Cash Book

Subsidiary Books- Meaning and Introduction

Objectives

After going through this lesson, you shall be able to understand the following concepts.

Introduction
• Need for Subsidiary Books
• Kinds of Subsidiary Books
• Advantages of Subsidiary Books

Introduction
Accounting process starts with identification of transactions of financial and non-financial nature. All financial transactions
are first recorded in Journal. This is known as Books of Original entry. A small business has lesser number of transactions
and therefore, it is possible to record all business transactions in one book i.e. Journal. However, when business grows, the
number of business transaction also increases. It is very time-consuming, difficult and tedious task for a firm to record
such voluminous transactions and events in one single book. Thus, in order to save time and efforts, it is advisable to sub-
divide the Journal into Subsidiary Books to record the transactions of similar nature in a separate book.

These sub-divided Journals are popularly known as Subsidiary Books. These books are also termed as Special Purpose
Books or Special Journals or Books of Original/Primary/Prime Entry. Sub-division of Journal provides scope for division of
work which leads to the improvement in efficiency and effectiveness. In other words, subsidiary books provide an ease and
convenience to record the transactions of similar nature in a separate book. Journal entry is not required for the
transactions which are entered in these books.

Need for Subsidiary Book or Special Purpose Books

The following are needs for drawing up the subsidiary books.

1. Quick and Efficient Recording-When the size of a business is large, then definitely its number of business
transaction will also be high. It is very tedious and time consuming process to record all the transaction in a Journal.
By maintaining separate books, then recording of such voluminous transactions can be done in lesser time and more
efficiently. So, due to this reason the need for maintaining special purpose books arises.
2. Similar Nature-In every business organisation, there are various transactions which are similar and repetitive in
nature. It will be more convenient to record all similar transactions at one place as it helps in division of work among
the employees. Thus, this need can be fulfilled by preparing the special purpose books.

iii. Economical- Maintaining the subsidiary books are more economical as it saves time and at the same time it also
enhances the efficiency of the employees.

1. Easy Posting-In the subsidiary books all the similar transactions are recorded at a single place. This helps in its
easy posting in the ledgers. For example, all credit sales are recorded in sales book and the total of sales book is to
be posted to the sales account in the ledger.
2. Complete Information at One Place-All information related to similar transactions such as credit sales, credit
purchases, cash receipts, cash payments, etc. are easily and readily available at a single place.

Kinds of Subsidiary Books

The following are the most popular subsidiary books that are used in a business.

1. Cash Book-This book is maintained to record all the cash receipts and cash payments. In addition to this, all the
transactions related to bank such as payment into bank and withdrawals from bank are also recorded in this book.
2. Sales Book-This book is maintained to record the credit sale of goods and services done by a firm.
3. Purchases Book-This book is maintained to record the credit purchase of goods and services by a firm.
4. Sales Return Book or Return Inward Book-This book is maintained to record the return of goods by the
customers, which were previously sold to them on credit.
5. Purchases Return Book or Return Outward Book-This book is maintained to record the return of goods by the
business to the suppliers, which were previously purchased from them on credit.
6. Journal Proper-This book is maintained to record all other similar transactions which cannot be incorporated or
recorded in any of the above books.
Advantages of Subsidiary Book or Special Purpose Books
The given below are the various advantages of maintaining the subsidiary books.

1. Division of Work-In the absence of sub-division of Journal, the large number of business transactions needs to be
recorded in one single book i.e. in the Journal by more than one person. This may lead to chaos and confusion. At
the same time, there will be more inflexibility and lack of accountability among the accountants. Sub-division of
Journal enables different persons to maintain different books. This division of work will not only avoid confusions but
also enhance the sense of accountability among the accountants.
2. Time Saving-The recording of huge business transactions through subsidiary books leads to time saving as various
accounting processes can be undertaken simultaneously due to use of different books as compared to its recording
through entries in a Journal.

iii. Prompt Information- The transactions of similar nature are recorded in a particular subsidiary book. This acts as a
ready or available source to access the information in a quick manner at a single place.

1. Accountability-Sub-division of Journal entrusts its employees with high degree of responsibility and accountability
for maintaining subsidiary books that are particularly assigned to them.
2. Easy Checking-As the volume of transactions is less in the subsidiary books, so, it helps in easy and quick detection
of any discrepancies or errors.
3. Specialisation-The accountability, responsibility and division of work together enhance the specialisation of each
accountant or employee. This is because, routine and repetitive tasks are performed by a single person which helps
in improving the efficiency.

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Cash Book- Introduction, Features and Advantages

Objectives

After going through this lesson, you shall be able to understand following concepts.

Meaning of Cash Book

• Features of Cash Book
• Advantages of Cash Book
• Differentiation between Cash Book and Cash Account
• Cash Book- A Subsidiary and a Principal Book
• Similarities of Cash Book with Journal
• Types of Cash Book

Meaning of Cash Book

As you have already learned that every transaction is first recorded in Journal. But as the business grows, volume of
transaction also increases and it becomes practically very difficult to record all the transactions in Journal. So, for all the
transactions related to Cash whether it is receipt or payment a separate book is maintained, which is called Cash Book. In
Cash Book all the transactions related to receipts of cash are recorded on the left side of the book as Cash Receipts and all
the transactions related to cash payments are recorded on the Right Side of the Book as Cash Payments. Balance of Cash
or Bank on any day can be calculated by deducting total of Right side (or Payment side) of the book from total of the Left
Side (or Receipt side) of the book.

Features of the Cash Book

(1) It records only cash transactions.

(2) All transactions relating to receipt of cash or cheque are recorded on the Left Side of the Cash Book and the
transactions related to payment of cash or cheque are recorded on the Right Side of the Cash Book.

(3) Transactions are recorded in the Cash Book as and when they occurred i.e. in chronological order.

(4) It serves both the purpose of Journal as well as Ledger.

Advantages of the Cash Book

(1) It eliminates duplication of work because when Cash Book is maintained there is no need to record these
transactions in Journal and Cash Account is also not required to be prepared. Cash book in itself acts as Journal as well as
a ledger.

(2) It records cash as well as bank transactions.

(3) It helps in getting balance of Cash and Bank for any day at any point of time.

(4) It gives a daily summary of Cash transactions in form of Cash received, paid and closing balance of Cash and bank at
the end of the day.

(5) Closing cash balance of the Cash Book on any particular day must match with actual cash in hand available. This
physical check reduces chances of cash frauds committed by cashiers and employees.

Differentiation between Cash Book and Cash Account

Basis Cash Book Cash Account

Nature It is a book that records all cash transactions It is a Ledger Account

It is called as the Book of Original Entry. As cash It is an Account in which posting is done
Purpose transactions are first recorded in the Cash Book and from the transactions recorded in the
thereafter posted into various Ledgers Journal

Requirement When cash transactions are recorded in

When Cash Book is maintained there is no requirement to
to open Cash Journal, there is an essential requirement to
prepare Cash Account
Account open a Cash Account

Cash Book- A Subsidiary and a Principal Book

Cash Book serves dual purpose i.e. Subsidiary Book as well as Principal Book. If Cash book is prepared then all the cash
transactions are directly recorded in the Cash Book and there is no need to record these transactions in Journal. On the
basis of Cash Book, Ledger Accounts are prepared and therefore, it is called as a Subsidiary Book.
Once, the cash transactions are recorded in the Cash Book there is no need to post them again in the Cash Account. Cash
Book in itself represents the Cash and Bank Account, that’s why, it is called as the Principal Book. From this, it can be
concluded that Cash Book serves the purpose of both Principal as well as Subsidiary Book.

Similarities of Cash Book with Journal

(1) Transactions (only of Cash nature) are recorded in the Cash Book from the source document just like a journal.

(2) Similar to Journal, transactions in the Cash Book are recorded as and when they occurred i.e date wise/chronological
order.

(3) Transactions whether recorded in Journal or in the Cash Book are to be posted to their Relevant Ledger Accounts, with
an exception to Cash Account in case of Cash Book.

(4) Both Journal as well as Cash Book contains a separate column of Ledger Folio.

Types of Cash Book

There are four types of Cash Book.

(1) Single Column Cash Book: It records transactions relating to cash only.

(2) Two Column Cash Book: It contains two columns i.e. Cash and Bank Columns on both the sides. It records all
transactions relating to Cash as well as Bank.

(3) Three Column Cash Book: It contains three columns i.e. Cash, Bank and discount Columns on both the sides.
Discount Allowed Column is shown on the Left Side (or debit side) of the book whereas Discount Received Column is
shown on the Right Side (or Credit side) of the Book.

(4) Petty Cash Book: It record expenses involving petty (or small) amount.

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Cash Book- Simple Cash Book (Single Column)

Objectives

After going through this lesson, you shall be able to understand the following concepts.
 Introduction to Single Column Cash Book
• Format of Single Column Cash Book
• Balancing of Single Column Cash Book
• Points to be considered for preparing Single Column Cash Book

Introduction to Single Column Cash Book

It has a structure similar to an account. There is only one column (i.e. Cash) on both the sides of the Cash Book. Left Side
(Debit side) of the Cash Book consists of Cash Receipts and Right Side (Credit side) consists of Cash Payments.

