the cash book the rule of debit and credit applicable to personal accounts should be followed i.e. debit the receiver and credit the giver. Thus, when cash is deposited with bank, the bank would be the receiver and would be debited in the bank column of the cash book. Similarly, for cash withdrawn from the bank the bank would be the giver and would be credited in the bank column of the cash book.

Contra Entry: If a transaction involves both cash and bank accounts, it is entered on both sides of the cash book, one in the cash column and other in the bank column, though on opposite sides. There are is called contra entries and word ‘C’ is indicated against that item in L.F. columns e.g. when cash is withdrawn from the bank, it is recorded on the debit side in cash column and on the credit side in the bank column. Similarly, when cash is deposited with the bank, the amount is recorded on the debit side in bank column and on the credit side in the cash column.

Illustration 5:
On 1st May, 2012 the columnar cash book of Mitra showed that he had Rs. 2,000 in his cash box and that there was a bank overdraft of ` 8,000. During the day the following transactions took place:

Cash withdrawn from bank for office use	10,000
Paid salaries in cash	3,000
Cash paid to Harish & Co.	6,500
Drawings in cash made by Mitra for household expenses	1,000
Received from G. Guha in settlement of an account of ` 10,000,
Rs.1,800 in cash and a cheque of ` 8,000. The cheque was immediately deposited in bank
Cash sales	6,500
Bank returns a cheque of ` 9,900 received from Kulu & Sons in settlement of an account of Rs.10,000
Paid rent by cheque	1,500
Cash deposited with bank	6,000
Write up the Cash Book for the day and balance it.

Solution:

Dr. Cash Book (Triple Column) Cr.

Date	Particulars	L.F	Discount Rs.	Cash Rs	Bank Rs.	Date	Particulars	L.F	Discount Rs.	Cash Rs	Bank Rs.
2012						2012
May	To Bal. b/d			2,000		May	By Bal. b/d				8,000
1	To Bank	(C)		10,000		1	By Cash	(C)			10,000
	To G.Guha		200	1,800	8,000		By Salaries A/c			3,000
	To Sales A/c			6,500			By Harish			6,500
	To Cash				6,000		By Drawings A/c			1,000
	To Bal. c/d				15,400		By Kulu & Sons		100		9,900
							By Rent A/c				1,500
							By Bank			6,000
			___________	___________	___________		By Bal c/d	©	________	3,800	________
			200	20,300	29,400				200	20,300	29,400
May. 2	To Balance b/d			3,800		May.2	By Balance b/d				15,400

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