Single column cash book

Single column cash book

Single column cash book or simple cash book, like a ledger account has only one amount column, i.e., cash column on each side. Only cash transactions are recorded in this book. All cash receipts and payments are recorded systematically in this book. The format of simple cash book is given as under:

The format of simple cash book shows that it has been divided into two parts. The left hand side is ‘Debit’ which represents all cash receipts and the right hand side is ‘Credit’, showing all cash payments.

Columns (1) and (6) – Date: Date of receiving cash is recorded in the debit side and date of paying cash is recorded in the credit side.

Column (2) Receipts: Receipts column shows name of persons or parties from whom cash has been received, income received, sale of asset like plant, cash sales and other receipts.

Column (3) Receipt Number (R.N.): This column contains the serial numbers of the cash receipts.

Columns (4) and (9) – Ledger Folio (L.F.): This column is provided both on the debit and credit side of the cash book. It is used for reference. The Ledger page number of every account in the cash book is recorded in this column. This column facilitates vouching and verification of transactions recorded.

Columns (5) and (10) – Amount: This is the last column of the cash book on both the debit and credit sides. In case of cash receipt, the amount of actual cash receipts and in case of payments, the amount of actual cash payment is recorded. The opening balance of cash is recorded on the debit side and the closing balance is the balancing figure on the credit side. Opening balance or capital contributed by cash in case of new business is the first item on the debit side and the closing balance is the last item on the credit side.

The word ‘To’ is conventionally used before different accounts at the debit side of cash book in particulars column. The word ‘By’ is used before the different accounts at the credit side of the cash book in particulars column.

Column (7) Payments: The accounts to which payments are made are recorded here such as names of persons to whom payment has been made, expenses paid, assets purchased, cash purchases, etc.

Column (8) Voucher Number (V.N.): This column contains the serial number of the voucher towards which payment is made.

1. Balancing of single column cash book

Since the cash book serves as cash account, it must be balanced regularly. The balancing procedure is the same like any other ledger account. It must be remembered that one cannot pay more cash than what one has received. Therefore, the total of receipts is always more than (or at least equal to, but never less than) the credit total (payments) and the cash book always shows a debit balance (or nil balance, but never credit balance).

Illustration 1

Enter the following transactions in a simple cash book of Kunal:

2017 

Jan.                                                                      Rs.                                                             

1   Cash in hand             11,200                                                                 

5   Received from Ramesh       300                                                            

7   Paid rent                             30                                                              

8   Sold goods for cash            300                                                            

10 Paid Mohan              700                                                            

27 Purchased furniture for cash        200                                         

31 Paid salaries              100                                                            

Solution

Explanation

Jan 1: Cash in hand is the opening balance with the firm. This would have been the closing balance on 31st December, 2017. Cash account always has debit balance so it has been shown in the debit side of the cash book.

Jan 5: It is a receipt from Ramesh, so it has been recorded in receipt side (debit side) of the cash book.

Jan 7: Payment of rent will decrease cash, so it has been recorded in payment side (credit side) of the cash book.

Jan 8: Cash sales of goods will bring cash and increases the cash balance, so it has been recorded in the debit side of the cash book.

Jan 10: Payment to Mohan decreases cash, so it has been recorded in the credit side.

Jan 27: Purchase of furniture for cash reduces cash, so it has been recorded in credit side.

Jan 31: Payment of salaries in cash reduces cash, so it has been recorded in the credit side of cash book.

Illustration 2

Enter the following transactions in a single column cash book of Pradeep for April, 2017

April           Rs.

1   Commenced business with cash   27,000

5   Bought goods for cash        6,000

10 Goods sold for cash  11,000

13 Paid into bank 5,000

14 Goods sold to Sangeetha for cash          9,000

17 Goods purchased from Preethi on credit         13,000

21 Purchased stationery by cash       200

25 Paid Murugan by cash        14,000

26 Commission paid by cash  700

29 Drew from bank for office use     4,000

30 Rent paid by cheque 3,000

Solution

Note: The transaction dated April 17th will not be recorded in the cash book as it is a credit transaction. The transaction on 30th is not recorded as the payment is made through bank which does not involve cash.

2. Posting from single column cash book

Since cash book serves as ‘journal’ as well as ‘ledger account’, there is no need for preparing separate cash account and posting thereto. But entering cash transactions in cash book means recording only cash aspect of each transaction. The other aspect of the transaction remains to be posted. When the related accounts are posted, the double entry will be completed. The procedure for posting is:

·        Credit the accounts mentioned on the receipts (or) debit side by entering ‘By Cash account’ and

·        Debit the accounts mentioned on the payment (or) credit side by entering ‘To Cash account’.

For example, for illustration 2, posting is made to sales account and purchases account as follows: