WEEK EIGHT
TOPIC: THREE COLUMN CASH BOOK
This is made up of cash column, bank column and discount column on both sides of the cash book.
1. CASH DISCOUNT: This is an allowance received or reduction made when cash is paid promptly. It is classified into discount allowed and discount received.
a. 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.
b. 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.
2. 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