Cash Book

A cash book is a special journal which is used to record all cash receipts and cash payments. The cash book is a book of original entry or prime entry since transactions are recorded for the first time from the source documents. The cash book is both a journal and a ledger. Cash Book will always show debit balance, as cash payments can never exceed cash available. In short, cash book is a special journal which is used for recording all cash receipts and cash payments

Kinds of Cash Book Single Column Cash Book Double Column Cash Book (with cash and bank. With discount and bank) Triple column cash book (with cash, bank and discount column) Petty Cash Book

Enter the following transactions in the double column cash book of Mr.Rahman and balance it. 2003 Aug. 1 Opening Balance : Cash in Hand Rs.4,250 Cash at Bank Rs.13,750 2 Paid to petty cashier Rs.2,500 2 Cash sales Rs.1,750 3 Paid to Amir by cheque Rs.3,750 3 Received a cheque from Rahim Rs.4,500 paid into bank. 5 Received cheque from Salman Rs.6,000 paid into bank

8 Cash purchases Rs.2,500 8 Paid rent by cheque Rs. 2,500 9 Cash withdrawn from bank for office use Rs.2,500 10 Cash sales Rs.3,750 14 Stationery purchased Rs.1,000 20 Cash sales Rs.6750 21 Paid into bank Rs.10,000 23 Withdrew cash for personal use Rs.1,000 25 Salaries paid by cheque Rs.9000.

Enter the following transactions in three column cash book of Mr.Mohsin and balance the same. 2003 Aug 1 Cash in hand Rs.75,000 Cash at bank Rs.40,000 4 Paid into bank Rs.20,000. 6 Purchased machinery by cheque Rs.10,000. 8 Received from Mudassir Rs.2,560, Discount allowed Rs. 40. 10 Paid to Somu by cheque Rs.3,970 in full settlement of his account Rs.4,000. 11 Withdrew cash from Bank for personal use Rs.5,000. 15 Received cheque from Ahmad Rs.4,900. Allowed him discount Rs.100. 19 Ahmads cheque deposited into Bank 24 Arif our customer has paid directly into our bank account Rs.10,000. 27 Rent paid by cheque Rs.3,000.

Exercise 1. Enter the following transactions in three column cash

book of Mr. Amber 2002 Sep 1 Cash in hand Rs.50,000 Bank balance Rs.15,000 2 Sold goods to Akbarr for Rs.15,000, cash discount allowed 1% and received cash for the balance. 3 Tax paid Rs.1,000. 7 Bought goods from Mahtab for Rs.2,400, cash discount received 2% and paid cheque for the balance. 9 Received repayment of loan from Mohsin Rs.10,000. 12 Paid into Bank Rs.5,000. 14 Paid Rs.1,400 to Ajmal & Co., half by cash and half by cheque. 16 Dividend collected by the Bank as per pass book Rs.2,000. 18 Sold goods for cash and deposited into the bank on the same day Rs.5,000. 20 Sent to Badar by money order Rs.460, the money order commission being Rs.20.

Exercise 2. Prepare Double Column Cash Book with cash and bank columns from the following: 2003 Jan 1 Cash in hand Rs.22,000 Cash at bank Rs.5,000. 2 Sold goods for cash Rs.15,000. 4 Cash withdrawn from bank Rs.2,000. 5 Credit purchases from Rahman Rs.15,000. 6 Cash deposited into bank Rs.5,000. 10 Paid wages by cheque Rs.10,000. 14 Cash received from sale of furniture Rs.10,000 and out of it paid into bank Rs.2,000. 18 Bank charges charged by the bank Rs.1,300. 20 Cheque issued to Rahman Rs.15,000. 24 Received a cheque for Rs.1,000 from Salman, deposited into the bank. 28 Rahman, to whom we have issued a cheque for credit purchases has reported that our cheque is dishonoured. (Answer : Cash balance Rs.42,000; Bank balance (Cr) Rs.300)

