Two/Double Column Cash
Book:
Definition and Explanation:
Cash A/c and Bank
A/c are two busiest accounts in ledger and they are removed from the
ledger to reduce its
volume and size. Cash
A/c is removed from the ledger and instead of it the
Single Column Cash Book is kept to record cash transactions. In the same way no
Bank A/c is opened in ledger for recording bank
transactions, rather an additional amount column is
provided on each side of 'Single Column Cash Book'
for recording bank transactions. One more column for
amount is provided on the debit side and one on
credit side of
Single Column Cash Book. These two
amount columns on debit side and credit side will
serve as Bank A/c and so it will not be necessary to
open a Bank A/c in the ledger. The Cash Book having
two Amount Columns on both sides is called 'Double
Column Cash Book'.
Advantages:
The following
advantages are derived from Double Column Cash Book:
- All entries made
in "Bank" Column of Double Column Cash Book form a
part of double entry system and hence a separate
Bank A/C need not be opened in ledger. It saves
time, labour and cost.
- Both cash
transactions and bank transactions are recorded in
the same book. So both cash balance and bank balance
are easily available from the same book.
Thus it is said
that the Double Column Cash Book has two accounts in
it, the Cash A/C and the Bank A/C.
Contra Entry
In any account we
can only have one half of a double entry. An account
cannot be debited and credited at the same time. For
example, when we sell goods for cash, cash received
will be recorded on the debit side of Cash Book and
the goods sold will be posted on the credit side of
Sales Account. But in Double Column Cash Book, we have
two accounts, Cash A/c and the Bank A/c, so it is
possible to have both a debit entry and a credit
entry at the same time. For example, cash of $5,000
is deposited into the bank. In this transaction both
Bank A/c and Cash A/c are involved and they will be
recorded on both sides of Double Column Cash Book
i.e. on the debit side in bank column and on the
credit side in cash column.
Thus a transaction
in which Cash A/c and Bank A/c are involved, is
recorded on both the sides of Double Column Cash
Book, it is called "contra entry", from the Latin
prefix contra meaning 'opposite to or against'.
In recording such a
transaction the letter "C", is written in 'L.F'
column because both aspects of the transactions are
recorded and there is no need to post them into the
ledger.
In this connection,
the difference between contra entry and other
entries in Cash Book may be noted. ''The Double
entry work of contra entry is completed in Cash
Book. They need not be posted to ledger". But the
double entry work of other entries in Cash Book is
not completed, one aspect (i.e. cash aspect) of the
transaction is, however, completed in Cash Book, but
the other aspect is not completed, which is to be
posted to the concerned account in ledger.
Contra entry will be passed in the following
cases:
When cash is
deposited into the Bank:
Bank column -
debit -- Cash column-credit.
When cash is
drawn from the bank for business purposes:
Cash Column -
debit -- Bank column - credit.
When a cheque
received from a debtor on a date subsequent to
its receipt is deposited into the bank:
Bank column -
debit -- Cash column - credit. More Hints:
While writing
Double Column Cash Book, keep in mind that there are
two separate boxes - one for the cash and other for
the bank:
Dr
→ |
Cash Box |
Cr
→ |
|
Dr
→ |
Bank Box |
Cr
→ |
When cash or
Cheques (Cheques received but not deposited on the
same date ) enters into cash box, Cash Column is
debited and when cash or cheque goes out of the cash
box. Cash Column is credited. On the other hand,
when Cash or cheque enters into bank box, Bank
Column is debited and when cash goes out of bank
box, bank column is credited.
Example
1:
Enter the following
transactions in a double column cash book/two column
cash book.
2005 |
|
$ |
March 1 |
Cash in
hand |
80,000 |
March 1 |
Bank
Balance |
120,000 |
March 3 |
Received a
cheque from Osman |
24,000 |
March 4 |
Deposited
Osman's cheque
with bank |
-- |
March 8 |
Withdrawn
from bank for business use |
20,000 |
March 10 |
Goods sold
for cash |
30,000 |
March 15 |
Goods
bought for cash |
80,000 |
March 18 |
Goods sold
for cash |
60,000 |
March 20 |
Paid
Rahim by cheque |
26,000 |
March 30 |
Deposited
into bank |
16,000 |
March 31 |
Paid
salary in cash |
10,000 |
March 31 |
Paid rent
by cheque |
6,000 |
Solution:
Double Column Cash Book
Date |
Particulars |
V/N |
L/F |
Cash $ |
Bank $ |
Date |
Particulars |
V/N |
L/F |
Cash $ |
Bank $ |
2005 |
|
|
|
|
|
2005 |
|
|
|
|
|
Mar. 1 |
Balance b/d |
|
|
80,000 |
120,000 |
Mar. 4 |
Bank A/c
(Being cheque deposited) |
|
C |
24,000 |
|
3 |
Osman A/c
(Being cheque received) |
|
|
24,000 |
|
8 |
Cash A/c
(Being cash withdrawn from bank) |
|
C |
|
20,000 |
4 |
Cash A/c
(Cheque deposited with bank) |
|
C |
|
24,000 |
15 |
Purchase A/c
(Being goods bought) |
|
|
80,000 |
|
8 |
Bank A/c
(Being cash drawn from bank) |
|
C |
20,000 |
|
18 |
Cash A/c |
|
C |
16,000 |
|
10 |
Sales A/c
(Being goods sold 'for cash) |
|
|
30,000 |
|
20 |
Rahim A/c
(Cheque issued) |
|
|
|
26,000 |
18 |
Sales A/c
(Being goods sold for cash) |
|
|
60,000 |
|
31 |
Salary A/c
(Being salary paid) |
|
|
10,000 |
|
30 |
Cash A/c
(Being cash deposited) |
|
C |
|
16,000 |
31 |
Rent A/c
(Being rent paid by cheque) |
|
|
|
6,000 |
|
|
|
|
|
|
31 |
Balances c/d |
|
|
84,000 |
108,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
214,000 |
160,000 |
|
|
|
|
214,000 |
160,000 |
|
|
|
|
|
|
|
|
|
|
|
|
April. 1 |
Balance b/d |
|
|
84,000 |
108,000 |
|
|
|
|
|
|
Example 2:
Enter the following
transactions of M. Rauf in a Double Column Cash Book
and post them to concerned accounts in ledger:
2005 |
|
$ |
Jan. 1 |
Cash in
hand |
100,000 |
Jan. 1 |
Cash at
Bank |
60,000 |
Jan. 3 |
Cash Sales |
40,000 |
Jan. 4 |
Paid M.
Arshad by a cheque |
14,000 |
Jan. 6 |
Received a
cheque from Babar |
8,000 |
Jan. 8 |
Cash
deposited into bank |
19,000 |
Jan. 8 |
Babar's
cheque deposited into bank |
-- |
Jan. 10 |
Drew from
bank for office use |
15,000 |
Jan. 11 |
Drew from
bank for personal use of owner |
24,000 |
Jan. 12 |
Cash
purchases |
57,000 |
Jan. 15 |
Received a
cheque from S. Rashid |
10,000 |
Jan. 16 |
Rashid's
cheque endorsed to Shakeel |
-- |
Jan. 17 |
Paid
Arshad Khan by a cheque |
36,000 |
Jan. 18 |
Rashid's
cheque returned dishonored |
-- |
Jan. 19 |
Our cheque
to Arshad Khan was dishonored |
-- |
Jan. 21 |
Received
interest from bank |
1,400 |
Jan. 24 |
Cash sales |
33,00 |
Jan. 27 |
Incidental
charges debited by bank |
700 |
Jan. 31 |
Salary
paid by cheque |
14,000 |
Solution:
Cash Book (double column)
Date |
Particular |
V/N |
L/F |
Cash $ |
Bank $ |
Date |
Particular |
V/N |
L/F |
Cash $ |
Bank $ |
2005 |
|
|
|
|
|
2005 |
|
|
|
|
|
Jun. 1 |
Balance b/d |
|
|
100,000 |
60,000 |
Jan. 4 |
M. Arshad A/c |
|
7 |
|
14,000 |
3 |
Sales A/c |
|
5 |
40,000 |
|
8 |
Bank A/c |
|
C |
19,000 |
|
6 |
1Babar
A/c |
|
9 |
8,000 |
|
8 |
Bank A/c |
|
C |
8,000 |
|
8 |
Cash A/c |
|
C |
|
19,000 |
10 |
Cash A/c |
|
C |
|
15,000 |
8 |
2Cash