Format of Single Column Cash Book

Cash Book

Dr. RECEIPTS PAYMENTS Cr.

Amount Amount
Date Particulars V.No. L.F. Date Particulars V.No. L.F.
(Rs) (Rs)

(i) Date: It refers to date on which transaction took place.

(ii) Particulars: It contains name of the account involved in cash transactions. If a transaction is related to the receipt of
an amount then name of the account will be shown under the head Particulars on the Receipt Side (or Debit side) of the
Cash Book. On the other hand, if transaction involves payment of an amount then name of the account will be mentioned
under the head Particulars on the Payment Side(or Credit side) of the Cash Book.

(iii) Voucher No. (V.No.): Transactions are recorded on the basis of voucher. All vouchers have a serial number. Column
of Voucher No in the Cash Book contains serial number of the voucher.

(iv) Ledger Folio (L.F.) In the L.F. column, page number of the Ledger is mentioned. This page number is that page of
Ledger where the amount has been posted.

(v) Amount: It contains amount of the transaction. Cash received is written on the debit side of the Cash Book and Cash
paid is written on the credit side of the Cash Book.

Balancing of Single Column Cash Book

Like any other Ledger Account Cash Book is also balanced. Total of Payment side is deducted from the Total of Receipt
side, difference amount is written on the credit side as "Balance c/d". After this both the sides are totaled then this
"Balance c/d" is written on the debit side as "Balance b/d", this shows opening Cash Balance of the next period.

Points to be considered for preparing Single Column Cash Book

(1) If Cash Book is prepared then there is no need to open a Cash Account.

(2) Balancing of Cash Book is done in the same way as we balance any other Ledger Account.

(3) Cash Book always has a debit balance, in no case it can have a credit balance. If there is a credit balance this shows
Cash Payments is in excess of Cash Receipts which is practically impossible.

(4) Cash Book does not record non-cash transactions i.e. transactions related to Cheques received or issued and
discount allowed or received.
(5) When an entry is recorded in the Cash Book, its second effect is recorded in the corresponding ledger. For
example Cash Received from Mohan Rs 5,000. There are two effects of this transaction. First as Cash is received so it will
be recorded on the debit side of the Cash Book with Rs 5,000. Second effect of this transaction is, it will be recorded on
the credit side of the Mohan Account with Rs 5,000.

Important Note
Cash Book always have a debit balance, in no case it can have a credit balance. If there is a credit balance this shows Cash
Payments is in excess of Cash Receipts which is practically impossible. Although it may be possible that the closing balance
of the Cash Book is nil and it is possible only in one case i.e. where Cash Receipts are exactly equal to Cash Payments.

Example-1: Prepare Single Column Cash Book of Rajesh Talwar from the transactions given below.

Amount
Date Particulars
(Rs)

2013

June 01 Rajesh Talwar commenced business with Cash 10,000

June 03 Purchased Goods 4,200

June 04 Sold goods for Cash 6,500

June 08 Paid Rent 1,200

June 09 Paid Electricity Expenses 1,500

June 12 Received Cash from Ajay 1,800

June 14 Paid Cash to Ankush 1,350

June 17 Paid for Miscellaneous Expenses 50

June 19 Purchased furniture for office use 980

June 22 Deposited into Bank 1,020

June 25 Paid Salaries 650

June 30 Paid to Kishore 1,120

Solution:

Cash Book
Dr. RECEIPTS PAYMENTS Cr.

Amount Amount
Date Particulars L.F. Date Particulars L.F.
(Rs) (Rs)

2013 2013

June 01 Capital A/c 10,000 June 03 Purchases A/c 4,200

June 04 Sales A/c 6,500 June 08 Rent A/c 1,200

June 12 Ajay 1,800 June 09 Electricity Expenses A/c 1,500

June 14 Ankush 1,350

June 17 Miscellaneous Expenses A/c 50

June 19 Furniture A/c 980

June 22 Bank A/c 1,020

June 25 Salaries A/c 650

June 30 Kishore 1,120

June 30 Balance c/d 6,230

18,300 18,300

2013

July 01 Balance b/d 6,230

Example-2: Prepare Single Column Cash Book of Inderjeet Singh from the transactions given below.

Amount
Date Particulars
(Rs)

2013

May 01 Inderjeet Singh commenced business with Cash 6,800

May 02 Sold goods to Arvind on credit 4,200

May 05 Paid into Bank 1,400

May 07 Paid Wages 280

May 10 Purchased goods in Cash 4,400

May 13 Advertising Expenses 1,250

May 15 Withdrew cash for personal use 450

May 18 Paid for Printing to Raman Press 800

May 20 Paid to Anil 3,100

May 24 Paid for Postage 160

May 28 Received from Janak 1,550

May 30 Sold goods to Amitosh in Cash 5,050

Solution:

Cash Book

Dr. RECEIPTS PAYMENTS Cr.

Amount Amount
Date Particulars L.F. Date Particulars L.F.
(Rs) (Rs)

2013 2013

May 01 Capital A/c 6,800 May 05 Bank A/c 1,400

May 28 Janak 1,550 May 07 Wages A/c 280

May 30 Sales A/c 5,050 May 10 Purchases A/c 4,400

May 13 Advertising Expenses A/c 1,250

 May 15 Drawings A/c 450

Printing and Stationery

May 18 800
Expenses A/c

May 20 Anil 3,100

May 24 Postage A/c 160

May 31 Balance c/d 1,560

13,400 13,400

2013

June 01 Balance b/d 1,560

Note: Goods sold to Arvind on Credit on May 02 is a non-cash transaction. Therefore, it is not recorded in the
Cash Book.

Example-3: Prepare Single Column Cash Book of Albert Pinto from the transactions given below.

Amount
Date Particulars
(Rs)

2013

July 01 Balance from the last month 2,80,000

July 03 Paid Rent 30,000

July 05 Paid cash to Rajinder on Account of Rs 1,00,000 and discount allowed @10%

July 09 Cash Purchases 52,000

July 11 Sold goods for Cash 75,000

July 12 Purchased books for his Son 3,600

July 15 Received cash from Mr. Kukreja 56,500

Discount Allowed 3,500

July 18 Furniture Purchased 22,800

July 21 Purchased goods from Randeep on credit 32,650

July 25 Paid Electricity Expenses 7,400

July 28 Received Cash from Shambhu 21,800

July 31 Sold goods to Vishal on credit 52,450

Solution:

Cash Book

Dr. RECEIPTS PAYMENTS Cr.

Amount Amount
Date Particulars L.F. Date Particulars L.F.
(Rs) (Rs)

2013 2013

July 01 Balance b/d 2,80,000 July 03 Rent A/c 30,000

July 11 Sales A/c 75,000 July 05 Rajinder 90,000

July 15 Kukreja 56,500 July 09 Purchases A/c 52,000

July 28 Shambhu 21,800 July 12 Drawings A/c 3,600

July 18 Furniture A/c 22,800

July 25 Electricity Expenses A/c 7,400

July 31 Balance c/d 2,27,500

4,33,300 4,33,300

2013

Aug.01 Balance b/d 2,27,500

Note: Goods purchased on credit on July 21 and sold on credit on July 31 are non-cash transactions.
Therefore, these are not recorded in the Cash Book.

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Cash Book- Double Column Cash Book

Objectives

After going through this lesson, you shall be able to understand the following concepts.

Double Column Cash Book

Balancing of Double Column Cash Book (Cash and Bank Column)

Introduction to Double Column Cash Book

Simple cash book with single column on both the sides is maintained if the organisation has only cash transactions. This
still might be theoretically possible or might be possible for very small businesses but in practical life one may hardly find
any instance of a single column cash book. Even the smallest of the businesses today have a Current Account with a bank
as most of the receipts and payments are done through bank.
A double column cash book is a Cash Book with two columns on both the sides .These two columns are of Cash and
Bank. In today’s world practically speaking no business can operate without a bank account as majority of transactions
take place with the help of a bank account. It is due to various legal bindings and security reasons that the transactions
have to be necessarily routed through a bank account. This makes it inevitable (unavoidable) for a business to maintain a
Double column cash book. The transactions related to cash and bank are separately recorded in a cash book this facilitates
the availability of bank balance immediately with the business. The format of a Cash and Bank Column cash book is:

Cash Book

Dr. Receipts Payments Cr.

Bank Cash Bank

Date Particulars V.No. L.F. Date Particulars V.No. L.F. Cash (Rs.)
(Rs.) (Rs.) (Rs.)

Balancing of Double Column Cash Book (Cash and Bank Column)

Like Single Column Cash Book, Double Column Cash Book is also balanced. Total of Payment side is deducted from the
Total of Receipt side, difference amount is written in the Amount Column on the credit side as "Balance c/d". When both
the sides are totaled then "Balance c/d" is written on the debit side as "Balance b/d", which shows opening Cash Balance
of the next period.
Remember Discount Columns on the Debit as well as Credit side of the book is only totaled not balanced. This is because
both discount allowed and discount received are nominal accounts and are treated as expenses and incomes of the
business respectively. Therefore, being nominal in nature they are never balanced simply totaled.

Example 1:Prepare a double column Cash Book with Cash and Bank Columns from the following information:
Date Particulars Rs.

