Prepare a two column Cash book with the help of following information for January 2018.

Prepare a two column Cash book with the help of following information for January 2018

PRACTICAL PROBLEM 

01. Started business with cash Rs.1,20,000 

03. Cash paid into Bank of Baroda Rs.50,000 

05. Purchased goods from Sakahi on credit Rs.20,000 

06. Sold goods to Divakar and received a bearer cheque Rs.20,000 

10. Paid to Sakshi cash Rs.20,000 

14. Cheque received on December 06, 2018 deposited into Bank Rs.20,000 

18. Sold goods to Shivaji on credit Rs.12,000 

20. Cartage paid in cash Rs.500 

22. Received cash from Shivaji Rs.12,000 

27. Commission received Rs.5,000 

30. Drew cash for personal use Rs.2,000 

SOLUTION: 

 

Dr.                              CASH BOOK                               Cr.

 

Date	Receipts	R	LF	Cash	Bank	Date	Payments	V	LF	Cash	Bank
2018  Jan.  1	To Capital A/c  [Being started Business]	-	-	1,20,000	-	2018  Jan.  03	By Bank A/c  [Being Cash Paid]	-	C	50,000	-
03	To Cash A/c  [Being Cash Paid]	-	C	-	50,000	10	By Sakshi A/c  [Being Cash Issued]	-	-	20,000	-
06	To Sales A/c  [Being Cash Sales made]	-	-	-	20,000	20	By Cartage A/c  [Being Cartage paid]	-	-	500	-
22	To Shivaji A/c  [Being Cash Received]	-	-	12,000	-	30	By Drawings A/c  [Being Cash withdrawn for personal use]	-	-	2,000	-
27	To Commission A/c  [Being Commission Received]	-	-	5,000	-	31	By Balance c/d			64,500	70,000
				1,37,000	70,000					1,37,000	70,000
Feb.1	To Balance b/d			64,500	70,00

 
 
 
 
 
 
 
 
 
 
 

 

Explanatory Notes: 

 

1. Started business with cash Rs.1,20,000: In the business cash comes in therefore Cash is shown on Receipts side and it will stated on cash column because business is started with cash.  

 

3. Cash paid into Bank of Baroda: In this Transaction Cash Account and Bank account affects simultaneously but with opposite effects. It decrease the cash balance and increasing bank balance.to record bank balance, bank account is debited and to record decreasing in cash balance, cash account is credited and vice versa. Entries recorded on both the sides of cash book are called as "CONTRA ENTRIES". This contra entries are denoted by the capital letter "C" in the ledger Folio column. 

 

5. Purchased goods from sakshi on credit Rs.20,000: This Transaction will not record in the cash book till the payment issue. 

 

6. Sold goods to Divakar and received a bearer cheque Rs.20,000: Goods sold to Divakar and received a bearer cheque. Bearer is a type of Cheque, that should be deposite into bank. Therefore in the column of bank amount is stated. 

 

10. Paid Sakshi to cash Rs.20,000: Cash issued to Sakshi therefore in the payment side it will denote Sakshi account and in Cash column 20,000. 

 

14. Cheque received on December 06, 2018 deposited into Bank: This Transaction will not recorded because cheque is received on 06th of December and passed entry on 6th. Now the proprietor is depositing the cheque into bank therefore no entry needed. 

 

18. Sold goods to Shivaji on credit 12,000: This Transaction will not record in the cash book till the payment receive. 

 

20. Cartage paid in cash Rs.500: Cartage is an expense for the business therefore it is denoted on payment side in cash column. 

 

22. Received cash from Shivaji Rs.12,000: Cash is received from Shivaji who has purchased goods on 18th December. Therefore in the receipts side it is denoted as shivaji acount and in cash column 12,000 is stated. 

 

27. Commission received Rs.5,000: Commission received is denoted on receipt side in cash column. 

 

30. Drew cash for personal use: Proprietor withdraw cash for personal use therefore from the business cash is going out of the business. On the payment side of cash account because cash is going out.