A/c |
|
C |
|
8,000 |
11 |
Drawing A/c |
|
11 |
|
24,000 |
10 |
Bank A/c |
|
C |
15,000 |
|
12 |
Purchase A/c |
|
13 |
57,000 |
|
15 |
3S.Rashid's
A/c |
|
15 |
10,000 |
|
16 |
Shakeel A/c |
|
16 |
10,000 |
|
19 |
4Arshad
Khan A/c |
|
17 |
|
36,000 |
17 |
Arshad Khan
A/c |
|
17 |
|
36,000 |
21 |
5Interest
A/c |
|
19 |
|
1,400 |
27 |
Bank charges
A/c |
|
20 |
|
700 |
24 |
Sales A/c |
|
5 |
33,000 |
|
31 |
Salary A/c |
|
21 |
|
14,000 |
|
|
|
|
|
|
31 |
Balance C/d |
|
|
112,000 |
20,7000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,000 |
124,400 |
|
|
|
|
206,000 |
124,400 |
|
|
|
|
|
|
|
|
|
|
|
|
Feb. 1 |
Balanced b/d |
|
|
112,000 |
20,700 |
|
|
|
|
|
|
- On 6.1.2005,
cheque received from Babar is treated as cash
because it is not deposited into the bank on the
same date.
- A contra entry
is passed when Babar's cheque (which was treated
as cash) is deposited into the bank on 8.1.2005.
- On 15.1.2005,
cheque received from S. Rashid is treated as
cash, so recorded in Cash Column.
- Cheque issued
to Arshad Khan on 17.1.2005 is dishonored, so
the bank is debited again and Arshad Khan became
a creditor again.
- On 21.1.2005,
the bank allowed us interest which is revenue
for the business and our bank balance is
increased by $1,400.
Note:
The transaction on
18.1.2005 is not entered in the Cash Book because it
does not involve cash A/c or Bank A/c. Simply S.
Rashid will become debtor and Shakeel will become
creditor again and entry will be passed in proper
journal as:
18.1.05.
S. Rashid A/C
............. Dr. 10,000
Shakeel A/C.............................. Cr. 10,000
Posting from
Cash Book to concerned accounts In Ledger:
Cash A/c and
Bank
A/c not have been opened in Ledger |
For posting in
Ledger, it will be very helpful to see the
two columns on the debit side and credit
side of the Cash Book first i.e. Particulars
Column and L.F Column. On the debit side, in
Particulars Column, the names of concerned
accounts, (accounts which are credited when
Cash A/C or Bank A/C are debited) are given
and in L.F Column, the page numbers on which
these accounts are opened in Ledger are
given. The concerned accounts on the debit
side in Particulars Column are Sales A/c,
Babar A/c, S. Rashid A/c, Arshad Khan A/c
and Interest A/c and on the credit side M.
Arshad A/c, Drawing A/c, Purchase A/c,
Shakeel A/c, Arshad Khan A/c, Bank Charges
A/c and Salary A/c. |
Rule For Posting:
- On credit
side: of the concerned accounts in
Particulars Column on the debit side of the Cash
Book.
- On debit
side: of the concerned accounts in
Particulars Column on the credit side of the
Cash Book.
Sales A/C (Folio 5)
|
|
|
3.1.2005
3.1.2005 |
Cash A/C
Cash A/C |
40,000
33,000 |
Baber A/C (Folio 9)
S. Rashid A/C (Folio 15)
|
|
|
15.1.2005 |
Cash A/C |
10,000 |
Interest A/C (Folio 19)
Arshad Khan A/C (Folio 17)
17.1.2005 |
Bank A/C |
36,000 |
19.1.2005
|
Bank A/C |
36,000 |
M. Arshad Khan A/C (Folio 7)
Drawings A/C (Folio 11)
Purchase A/C (Folio 10)
12.1.2005 |
Cash A/C |
57,000 |
|
|
|
Shakeel A/C (Folio 16)
16.1.2005 |
Cash A/C |
10,000 |
|
|
|
Bank Charges A/C (Folio 20)
Sales A/C (Folio 21)
31.1.2005 |
Bank A/C |
14,000 |
|
|
|
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