2019

Feb.1 Cash in Hand 50,000

Bank Overdraft 25,000

Feb.3 Wages Paid 1,500

Feb.7 Cash Sales 80,000

Discount Allowed 500

Feb.12 Cash Deposited in the bank 35,000

Feb.15 Goods purchased and payment made by cheque 15,000

Received Cash Discount 450

Feb.24 Paid Rent 3,000

Feb.26 Drew from bank for personal use 2,000

Feb.28 Salary paid 5,000

Answer:

Cash Book
Dr. Cr.
(Double Column)

Date Particulars L.F. Cash(Rs.) Bank(Rs.) Date Particulars L.F. Cash(Rs.) Bank(Rs.)

2019 2019
To balance By balance
50,000 25,000
b/d b/d
Feb.1 Feb.1

By Wages
Feb.3 To Sales A/c 79,500 Feb.3 1,500
A/c

C
Feb.12 To Cash A/c 35,000 Feb.12 By Bank A/c C 35,000

By
Feb.15 Purchases 14,550
A/c

Feb. 28 To balance 6,550

c/d
Feb.24 By Rent A/c 3,000
 By Drawings
Feb.26 2,000
A/c

By Salary 5,000
Feb.28 A/c

Feb.28 By balance
c/d 85,000

1,29,500 41,550 1,29,500 41,550

Example 2: (With GST) : Prepare a Double Column Cash Book with Cash and Bank Columns from the following
information:

Date Amount
Particulars
(₹)
2018

Jan. 1 Cash in hand 10,000

Jan. 1 Cash at Bank 50,000

Jan. 2 Purchased goods @12% IGST in cash 5,000

Jan. 8 Purchased Machinery @6% CGST and SGST each and paid by cheque 20,000

Jan.12 Sold goods of Rs.2,000 Plus CGST and SGST @6% each ––––––––

Jan. 18 Paid wages 1,000

Jan. 22 Drew from Bank to purchase a bi–cycle for household use 5,000

Jan. 30 Salary paid by cheque 10,000

Jan. 31 Cash deposited into Bank 5,000

Solution:

Cash Book (Two columns)

Date Particulars L.F. Cash Bank Date Particulars L.F. Cash Bank
2018 2018

Jan.1 Balance b/d 10,000 50,000 Jan.2 Purchases A/c 5,000

Jan.12 Sales A/c 5,000 Jan.2 Input IGST A/c 600

Jan.12 Output CGST A/c 300 Jan.8 Machinery A/c 20,000

Jan.12 Output SGST A/c 300 Jan.8 Input CGST A/c 1,200

Jan.31 Cash A/c C 5,000 Jan.8 Input SGST A/c 1,200

Jan.18 Wages A/c 1,000

Jan.22 Drawings A/c 5,000

Jan.30 Salary A/c 10,000

Jan.31 Bank A/c C 5,000

Jan.31 Balance c/d 4,000 17,600

15,600 55,000 15,600 55,000

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Cash Book- Special Transactions

Objectives

After going through this lesson, you shall be able to understand some special transactions which need special treatment in
the Cash Book. These transactions are following:

Contra Transactions
• Cheque received and deposited on the same day
• Cheque received and deposited on another day
• Dishonour of cheque
• Payment by cheque
• Endorsement of cheque
• Amount withdrawn from bank for personal use
• Interest and dividend received by bank
• Interest, commission or other charges of bank
• Amount directly deposited into bank by the customer
• Discounting bill receivable from the bank
• Bills sent for collection, collected by the bank
• Cash Discount received
• Cash Discount allowed
• Discount received earlier, refused later on by the creditors
• Discount allowed earlier, refused later
• Insolvency of Debtors
• Loan Taken
 • Bank Overdraft
• Sale through Credit / Debit Cards

1.
Contra Transactions

In case a single transaction affects both cash and bank column with the same amount then such a transaction is known as
contra transaction. In other words, contra transactions are those transactions in which both accounts i.e. cash and bank
are involved in one transaction. These transactions are indicated by the contra sign “C” in the “Ledger Folio” column
against both sides of the Cash Book. The use of “C” against both sides of the Cash Book under the “L.F.” column of the
Cash Book eliminates the need for any further posting to the ledger. We can better understand contra transactions with the
help of following examples:

1. Cash deposited in bank: Cash deposited in bank is recorded on the debit (receipts) side of bank column showing an
increase in bank and credit (Payments) side under the cash column of the Cash Book showing a decrease in cash.

ii.Cash withdrawn from bank for Petty Expenses: In case cash is withdrawn from bank for petty expenses, the
transaction is recorded on the debit side (receipts) side under the cash column showing an increase in cash and
credit (payments) side under the bank column showing a decrease in bank .

Example: On 21-01-2013, XYZ Ltd pays Rs 2,000 into bank. This transaction shall be recorded in the Cash Book as
under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Bank
Date Particulars L.F. Date Particulars L.F.
(Rs) (Rs) (Rs) (Rs)

2013 2013

Jan 21 Cash A/c C 2,000 Jan 21 Bank A/c C 2,000

Example: On 29-01-2013, ABC Ltd. withdraws amount of Rs 9,000 from bank for office use. This transaction shall be
recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Date Particulars L.F. Cash Bank Date Particulars L.F. Cash Bank
(Rs)
 (Rs) (Rs) (Rs)

2013 2013

Jan 29 Bank A/c C 9,000 Jan 29 Cash A/c C 9,000

2. Cheque received and deposited on the same day

When a business receives a cheque it may be deposited into bank on the same day or on another day. In case the cheque
is deposited into bank on the same day the amount is recorded in the bank column of the Cash Book on the receipts side.

Example: On 21-01-2013, a business receives a cheque of Rs 10,000 from Ram and deposits the same in the bank on the
same day. This transaction shall be recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Bank
Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Jan 21 Ram 10,000 Jan 21

3. Cheque received and deposited on another day

If cheques and drafts are received but are not deposited in the bank on the same day, they are recorded in the books of
account through following Journal Entry.

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)
 Cheques-in-hand A/c Dr.

To Debtor (say XYZ) A/c

(Cheque is received but not deposited into bank)

When the cheque received is deposited, it is recorded in the bank column on the receipt side of Cash Book as follows:
Cheques-in-Hand A/c xxx
The above entry will make the balance in cheques-in-hand as NIL.

Alternatively,
If cheque is received but is not deposited in the bank on the same day, the cheque is first entered in the cash column on
the debit side (receipts side) of the Cash Book. Subsequently, on deposit of cheque in the bank, it is recorded as cash
deposited into the bank, for which Bank Account is debited (recorded on the debit side i.e. receipts side in the bank
column) and Cash Account is credited (recorded in the cash column on payments or credit side).

Note: If there is no information as to the deposit date of the cheque, it is assumed that the cheque has been
deposited on the same date.

Example: On 20-01-2013, a cheque of Rs 2,500 is received from Rajesh and deposits the same into bank on 30-01-2013.
This transaction shall be recorded in the Cash Book as under.
The Journal Entry for recording the receipt of cheque is:

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

2013

Jan.20 Cheques-in-Hand A/c Dr. 2,500

To Rajesh 2,500

(Cheque is received but not deposited into bank)

And on the deposit of cheque in the bank, it will be recorded in Cash Book as follows:
Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Bank
Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Jan 30 Cheques-in-Hand C 2,500

Alternatively,

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Bank
Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Jan 20 Rajesh 2,500 Jan 30 Bank A/c C 2,500

Jan 30 Cash A/c C 2,500

4. Dishonour of Cheque

It means return of a cheque by the bank due to various reasons such as insufficient funds in the party’s account with bank,
signature of party is not in agreement with that present in bank record, wrong account number quoted on the cheque etc.
On dishonour of a cheque the bank will debit the account of business enterprise and return the cheque. On intimation and
receipt of such a cheque from the bank, the enterprise shall make such an entry which will restore to the position
prevailing before the receipt of the cheque from the party and its deposit in the bank. This is done by making an entry in
the credit side of bank column in the Cash Book, name of the party is written in the Particulars Column of Cash Book.

Example: On 12-01-2013, an intimation was received from the bank that a cheque of Rs 5,000 received from Aman had
been dishonoured. This transaction shall be recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs) (Rs) (Rs) (Rs)

2013 2013

Jan 12 Aman 5,000

Note: The bank charges, charged upon dishonour of a cheque shall be included in the amount of dishonoured cheque.

5. Payment by Cheque

Cheques once issued ultimately reduce the bank amount, thus, all payments made through cheques are recorded on the
credit side and under the bank column of the Cash Book.
Example: On 09-01-2013, electricity bill of Rs 9,500 was paid by cheque. This transaction shall be recorded in the Cash
Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Jan 09 Electricity Expenses A/c 9,500

 6. Endorsement of Cheque

Endorsement of a cheque happens when a bearer cheque received from a party is not deposited in the bank, but is given
to any third party for making the similar payment to such a third party . On endorsement of a cheque to the third party
the cash column must be reduced so that it gets recorded in the cash column of the credit side of the Cash Book. On
receipt of such a cheque, it must have been recorded in the cash column on the debit (receipt) side of the Cash Book.
Example: On 05-03-2013, the business endorsed a cheque of Rs 2,500 in favour of Rajat. The cheque was earlier received
from Lalit on 12-01-2013 but due to paucity of time cheque was not deposited in the bank till date. This transaction shall
be recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Jan 12 Lalit 2,500 Mar 05 Rajat 2,500

Note: If Cheque received is endorsed on same day then it will not be recorded in Cash Book instead an entry will be
passed in Journal Proper.

7. Amount withdrawn from the bank for personal use

Such an amount is regarded as drawings of the proprietor and thus it will not be regarded as a contra entry. Such an entry
will reduce the bank balance, hence, it shall be shown in the bank column on the credit (payments) side of the Cash Book.
Example: On 19-03-2013, the business enterprise draws a cheque worth Rs 5,000 for personal use. This transaction shall
be recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Mar 19 Drawings A/c 5,000

 8. Interest and dividend received by the bank

Bank credits the customer’s account for collection of interest or dividend or any receipt on behalf of the customers. In such
a situation, the entry shall be made on the debit side of the Cash Book.

Example: On 31-3-2013 bank credits the account of the business with Rs 150 in respect of dividends from XYZ Ltd. This
transaction shall be recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Mar 31 Dividend A/c 150

9. Interest, commission or other charges of the bank

The entry in such a case will be made in the bank column on the credit side of the Cash Book when the bank debits the
account of a business because of Bank charges, Interest etc.
Example: On 31-1-2013 bank debits the account of the business with Rs 250 in respect of bank charges for current
account. This transaction shall be recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013
 Jan 31 Bank Charges 250

10. Amount directly deposited into the bank by the customer

Sometimes it may happen that the customer directly deposits the payment into the bank of the business enterprise. The
same should be reflected on the debit side of the Cash Book.

Example: On 31-1-2013 goods were sold to Manju for Rs 7,800. On the same day, Manju deposited the full amount
directly into the bank account of the business enterprise. This transaction shall be recorded in the cash book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Jan 31 Sales A/c 7,800

11. Discounting bill receivable from the bank

A business can discount a bill received by it with a bank before its maturity. In such a case, bank after deducting
discounting charges credits the remaining amount to a customer’s account. This will lead to an entry being made in the
bank column on the debit side of the Cash Book with the net amount (i.e. after deducting discounting charges). The entry
for recording discount shall be made in the Journal Proper as well.

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)
 Discounting Charges A/c Dr.

To Bills Receivable A/c

(Bill discounted with the bank and discount charged)

Example: On 21-11-2013, goods were sold to Raina for Rs 4,200. On the same day, a bill for the same amount was drawn
upon Raina for two months. As the business was in urgent need of funds it got the bill discounted from the bank on 23-11-
2013, bank deducted Rs 200 for discount. This transaction shall be recorded in the Cash Book and Journal Proper as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Bank Cash Bank

Date Particulars L.F. Date Particulars L.F.
(Rs)
(Rs) (Rs) (Rs)

2013 2013

Nov 21 Bills Receivable A/c 4,000

The entry for recording discount shall be made in the Journal Proper as under.

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Discounting Charges A/c Dr. 200

To Bills Receivable A/c 200

 (Bill of Rs 4,200 discounted with bank , discount of Rs 200
charged)

12. Bills sent for collection, collected by the bank

Most of the banks these days extend a facility to its customers to collect on behalf of them, the amount due on bills from
the drawee of the bills in time. The entry shall be made in the bank column on the debit side (receipt) of Cash B ook with
the amount mentioned on the bill.

Example: On 18-1-2013 bank intimates that the bill for Rs 6,000 which were sent for collection has been collected. This
transaction shall be recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013

Jan 18 Bills sent for Collection A/c 6,000

13. Cash discount received

In case a business enterprise receives a cash discount, only net amount (amount after deducting discount) paid shall be
recorded on the credit side under cash column, if the payment is made in cash. However, if the payment is made through
cheque, then net amount paid shall be recorded in the bank column on the credit side of the Cash Book. In such a
situation we have to record the entry for recording discount in Journal Proper.

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)
 Creditors A/c Dr.

To Discount Received A/c

(with the amount of discount)

Example: On 31-3-2013, a creditor worth Rs 1,00,000 allowed 10% discount on the total payment due to him, if paid
immediately . In order to avail of this facility, the business paid the full amount through cheque on the same day. This
transaction shall be recorded in the Cash Book and Journal Proper as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013

Mar 31 Creditors A/c 90,000

The entry for recording discount shall be made in the Journal Proper as under.

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Creditors A/c Dr. 10,000

 To Discount received A/c 10,000

(Discount @ 10% received from creditors)

14. Cash discount allowed

In many cases the businesses allows a cash discount, in such a case the net amount received (i.e. amount after deducting
the discount amount) shall be recorded on the debit side (receipt side) under the cash column of the Cash Book, if the
payment is received in cash. However, if the payment is received by a cheque then it shall be recorded in the debit side of
the bank column in the Cash Book. Entry in the Journal Proper for recording the discount shall be made as follows:

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Discount Allowed A/c Dr.

To Debtors A/c

(with the amount of discount)

Example: On 15-1-2013, a business allowed 10% discount to Nikhil (debtor) who owes Rs 10,000 to the business. Nikhil
paid the whole sum through cheque on the same day and it was also deposited on the same day. This transaction shall be
recorded in the Cash Book and Journal Proper as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013
Jan 15 Nikhil 9,000

The entry for recording discount shall be made in the Journal Proper as under.

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Discount Allowed A/c Dr. 1000

To Nikhil 1000

(With the amount of discount)

15. Cancellation of discount (previously received) on dishonour

Discount is received by a business for making payment to the creditors before time. In this case where the payment is
made through cheque and cheque is dishonoured, an entry will be made on the debit side of the Cash Book by entering
amount of dishonoured cheque in the bank column in the Cash Book. The entry of discount allowed should be nullified by
way of following entry in Journal Proper:

Journal

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Discount Received A/c Dr.

 To Creditors A/c

(With the amount of discount received earlier)

Example: On 05-3-2013, an intimation was received from the bank that a cheque for Rs 5,600 given to Ms. P.Sethi on 12-
01-2013 for making the payment settling her account of Rs 6,000 had been dishonoured due to insufficient funds in the
bank. This transaction shall be recorded in the Cash Book and Journal Proper as under:

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013

Mar 05 Ms. P. Sethi 5,600

The entry for recording discount received earlier shall be nullified by passing the below mentioned entry in the Journal
Proper as under:

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Discount Received A/c Dr. 400

To Ms P. Sethi 400
 (Reversal of discount received earlier)

16. Discount allowed (previously) is cancelled on dishonour

Discount is allowed by a business enterprise to the debtors if the debtors make the payment within specified time. If
payment is received through cheque and cheque is dishonoured, we will pass an entry on the credit side of Cash Book and
amount of dishonour will be entered in the bank column of the Cash Book. The earlier entry of discount allowed will be
nullified by passing the below mentioned entry in the Journal Proper.

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Debtors A/c Dr. 400

To Discount allowed A/c 400

(Amount of discount allowed earlier )

Example: On 15-01-2013, an intimation was received from the bank that a cheque for Rs 4,500 received from Rahul on
15-01-2013, had been dishonoured. This transaction shall be recorded in the Cash Book and Journal Proper as under:

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013

Jan 15 Rahul 4,500

The entry for recording discount received earlier shall be made in the Journal Proper as under.

Journal

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Rahul Dr. 500

To Discount Allowed A/c 500

(Discount allowed earlier is cancelled)

17. Insolvency of Debtors

In case any debtor of a business enterprise becomes insolvent, the actual cash received from his estate shall be recorded
on the debit side of the Cash Book under the cash column if payment is received in cash or under bank column if payment
is received through cheque and the cheque is deposited on the same day. It should be noted that the entry for recording
bad debts shall be made in the Journal Proper as follows:

Journal Proper

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Bad Debts A/c Dr.

To Debtors A/c

(Amount not received from debtors)

Example: On 19-01-2013, a business received Rs 5,500 (50% of the amount due) from Dinesh due to his insolvency. The
cheque was deposited into the bank on the same day. This transaction shall be recorded in the Cash Book and Journal
Proper as under:

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013

Jan 19 Dinesh 5,500

The entry for recording discount received earlier shall be made in the Journal Proper as under.

Journal

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Bad Debts A/c Dr. 5,500

To Dinesh 5,500

(50% is not received from Dinesh due to his insolvency)

 18. Loan Taken

Loan taken from bank or any financial institutions should be recorded on the debit side of the Cash Book under the bank
column.
Example: On 10-01-2013, a sum of Rs 50,000 was taken from ICICI .This transaction shall be recorded in the Cash Book
as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013

Jan 10 Loan from ICICI 50,000

19.
Bank Overdraft

It is an arrangement made with the bank under which a business can withdraw beyond its bank balance from the bank.
This limit is decided by the bank according to the reputation and need of the client. The bank overdraft shall be on the
credit side of the Cash Book under the bank balance .
Example: On 14-02-2013,a business issued a cheque of Rs 95,000 to Yuvraj, bank intimated that the business had
exercised the overdraft facility and drawn Rs 50,000 in excess of the balance in Current Account. This transaction shall be
recorded in the Cash Book as under.