Question: From the following transactions given below you are require to prepare three columnar Cash Book. 1998 Rs. July 1 Cash on hand 6000 Cash at bank 9,670 July 2 Received cash from Anwar 1,900 Allowed him discount 100 July 4 Paid Azhar by cheque 800 Discount received 30 July 6 Purchased Goods and paid by cheque 2,100 July 8 Deposited with bank 2,100 July 10 Sold goods to Kamran on credit 1,100 July 12 Sold goods & received payment by cheque 900 July 14 Deposited the cheque of Rs. 900 in the bank

July 15 Received a cheque from Kamran in full settlement of his account 1,050 and sent it for collection same day July 17 Withdrawn from bank for office use 900 July 19 Purchased goods from K& Co. by cheque 2900 Discount received 100 July 20 Paid telephone charges 100 July 23 Paid Ahmad by cheque 684 Discount received 16 July 24 Cash Sales 1,900 July 26 Received cheque from Antony and sent to the bank 480 Discount allowed 20

July 27 Purchased a new machinery for office use by cheque 4,000 July 28 Bank intimated that Antonys cheque has been dishonoured July 30 Ali our customer has paid directly into our bank account Rs.5,000. 31 Deposited with bank 600 July 31 Bank charges as shown in the pass book 26 July 31 Paid into bank all cash in excess of Rs.3000

Petty Cash Book: The word petty has its origin from the French word petit which means small. The petty cash book is used to record items like carriage, cartage, entertainment expenses, office expenses, postage and telegrams, stationery, etc. The person who maintains this book is called the petty cashier. The petty cash book is used by many business concerns to save the much valuable time of the senior official, who usually writes up the main cash book,

The amount required to meet out various petty items is estimated and given to the petty cashier at the beginning of the stipulated period say a fortnight or a month. When the petty cashier finds shortage of money, he has to submit the petty cash book, after making all the entries, to the chief cashier for necessary verifications. The chief cashier in turn, verifies all the entries with supporting vouchers and disburses cash or issues cheque for the exact amount spent.

In this cash book various items of petty cash payments are analysed and separate analytical columns are provided for recording each and every item. The amount of cash received from the chief cashier for meeting out the petty expenses is recorded on the debit side and the actual cash payments towards various petty items are recorded on the credit side in the total as well as analytical columns.

The analytical column is provided for each usual head of expense like postage & telegrams, printing & stationery, carriage & cartage, traveling expenses, entertainment expenses, office expenses, sundry expenses, etc. Subsequently, the totals of these analytical columns are posted to the respective ledger accounts which save labour used in posting each item of payment separately in the ledger. The balancing of petty cash book is done in the total payments column.

Enter the following transactions in a petty cash book maintained on Imprest System with analytical columns: 1998 Rs. July 15 Received from the chief cashier 250 July 16 Bought stamps 10 July 17 Paid cartage 25 July 18 Tea and Lunch expenses to customers 35 July 19 Telegram sent 5 July 20 Paid Taxi Hire 8 July 21 Purchased envelopes 6 July 22 Paid for repairs of typewriter 21

July 23 Purchased one bottle of ink 10 July 25 Purchased Clips 10 July 27 Paid Railway far to manager 30 July 31 Paid to Coolie 5

1. Journalize the following transactions in the books of Mr.Chandran: 2001 Apr. 1 Started business with cash Rs.40,000 and furniture Rs.10,000. 5 Paid tuition fee of the son Rs.1,000 8 Paid household expenses Rs.1,400. 15 Withdrew goods for personal use Rs.2,000. 16 Sold goods to Navin on credit Rs.8,000. 18 Sold old typewriter Rs.1,000. 19 Purchase goods on credit from Ramesh Rs.20,000 20 Received interest on investment Rs.6,000. 22 Received commission from Manohar Rs.2,000. 23 Receive a cheque from Navin Rs.5,000. 25 Issued a cheque to Ramesh Rs.12,000 26 Received cash from Anand on account Rs.4,000 27 Paid cash to Bhagwan on account Rs.1,000. 28 Returned goods to Ramesh Rs.1,000.