Double column cash book (Cash book
with cash and discount column)
It is a cash
book with cash and discount columns. As there are two columns, i.e., discount
and cash columns, both on debit and credit sides, this cash book is known as
‘double column cash book’.
The double
column cash book is prepared on the lines of simple cash book. It has only one
additional column, i.e., discount column on each side. Discount column
represents discount allowed on the debit side and discount received on the
credit side.
In the
discount columns, cash discount, i.e., cash discount allowed and cash discount
received are recorded. The net amount received is entered in the amount column
on the debit side and the net amount paid is entered in the amount column on
the credit side. For the seller who allows cash discount, it is a loss and
hence it is debited and shown on the debit side of the cash book. For the
person making payment, discount received is a gain because less payment is made
and it is credited and shown on the credit side of the cash book.
The cash
columns are balanced. Discount columns are not balanced, since debit represents
discount allowed and credit represents discount received. They are totalled,
separately.
The format of double column cash book is given
below:
The cash
columns should be balanced as usual and the balance should be carried forward
to the next date or period.
However,
discount columns are not to be balanced. They are to be totalled on the debit
side and credit side separately. The total of discount column on the debit side
represents total discount allowed to customers and is debited to discount
allowed account. Total of discount column on the credit side represents total
discount received and is credited to discount received account. The periodical
totals of discount columns are posted as under:
·
Debit Discount allowed account as ‘To Sundry
Accounts as per Cash book’, with the periodical total of the discount allowed
column.
·
Credit
Discount received account as ‘By Sundry Accounts as per Cash Book’ with the
periodical total of the discount received column.
Enter the following transactions in a cash book
with cash and discount columns:
2017 Rs.
Jan 1 Cash in
hand 11,500
Jan 5 Paid to
Ramanathan by depositing in cash deposit machine 300
Discount
allowed by him 10
Jan 8 Purchased
goods for cash 400
Jan 10 Cash
received from Rajagopal 980
Discount
allowed 20
Jan 15 Sold
goods for cash 400
Jan 21 Paid
cash to Shanthi 295
Discount
received 5
Jan 25 Paid
wages by cash 50
Jan 31 Paid
to Sanjeev Rs. 390 in full settlement of his account 400
Solution
Following is
the procedure for posting entries from double column cash book:
Cash
columns: Debit the accounts mentioned on the credit side and the credit is to
Cash A/c with the amount mentioned in cash
column; credit the accounts mentioned on the debit side and the debit is for
Cash A/c with the amount mentioned in cash column.
Discount
columns: Debit the concerned personal account mentioned on the credit side and the credit is to Discount received A/c with
the amount mentioned in the discount received column. Credit the concerned
personal account mentioned on the debit side and the debit is for Discount
allowed A/c with the amount entered in the discount allowed column.
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