Cash Book

(Double Column – Cash and Bank )

Dr. RECEIPTS PAYMENTS Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars L.F.
(Rs) (Rs) (Rs)

2013 2013

Feb 14 Balance b/d 45,000 Feb.14 Yuvraj 95,000

Mar.01 Balance c/d 50,000

95,000 95,000

Mar 01 Balance b/d 50,000

20. Sale through Credit / Debit Cards

Credit /Debit cards are now being issued by almost every bank in India. Banks issue such cards directly or with
collaboration of some other agencies. For Example ICICI, HSBC, SBI etc. The sales made through credit cards are recorded
by the seller with a brief description of goods and the customer along with the details of credit card. This is countersigned
by the customer and then, deposited by the seller to his bank. The amount is then deposited into seller’s account and
debited to the bank account of the Credit Card Company. A commission is charged by the Credit Card company for each of
such transaction which is directly debited from the Seller’s Account.

(1) The sale is recorded as follows:

Journal

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

Bank A/c Dr.

To Sales A/c

(Total Credit card sales)

Commission A/c Dr.

To Bank A/c

(Commission on credit card sales)

The sale through Debit card is recorded in a similar manner as sale through cheque, here it is recorded as simple sale
using bank account in the same way as a cheque. This alternate offers more benefits than simple cash or bank sale. For
example, larger payments can be done using debit cards, can be used at ATM’s etc.

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Imprest System of Cash Book and its Balancing

Objectives

After going through this lesson, you shall be able to understand the following concepts.

Introduction to Petty Cash Book

• Features of Petty Cash Book
• Systems of Petty Cash Book – Imprest vs Non-Imprest
• Types of Petty Cash Book and their Formats
• Advantages of Petty Cash Book

Introduction to Petty Cash Book

Petty Cash Book is the book which records large number of small payments such as conveyance, cartage, postage,
telegram and other expenses. These expenses occur very frequently in an organisation and it becomes very difficult for the
main cashier to accommodate them in the main Cash Book. This is due to the fact that the main cash book will become
very bulky and the main cashier will be overburdened because of petty cash transactions. Thus a petty cashier is appointed
who is authorised to make payments of petty cash expenses and record them in Petty Cash Book.

Features of Petty Cash Book

1) Cash received from the main cashier is recorded on the left hand side column.

2) Payments of petty cash expenses are recorded on the right hand side in the respective column.

3) There can never be a credit balance in a petty cash book as the cash payments can never exceed the cash receipts.

4) The balance of such a cash book represents unspent cash in hand.

5) Both internal and external vouchers are used as a base for recording, In case, external vouchers are not available petty
cashier may use duly authorised internal vouchers.

6) All the columns of the expenses are totaled from time to time and such periodic totals are posted to the respective debit
side of the Expense Account.

Systems of Petty Cash Book – Imprest vs Non-Imprest

Imprest System
Under the imprest system the chief cashier makes the reimbursement of the amount spent by the petty cashier, this
makes the closing balance of Petty Cash Book same as the opening balance. The amount that the main cashier hands over
to the petty cashier is known as imprest or float. The features of Petty Cash Book are:

1) Estimation by Chief Cashier: The chief cashier estimates the total petty cash expenses for a fixed period.

2) Advances by Chief Cashier: Chief Cashier advances the estimated amount to the petty cashier in the beginning of the
period.

3) Submission of Petty Cash Book by Petty Cashier: The petty cashier submits the supporting vouchers to chief cashier.

4) Examination of Petty Cash Book by Chief Cashier: After preparation of Petty Cash Book, the chief cashier examines the
Petty Cash Book.

5) Availability of Same Amount of Petty Cash: The balance of Petty Cash Book is the same amount in the beginning of new
period as that in the end.

Non-Imprest System of Petty Cash

Under Non-Imprest System, the chief cashier may hand over the cash to the petty cashier equal to/more than/less than
the amount spent by petty cashier. Thus the closing balance may be or may not be same as the Opening Balance.

Types of Petty Cash Book and their Formats

There are two types of Petty Cash Books :

(a) Simple Petty Cash Book

(b) Analytical Petty Cash Book or Columnar Cash Book

Simple Petty Cash Book
Simple Petty Cash Book is identical with a Cash Book. Any cash which a petty cashier receives is recorded on the left hand
side cash column (debit or receipts side) and any cash which he pays out is recorded on the right hand side (credit or
payments side).

Amount Amount

Received C.B. Folio Date Particulars V.No Paid

(₹) (₹)

Analytical Petty Cash Book or Columnar Cash Book

An Analytical Petty Cash Book has two sides, left hand side is used for recording receipts of cash (this will be from the
main cashier) and right hand side, which is used for recording payments. In the Analytical Petty Cash Book, a separate
column is provided for recording a particular item of expenditure i.e. postage, stationery, travelling, advertisement etc. A
column is also provided for sundries or miscellaneous expenses.

Format of Analytical Petty Cash Book

Amount Total
C.B. Voucher Misc
Received Date Particulars Amount Postage Cartage Refreshments Remark
Folio No. Exp
(₹) (₹)
Advantages of Petty Cash Book

1) Saving of Chief Cashier’s Time: In case, the petty expenses are recorded in the petty cash book then the time of
chief cashier is saved.

2) Reduction in Mistakes: As the chief cashier regularly examines the cash book the chances of mistakes are reduced to
minimum.

3) Low Probability of Fraud: Defalcation of cash can be minimised since the petty cashier is not allowed to draw cash as
and when he desires.

4) Specialisation in Work: The chief accountant can obtain the benefits of specialisation as the transactions are recorded
in two separate books. The main cash book and the Petty cash book.

5) Reduction in Petty Expenses: Petty cash expenses are to be kept within the limits of imprest as the petty cashier can
never spend an amount which is more than available petty cash.

6) Labour Cost in Posting of Transactions is saved manifold: This saving takes place because of below mentioned
two reasons:

(a) The number of accounts opened under the head petty expenses is limited.

(b) Periodically the balances of various accounts are to be transferred to their respective heads.

Example-1: Record the following transactions in Analytical Cash Book. On 1st Feb, 2013 Rs 1,200 were given to Petty Cash
Clerk.

Date Particulars Rs

2013

Feb 01 Chowkidar Wages 700

Feb 02 Pencils 150

Feb 08 Railways Freight on account of books 50

Feb 12 Postage Stamps 25

Feb 14 Telegrams 70

Feb 15 Sundry Expenses 57

Solution

Petty Cash Book

Total
Postage
Cash Printing & Misc
Date Particulars V No. Amount Wages & Carriage
Receipts Stationery Exp
Stamps
Paid
 2013

1,200 Feb 01 Cash A/c

Feb 01 Chowkidar Wages A/c 700 700

Feb 02 Pencils A/c 150 150

Railways Freight on account of

Feb 08 50 50
books A/c

Feb 12 Postage Stamps A/c 25 25

Feb 14 Telegrams A/c 70 70

Feb 15 Sundry Expenses A/c 57 57

Total Payment 1,052 150 700 95 50 57

Feb 28 Balance c/d 148

1,200 Grand Total 1,200

148 Mar 01 Balance b/d

1,052 Mar 01 Cash A/c

Example-2: From the following particulars, prepare Petty Cash Book on imprest system of XYZ Ltd

Date Particulars Rs

2013

Jun 01 Opening Balance (on Imprest System) 150

Jun 02 Paid for stamps 30

Jun 03 Paid cleaners wages 20

Jun 04 Paid for fare 21

Jun 05 Paid for office tea 20

Jun 06 Paid for repair of cycle 15

Jun 07 Paid for advertisement 35

Jun 08 Drew imprest from head cashier

Jun 09 Paid for cartage 25

Jun 10 Paid for travelling Expenses 30

Jun 11 Paid for telegram sent 35

Jun 12 Paid for entertainment to salesman 25

Jun 13 Paid for repairs of cycle 9

Jun 14 Paid for printing bill 15

Jun 15 Paid for stationery 9

Jun 16 Drew imprest from head cashier

Solution

Petty Cash Book

Total
Cash V Postage Conveyance Staff Welfare Printing & Misc
Date Particulars Amount Cartage
Receipts No. Telegram Travelling Entertainment Stationery Item
Paid

2013

Jun
150 Balance b/d
01

Jun
Paid for stamps 30 30
02

Jun Paid cleaners

20 20
03 wages

Jun
Paid for fare 21 21
04
 Jun Paid for office 20 20
05 tea

Jun Paid for repair

15 15
06 of cycle

Jun Paid for

35 35
07 advertisement

Drew imprest
Jun
141 from head
08
cashier

Jun
Paid for cartage 25 25
09

Paid for
Jun
travelling 30 30
10
Expenses

Jun Paid for

35 35
11 telegram sent

Paid for
Jun
entertainment 25 25
12
to salesman

Jun Paid for repairs

9 9
13 of cycle

Jun Paid for

15 15
14 printing bill

Jun Paid for

9 9
15 stationery

Jun
Balance c/d 2
15

Total Payment 289 65 51 45 25 24 79

Jun
2 Balance b/d
16

148 Jun Cash From

 16 Head Cashier

Example 3: (GST) Prepare an Analytical Petty Cash Book on the imprest system from the following information:

Amount
Date 2018 Particulars
(₹)

Jan. 1 Received for Petty Cash 8,000

Jan. 1 Paid for Stationery Rs.200 plus CGST and SGST @6% each –––––––

Jan. 2 Paid cartage 150

Jan. 8 Paid Bus fare 120

Jan.12 Paid for conveyance charges 700

Jan. 18 Paid for refreshment to customers 50

Jan. 22 Paid electricity bill 340

Jan. 30 Paid for speed post to Lucknow 40

Jan. 31 Paid Bus fare 80

Solution:

Voucher Total
Receipts Amount (₹) Date 2018 Particulars Stationery Amount (₹) Cartage Am
No. Payment Amount (₹)
To Cash
8,000 Jan.1 1 –––––––––
A/c
By
Jan.1 1 Stationery 200 200
A/c

By Input
Jan.1 1 12
CGST A/c

By Input
Jan.1 1 12
SGST A/c

By Cartage
Jan.2 2 150 150
A/c

By
Jan.8 3 Conveyance 120
A/c
Jan.12 4 By
 Conveyance 700
A/c

By Sundries
Jan.18 5 50
A/c

By
Jan.22 6 Electricity 340
Bill A/c

By Postage
Jan.30 7 40
A/c

By
Jan.31 8 Conveyance 80
A/c

1,704 200 150

By Balance
Jan.31 6,296
c/d

8,000 8,000

To Balance
6,296 Feb.1
b/d

1,704 Feb.1 To Cash A/c

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Comprehensive Examples

Introduction

In the given lesson, we will try our hand on the comprehensive examples relating to cash book. Sufficient practice will give
us an expert level understanding of the given chapter.

Example-1: Record the following items in a Three Column Cash Book of Krishna and Ram.

Amount
Date Transactions
(Rs)

2013

Jan 01 Cash in hand 500

Jan 01 Cash at Bank 300

Jan 03 Paid Salaries in Cash 200

Paid Singhal & Co. by a crossed cheque in

Jan 04 250
full settlement of their claim of Rs 255
Jan 05 A cheque is received from Raman & 450
Mahesh

Jan 06 Bought goods for cash 50

Jan 07 Cash sent to bank 150

Paid Krishna & Co. by cheque (discount

Jan 08 55
allowed 5)

Received from Ram Bros. in coins and

Jan 09 155
notes

Received from Sharma & Co. a crossed

Jan 11 150
cheque (discount allowed 10)

Jan 12 Drawn from bank 175

Jan 14 Paid wages 255

Cheque from Sharma & Co. returned

Jan 14 dishonoured and bank debits account in 5
respect of charges

Jan 14 Interest collected by bank 40

Jan 14 Goods sold to Mr. Ankit for Cash 90

Jan 15 Bought goods from Milkha Singh on credit 25

Solution

Cash Book

Dr. Cr.

RECEIPTS PAYMENTS

Discount Discount
Cash Bank Cash Bank
Date Particulars L.F. Allowed Date Particulars L.F. Received
(Rs) (Rs) (Rs) (Rs)
(Rs) (Rs)
2013 2013

Jan 01 Balance b/d 500 300 Jan 03 Salaries A/c 200

Jan 05 Raman & Mahesh 450 Jan 04 Singhal & Co. A/c 5 250

Jan 07 Cash A/c C 150 Jan 06 Purchases A/c 50

Jan 09 Ram Bros. 155 Jan 07 Bank A/c C 150

Jan 11 Sharma & Co. A/c 10 150 Jan 08 Krishna & Co. A/c 5 55

Jan 12 Bank A/c C 175 Jan 12 Cash A/c C 175

Jan 14 Interest A/c 40 Jan 14 Wages A/c 255

Jan 14 Cash Sales 90 Jan 14 Sharma & Co. 155

Jan 31 Balance c/d 265 455

10 920 1090 10 920 1090

Apr 01 Balance b/d 265 455

Note: Goods bought on credit from Milkha Singh on credit will appear in Purchases Book and not in the Cash Book.

Example-2: Record the following items in a Three Column Cash Book of Chandamita and also prepare Journal Proper.

Amount
Date Transactions
(Rs)

2013

Mar 01 Chandamita commences business with Cash 21,00,000

Mar 03 She paid into Bank current A/c 17,00,000

Mar 04 She receives a cheque from Kunal & Co. on account 50,000
Mar 07 She pays into bank Kunal & Co.’s Cheque 50,000

Mar 10 She pays Rajat & Co by cheque and received discount Rs 4,000 34,000

Mar 12 Lalit & Co. has paid into her bank A/c 48,000

Mar 15 She receives cheque from Javed and allows him discount Rs 5,000 44,000

Mar 20 She receives cash Rs 8000 and Cheque Rs 11,000 for cash sales

Mar 25 She pays into bank, including cheques received on 15 and 20 march 95,000

Mar 28 Cheque received from Javed was dishonoured

Mar 31 She draws a Cheque for office use 45,000

Solution

Cash Book

Dr. Cr.

Discount Discount
Cash Bank Cash Bank
Date Particulars L.F. Allowed Date Particulars L.F. Received
(Rs) (Rs) (Rs) (Rs)
(Rs) (Rs)

2013 2013

Mar Mar
Balance b/d 21,00,000 Bank A/c C 17,00,000
01 03

Mar Mar
Cash A/c C 17,00,000 Rajat & Co. 4,000 34,000
03 10

Mar Cheques-in- Mar

50,000 Bank A/c C 40,000
07 Hand A/c 25

Mar Mar
Lalit & Co. 48,000 Javed 44,000
12 28

Mar Mar
Sales A/c 8,000 Cash A/c C 45,000
20 31

Mar Cash A/c C 40,000

25

Mar Cheques in
55,000
25 Hand A/c

Mar
Bank A/c C 45,000
31

Mar
Balance c/d 4,13,000 17,70,000
01

21,53,000 18,93,000 4,000 21,53,000 18,93,000

Apr
Balance b/d 4,13,000 17,70,000
01

Journal

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

2013

Mar 04 Cheques in Hand A/c Dr. 50,000

To Kunal & Co. 50,000

(Cheque received not yet deposited)

Mar 15 Cheques in hand A/c Dr. 44,000

Discount Allowed Dr. 5,000

To Javed A/c 49,000

(Cheque recived and discount allowed)

Mar 20 Cheques in Hand A/c Dr. 11,000

To Sales A/c 11,000

(Cheque received against cash sales)

Mar 28 Javed A/c Dr. 5,000

To Discount Allowed A/c 5,000

(Cash discount reversed on dishonour)

Example-3: Record the following items in a Three Column Cash Book of Divya and also prepare Journal Proper.

Date Transactions

2013

Cash in hand Rs 1,500; Overdraft at bank Rs

Aug 01
20,000

Further a capital of Rs 30,000 was introduced out

Aug 03
of which Rs 21,000 were deposited in bank

Purchased goods from Ram & sons amounting to

Aug 04 Rs 3,500, a cash discount of Rs 500 was received
and the amount was paid by Cheque

Received cheque from Deepak Rs 2,500

Aug 06
Allowed him a discount of Rs 100

Aug 10 Cheque received from Deepak deposited in bank

An amount of Rs 1500 due from Aman Bros

Aug 16 written off as bad debts in the previous year, now
recovered.
Aug 19 Received Cheque of Rs 1,500 from Megha, which
was endorsed to Namrata on 24 Aug

Sale of old furniture, payment received in cash

Aug 20
for Rs 800

Aug 25 Cashed a cheque of Rs 4,000

Hitesh who owed Rs 500 to the business became

Aug 28
bankrupt and paid 50 paisa in a Rupee

Deposited with bank the entire balance after

Aug 30
retaining Rs 2,500 at office

Solution

Cash Book

Dr. Cr.

Discount Discount
Cash Bank Cash Bank
Date Particulars L.F. Allowed Date Particulars L.F. Received
(Rs) (Rs) (Rs) (Rs)
(Rs) (Rs)

2013 2013

Aug Aug
Balance b/d 1,500 Balance b/d 20,000
01 01

Purchases A/c
Aug Aug
Capital A/c 9,000 21,000 (Rs 3,500- 500 3,000
03 04
Rs500)

Aug Aug
Cheques -in-Hand A/c 2,500 Cash A/c C 4,000
10 25

Aug Bad-debts Recovered Aug

1,500 Bank A/c C 14,550
16 A/c 30

Aug Aug
Furniture A/c 800 Balance c/d 2,500 11,050
20 30

Aug Bank A/c C 4,000

25

Aug
Hitesh 250
28

Aug
Cash A/c C 14,550
30

17,050 38,050 17,050 38,050

Apr 01 Balance b/d 2,500 11,050

Journal

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

2013

Aug 06 Cheques in Hand A/c Dr. 2,500

Discount Allowed A/c 100

To Deepak 2,600

(Cheque received not yet deposited)

Aug 19 Cheque in Hand A/c Dr. 1,500

To Megha 1,500

(Cheque received against cash sales)

Aug 24 Namrata Dr. 1,500

To Cheque in Hand A/c 1,500

(Cash discount reversed on dishonor)

Example-4:

Record the following items in a Two Column Cash Book (Cash & Bank Column) of Daman.

