This is made up of cash column, bank column and discount column on both sides of the cash book.
- CASH DISCOUNT: This is an allowance received or reduction made when cash is paid promptly. It is classified into discount allowed and discount received.
- Discount Allowed – Is an allowance or reduction given by the business organisation to debtors / customers for prompt payment of cash. It is an expenses and posted to debit side of profit and loss account and cash book.
- Discount Received – This is an allowance or reduction granted by creditors/suppliers to the business organisation for prompt payment. It is a revenue item and credited to both the profit and loss account and the cash book.
- CONTRA ENTRY: Is a situation whereby double entry for a particular transaction is completed in the same book of account. it is represented by letter ‘C’ in the folio column.
Three Column Cash Book
Dr Cr.
Date Particulars F Dis.allo Cash Bank Particulars F Cash Bank
Example: Olowolayemo started business with #10,000 cash as at 1st Jan., 2014
Jan 3 Paid rent by cash 1,500
Jan 5 Paid Insurance by cash 250
Jan 7 Received cheques from Mutiat 3,000
Jan 9 Cash sales #1000 with 5% discount
Jan 12 Cash purchase 3% discount 2,000
Jan 15 Paid office expense by cheque 400
Jan 18 Paid transport by cheque 200
Jan 20 Withdraw #1200 from cash into bank
Jan 25 Purchase goods by cash with 5% discount 1,500
Olowolayemo
Three Column Cash Book
| Date | Particular | F | Discount allowed | Cash | Bank | Date | Particular | F | Discount
Received |
Cash | Bank
|
| N | N | N | N | N | N | ||||||
| Jan 1 | Capital | 10,000 | Jan3 | Rent | 1,500 | ||||||
| Jan 7 | Mutia | 3,000 | Jan 5 | Insurance | 250 | ||||||
| Jan 9 | sales | 50 | 950 | Jan12 | purchases | 60 | 1940 | ||||
|
Jan 20 |
Bank |
C |
1, 200 |
Jan15 | Office expenses | 400 | |||||
| Jan18 | Transport | 200 | |||||||||
| Jan20 | Cash | 1200 | |||||||||
| Jan26 | Purchases | 75 | 1425 | ||||||||
| Jan31 | Balance c/d | ||||||||||
| 50 | 12,150 | 3,000 | 135 | 12,150 | 3,000 | ||||||
| Feb 1 | Balance b/d | 7,035 | 1200 |
Assignment
Enter the following transactions into the cash book of Goodnews as at 1st Dec. 2013.
Dec. 1 Cash in hand 10,000
Cash in bank 5,000
Dec 4 Cash sales 3,000
Dec 5 Paid rent by cheque 500
Dec 8 Bought goods for sale less 4% discount 2,000
Dec 10 Receive cheque from Kofo less 10% discount 1,000
Dec 15 Withdrew for office use 1,200
Dec 20 Paid Jude by cash 500
Dec 22 Bought stationery for cash 200
Dec 23 Paid wages by cash 400
See also