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 9Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 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 20Â Â Â Â Â Â Â Â Â Â Â Â Â 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
DOUBLE COLUMN CASH BOOK
CASH BOOK
PETTY CASH BOOK
LEDGER ENTRIEES
BOOK – KEEPING ETHICS