Date Transactions

2013

Nov 01 Cash in hand Rs 40,000 and Bank Rs 56,000

Received cash Rs 4,500 and a Cheque of Rs 3,500 from M/s P.R. Bros
Nov 03
and allowed a discount of Rs 450

Nov 09 Cash Rs 3,000 paid to S. Chand and received 5% discount from him

Nov 13 Cash withdrew from bank for office use Rs 2,500

Nov 18 Received a cheque from Sehdev Rs 3,000

Endorsed Sehdev’s Cheque to Pranav in full settlement of his account

Nov 21
of Rs 3,100

D. Bose account of Rs 3000 was settled in cash and a discount of 5%

Nov 23
was received

Issued a cheque of Rs 3,500 to Mr. Verma and received discount Rs

Nov 25
250

Nov 27 Dividend collected by bank Rs 750

Nov 28 Paid for advertisement Rs 1000

Nov 31 Banked all cash, keeping a balance of Rs 25,000 in hand

Solution

Cash Book

Dr. Cr.

Cash Cash Bank

Date Particulars L.F. Bank (Rs) Date Particulars. L.F.
(Rs) (Rs) (Rs)

2013 2013

Nov 01 Balance b/d 40,000 56,000 Nov 09 S.Chand 3,000

Nov 03 M/s P.R. Bros A/c 4,500 3,500 Nov 13 Cash A/c C 2,500

Nov 13 Bank A/c C 2,500

Nov 23 D.Bose 2,850

Nov 27 Dividend A/c 750 Nov 25 Verma 3,500

Nov 31 Cash A/c C 15,150 Nov 28 Advertisement A/c 1,000

Nov 31 Bank A/c C 15,150

Nov 31 Balance c/d 25,000 69,400

47,000 75,400 47,000 75,400

2013

Dec 01 Balance b/d 25,000 69,400

Note: Cheque is received from Sehdev is treated as cheques-in-hand and when it is endorsed to Pranav then
Pranav A/c and Discount Allowed A/c is debited and Cheques-in-hand A/c is credited. So, this transaction will
not be shown in Cash Book.

Example-5: Record the following items in a Two Column (Cash & Bank Column) Cash Book of Rachit.
Date Transactions Amount

(Rs)

2013

Jun 01 Cash in Hand 1,00,000

Bank Overdraft 25,000

Jun 04 Received a cheque from Charlie on account 4,500

Allowed discount 300

Jun 05 Charlie’s cheque was deposited into the bank

Jun 10 Interest paid 29,600

Jun 12 Withdrew from Bank 19,000

Paid to Swati & co. Rs 5,900 in full settlement of

Jun 15
their dues of Rs 6,000 by cheque

Cheque in favour of Swati & co. returned

dishonoured due to mismatch of signatures. Issued
Jun 18
a fresh cheque in their favour, bank charged Rs
500 for dishonour of cheque

Jun 22 Outstanding interest is paid 1,900

Jun 24 Outstanding Salaries paid 3,500

Jun 25 Issued a cheque for Petty cash 500

Jun 28 Paid to V. Rathore by cheque 2,400

Discount Received 600

Jun 31 Interest received 1,900

Solution

Cash Book
Dr. Cr.

Cash Bank Particulars Cash Bank

Date Particulars L.F. Date L.F.
(Rs) (Rs) (Rs) (Rs)

2013 2013

Jun 01 Balance b/d 1,00,000 Jun 01 Balance b/d 25,000

Jun 04 Charlie* 4,500 Jun 05 Bank A/c* C 4,500

Jun 05 Cash A/c* C 4,500 Jun 10 Interest A/c 29,600

Jun 12 Bank A/c C 19,000 Jun 12 Cash A/c C 19,000

Jun 18 Swati & co. 5,900 Jun 15 Swati & Co. 5,900

Jun 31 Interest A/c 1,900 .

Jun 31 Balance c/d 42,900 Jun 18 Bank Charges A/c 500

Jun 22 Outstanding Interest A/c 1,900

Jun 24 Outstanding Salaries A/c 3,500

Jun 25 Petty Cash A/c 500

Jun 28 V. Rathore 2,400

Jun 31 Balance c/d 85,900

1,25,400 53,300 1,25,400 53,300

2013 2013

July 01 Balance b/d 85,900 July 01 Balance b/d 42,900

* The cheque received from Charlie and deposited next day has been recorded using alternative treatment
discussed in Lesson 4.

Example-6: Prepare Cash Book from the following transactions of M/s ACL tech for the month of September 2013 and
post them in the related ledger accounts.

Amount
Date Transactions
(Rs)

2013

Sep 01 Cash in Hand 19,000

Bank Overdraft 10,500

Sep 04 Wages paid 1,500

Sep 05 Cash sales 14,000

Purchased goods from Rohit for Rs 13,500 paid by cheque in

Sep 07 13,000
full settlement

Sep 09 Purchased Laptop for cash 11,000

Sep 10 Cash paid to Nidhi, discount received Rs 500 6,000

Sep 11 Cheque issued to Rohit was dishonoured

Sep 13 Cash sales 5,000

Sep 16 Bank charged interest on overdraft 450

Sep 18 Deposited in bank 7,500

Sep 20 Paid telephone bill by cheque 550

Sold goods of Rs 24,500 to Vikram and received cheque in

Sep 25 24,000
full settlement (Deposited on the same day)

Sep 27 Paid Rent 750

Sep 29 Drew cash for personnel use 1,500

Sep 30 Paid salary 1,000

Sep 30 Interest collected by bank 3,000

Solution

Cash Book

Dr. Cr.

Discount Discount
Cash Bank Cash Bank
Date Particulars L.F. Allowed Date Particulars L.F. Received
(Rs) (Rs) (Rs) (Rs)
(Rs) (Rs)

2013 2013

Sep 01 Balance b/d 19,000 Sep 01 Balance b/d 10,500

Sep 05 Sales A/c 14,000 Sep 04 Wages A/c 1,500

Sep 11 Rohit 13,000 Sep 07 Rohit 500 13,000

Sep 13 Sales A/c 5,000 Sep 09 Laptop A/c 11,000

Sep 18 Cash A/c C 7,500 Sep 10 Nidhi 500 6,000

Sep 25 Vikram 500 24,000 Sep 16 Interest A/c 450

Sep 30 Interest A/c 3,000 Sep 18 Bank A/c C 7,500

Sep 20 Telephone Expenses A/c 550

Sep 27 Rent A/c 750

Sep 29 Drawings A/c 1,500

Sep 30 Salary A/c 1,000

Sep 30 Balance c/d 8,750 23,000

 500 38,000 47,500 1,000 38,000 47,500

Apr 01 Balance b/d

Discount allowed by Rohit will be reversed by passing the following Journal Entry.

Journal

Debit Credit

Date Particulars L.F. Amount Amount

(Rs) (Rs)

2013

Sep 11 Discount Received A/c Dr. 500

To Rohit A/c 500

(Discount received reversed on dishonour of cheque)

LEDGERS

Wages Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 04 Cash A/c 1,500

Sales Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 05 Cash A/c 14,000

Sep 13 Cash A/c 5,000

Rohit

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 07 Bank A/c 13,000 Sep 11 Bank 13,000

Sep 07 Discount received 500 Discount Allowed 500

Vikram

Dr. Cr.
Date Particulars Amount Date Particulars Amount

(Rs) (Rs)

2013 2013

Sep 25 Bank A/c 24,000

Sep 25 Discount Allowed A/c 500

Laptop Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 09 Cash A/c 11,000

Nidhi

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 10 Cash A/c 6,000

Sep 10 Discount Received 500

Interest Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 16 Bank A/c 450

Telephone Expenses Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 20 Bank A/c 550

Rent Account
Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 27 Cash A/c 750

Drawings Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 29 Cash A/c 1,500

Salary Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 30 Cash A/c 1,000

Discount Allowed Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 25 Cash Book 500

Interest Received Account

Dr. Cr.

Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)

2013 2013

Sep 30 Bank A/c 3,000

Discount Received Account

Dr. Cr.
Date Particulars Amount Date Particulars Amount

(Rs) (Rs)

2013 2013

Sep 11 Rohit 500 Sep 07 Cash Book 500

Example-7: From the following particulars, Prepare a Petty Cash Book for the month of July 2013.

Voucher Amount
Date Transactions
No. (Rs)

2013

Jul 01 Drew cash for petty Cash 5,000

Jul 02 Paid for postage 101 250

Jul 03 Paid telephone bill 102 300

Jul 05 Paid cartage 103 450

Jul 09 Paid taxi fare 104 500

Jul 10 Paid sundries 105 150

Jul 12 Paid bus fare 106 75

Jul 15 Stationery purchased for office use 107 95

Jul 17 Paid for milk and sugar for office tea 108 250

Jul 18 Paid to window cleaner 109 575

Jul 19 Paid auto fare 110 1,000

Jul 20 Paid for postage 111 25

Jul 22 Paid for sundries 112 150

Jul 25 Paid to sweeper 113 175

Jul 26 Paid cartage 114 220

Jul 28 Paid for stationery 115 190

Jul 30 Paid taxi fare 116 145

We have to maintain an imprest of Rs 5,000, show what amount the petty cashier would be entitled to draw in the
beginning of the next month.

Solution

Petty Cash Book

Receipts C.B. Amount

Date Particulars V. No
(Rs) Folio (Rs)

2013

5000 Jul 01 Bank A/c

Jul 02 Postage A/c 101 250

Jul 03 Telephone A/c 102 300

Jul 05 Cartage A/c 103 450

Jul 09 Travelling Exp A/c 104 500

Jul 10 Sundry Expense A/c 105 150

Jul 12 Travelling Exp A/c 106 75

Jul 15 Stationery A/c 107 95

Jul 17 Office Exp A/c 108 250

Jul 18 Miscellaneous Exp A/c 109 575

 Jul 19 Travelling Exp A/c 110 1,000

Jul 20 Postage A/c 111 25

Jul 22 Sundry Expense A/c 112 150

Jul 25 Miscellaneous Exp A/c 113 175

Jul 26 Cartage A/c 114 220

Jul 28 Stationery A/c 115 190

Jul 30 Travelling Exp A/c 116 145

Jul 30 Balance c/d 450

5,000 5,000

450 Aug 01 Balance b/d

4,550 Aug 01 Bank A/c

Example-8: Using Example 10, prepare Analytical Cash Book.

Solution

Analytical Cash Book

Total
Cash V Postage Traveling Office Printing
Date Particulars Amount Telephone Sundries Cartage
Receipts No. Telegram Expense Expense Stationer
Paid

2013

Jul
5,000 Bank
01

Jul
Postage A/c 101 250 250
02

Jul Telephone
102 300 300
03 A/c
Jul Cartage A/c 103 450 450
05

Jul Travelling
104 500 500
09 Exp A/c

Jul Sundry
105 150 150
10 Expense A/c

Jul Travelling
106 75 75
12 Exp A/c

Jul Stationery
107 95 95
15 A/c

Jul Office Exp

108 250 250
17 A/c

Jul Miscellaneous
109 575
18 Exp A/c

Jul Travelling
110 1000 1000
19 Exp A/c

Jul
Postage A/c 111 25 25
20

Jul Sundry
112 150 150
22 Expense A/c

Jul Miscellaneous
113 175
25 Exp A/c

Jul
Cartage A/c 114 220 220
26

Jul Stationery
115 190 190
28 A/c

Jul Travelling
116 145 145
30 Exp A/c

Jul
Balance c/d 450
30

Total
5,000 275 1720 300 300 250 670 285
Payment
450 July Balance b/d
01

July Cash From

4,550
01 Head Cashier

Example-9: Prepare Petty Cash Book for Orange Ltd. if the books are maintained on imprest system.

Voucher Amount
Date Transactions
No. (Rs)

2013

Jan 01 Cash received from Head office 2500

Jan 02 Revenue stamps purchased 1 75

Jan 02 Conveyance paid 2 80

Jan 04 Paid for snacks in office 3 90

Jan 04 Cartage paid 4 100

Jan 04 Stationery purchased 5 250

Jan 06 Taxi fair paid 6 85

Jan 06 Telegram charges 7 15

Jan 06 Stamps purchased 8 75

Jan 06 Drawing board purchased 9 95

Jan 20 General expenses 10 220

Jan 20 Travelling expenses paid 11 110

Jan 20 Advance given to watchman 12 175

Jan 30 Tea and coffee expenses 13 195

Jan 31 Cartage paid 14 200

Solution

Petty Cash Book

Total Postage Printing & Misc

Cash V
Date Particulars Amount Conveyance Refreshment Cartage
Receipts No. Telegram Stationery Item
Paid

2013

Jan Cash
2,500
01 Received

Jan
Stamps 1 75 75
02

Jan
Conveyance 2 80 80
02

Jan
Snacks 3 90 90
04

Jan
Cartage 4 100 100
04

Jan
Stationery 5 250 250
04

Jan
Taxi fare 6 85 85
06

Jan
Telegram 7 15 15
06

Jan
Stamps 8 75 75
06

Jan Drawing
9 95 95
06 Board

Jan Genral
10 220 220
20 Expenses

Jan Travelling 11 110 110

 20 Expenses

Jan Advance to
12 175 175
20 watchman

Jan
Refreshment 13 195 195
30

Jan
Cartage 14 200 200
31

Jan
Balance c/d 735
31

Total
2,500 165 275 285 300 345 395
Payment

Jun
735 Balance b/d
16

Cash From
Jun
1,765 Head
16
Cashier

Example-10: Prepare Petty Cash Book for MN Ltd. if the books are maintained on imprest system. The imprest amount
is Rs 1500

Voucher Amount
Date Transactions
No. (Rs)

2013

May 01 Cartage paid 1 45

May 02 STD charges 2 75

May 03 Bus fair 3 65

May 04 Postage 4 30

May 06 Refreshment for employees 5 15

May 08 Courier charges 6 25

May 10 Cartage 7 80
May 15 Taxi fair to manager 8 95

May 18 Stationery 9 90

May 20 Bus fair 10 80

May 22 Fax charges 11 75

May 25 Telegram charges 12 35

May 27 Postage stamp 13 25

May 29 Repair to furniture 14 125

Solution

Petty Cash Book

Total
Cash Postage Printing & M
V
Date Particulars Amount Conveyance Telephone Refreshment Cartage
Receipts No. Telegram Stationery E
Paid

2013

Cash
May Received
1500
01 from head
cashier

May
Cartage paid 1 45 45
01

May
STD charges 2 75 75
02

May
Bus fair 3 65 65
03

May
Postage 4 30 30
04

May Refreshment 5 15 15
06 for
employees
 May Courier
6 25 25
08 charges

May
Cartage 7 80 80
10

May Taxi fair to

8 95 95
15 manager

May
Stationery 9 90 90
18

May
Bus fair 10 80 80
20

May
Fax charges 11 75 75
22

May Telegram
12 35 35
25 charges

May Postage
13 25 25
27 stamp

May Repair to
14 125 1
29 furniture

May
Balance c/d 640
30

Total
115 240 150 15 125 90 1
Payment

640 Balance b/d

Cash From
860 Head
Cashier

Example-11: Prepare a Two Column Cash Book from the following transactions of B.S. Goyal.

Amount
Date Transactions
(Rs)
2013

Mar 01 Cash in hand 5,500

Mar 06 Purchases made in cash 2,000

Mar 10 Wages paid 50

Mar 11 Cash sales 6,500

Cash received from Aman and allowed

Mar 12 1,750
him discount of Rs 50

Cash paid to Raman and discount

Mar 19 2225
received from him Rs 75

Mar 27 Cash paid to Lakshman 500

Mar 28 Purchase of goods in cash 2500

Solution

Cash Book

Dr. RECEIPTS PAYMENTS Cr.

Discount Discount
Amount Amount
Date Particulars L.F. Allowed Date Particulars L.F. Received
(Rs) (Rs)
(Rs) (Rs)

2013 2013

Mar 01 Balance b/d 5,500 Mar 06 Purchases A/c 2,000

Mar 11 Sales A/c 6,500 Mar 10 Wages A/c 50

Mar 12 Aman 50 1,750 Mar 19 Raman 75 2,225

Mar 27 Lakshman 500

Mar 28 Purchases A/c 2,500

 Mar 31 Balance c/d 6,475

50 13,750 75 13,750

2013

Apr.01 Balance b/d 6,475

Example-12: Prepare a Two Column Cash Book from the following transactions of Mr. Sehgal.

Amount
Date Transactions
(Rs)

2013

Jul 01 Mr. Sehgal started business with cash 7,500

Jul 03 Cash purchases 700

Jul 04 Paid to Mr. Kamal, discount allowed Rs 10 100

Jul 06 Deposited in bank 4500

Jul 09 Cash sales 3500

Jul 12 Wages paid 100

Jul 13 Paid for Stationery 50

Jul 15 Cash Sales 3000

Jul 17 Miscellaneous Expenses 55

Jul 19 Received cash from Tilak Kumar and discount allowed to him Rs 20 450

Jul 21 TV Purchased for personal use 300

Jul 22 Salary paid 450

Jul 25 Rent Paid 95

Jul 28 Electricity Bill paid 100

Jul 29 Advertising Expense paid 45

Jul 31 Payment into bank 2,000

Solution

Cash Book

Dr. RECEIPTS PAYMENTS Cr.

Discount Discount
Amount Amount
Date Particulars L.F. Allowed Date Particulars L.F. Received
(Rs) (Rs)
(Rs) (Rs)

2013 2013

Jul 01 Balance b/d 7,500 Jul 03 Purchases A/c 700

Jul 09 Sales A/c 3,500 Jul 04 Kamal 10 100

Jul 15 Sales A/c 3,000 Jul 06 Bank A/c 4,500

Jul 19 Tilak kumar 20 450 Jul 12 Wages A/c 100

Jul 13 Stationery A/c 50

Jul 17 Misc exp. A/c 55

Jul 21 Drawings A/c 300

Jul 22 Salaries A/c 450

Jul 25 Rent A/c 95

Jul 28 Electricity Bill A/c 100

Jul 29 Advertisement A/c 45

Jul 31 Bank A/c 2,000

 Jul 31 Balance c/d 5,955

20 14,450 10 14,450

2013

Apr. 01 Balance b/d 5,955