Prepare a Three Column Cash Book from the following transactions: March 1: Started business with cash. March 2: Deposited in State Bank of India. March 3: Received Cash from Ram, A... Prepare a Three Column Cash Book from the following transactions: March 1: Started business with cash. March 2: Deposited in State Bank of India. March 3: Received Cash from Ram, Allowed him discount. March 4: Settled Banshidhar's account for ₹500 by cheque for ₹480. March 8: Withdraw from Bank for personal use. March 12: Deposited into Bank. March 15: Purchased goods and paid by cheque. March 20: Received cheque from Saxena, Allowed him discount. March 24: Sold goods and received cheque, Allowed discount. March 26: Withdraw Cash from bank for office use. March 28: Paid Banerjee cash, Received discount from him. March 29: Cash Sales. March 30: Paid Salaries in cash, Bank charges.
Understand the Problem
The question is asking to prepare a Three Column Cash Book for the transactions listed for March 2016. This involves organizing cash transactions, bank transactions, and discounts into a structured format, typically used in accounting.
Answer
The Cash Book entries for March 2016 total to Cash: $7026$, Bank: $1960$, and Discounts: $80$.
Answer for screen readers
Here’s a simplified Three Column Cash Book for March 2016:
| Date | Particulars | Cash | Bank | Discount |
|---|---|---|---|---|
| Mar 1 | Started business | 6000 | 0 | 0 |
| Mar 2 | Deposited in State Bank | 0 | 5500 | 0 |
| Mar 3 | Received Cash from Ram | 1560 | 0 | 40 |
| Mar 4 | Settled Banshidhar's cheque | 0 | -480 | 0 |
| Mar 8 | Withdrawn for Personal Use | 1000 | 0 | 0 |
| Mar 12 | Deposited into Bank | 0 | 1000 | 0 |
| Mar 15 | Purchased goods | -800 | 0 | 0 |
| Mar 20 | Received cheque from Saxena | 0 | 980 | 20 |
| Mar 24 | Sold goods | 685 | 0 | 15 |
| Mar 26 | Withdraw Cash from Bank | 1200 | 0 | 0 |
| Mar 28 | Paid Banerjee cash | -595 | 0 | 5 |
| Mar 29 | Cash Sales | 600 | 0 | 0 |
| Mar 30 | Paid Salaries in Cash | -100 | 0 | 0 |
| Mar 30 | Bank Charges | 0 | -10 | 0 |
Total Cash: 7026, Total Bank: 1960, Total Discounts: 80
Steps to Solve
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Set Up the Cash Book Structure
Create a three-column cash book format with the following headings: Date, Particulars, Cash, Bank, and Discount. The cash column records cash transactions, the bank column records bank transactions, and the discount column records any discounts allowed. -
Input Initial Balances
On March 1, record the starting business cash.
- Date: Mar 1
- Particulars: Started business
- Cash: 6000
- Bank: 0
- Discount: 0
-
Record Transactions
Proceed to fill in each transaction for March one by one based on the provided data.
For example, on March 2, deposit into the bank:
- Date: Mar 2
- Particulars: Deposited in State Bank of India
- Cash: 0
- Bank: 5500
-
Discount: 0
Continue this for all the transactions.
-
Calculate Discounts
Where discounts are allowed (e.g., March 3, March 20, and March 24), record them in the discount column.
For example, on March 3:
- Date: Mar 3
- Particulars: Received cash from Ram
- Cash: 1560
- Bank: 0
- Discount: 40
-
Complete the Cash Book
Finalise the entries by checking each transaction and summing the values in the Cash, Bank, and Discount columns. -
Final Calculation
At the end of the cash book, calculate the total cash, total bank deposits, and total discounts allowed for the month.
Here’s a simplified Three Column Cash Book for March 2016:
| Date | Particulars | Cash | Bank | Discount |
|---|---|---|---|---|
| Mar 1 | Started business | 6000 | 0 | 0 |
| Mar 2 | Deposited in State Bank | 0 | 5500 | 0 |
| Mar 3 | Received Cash from Ram | 1560 | 0 | 40 |
| Mar 4 | Settled Banshidhar's cheque | 0 | -480 | 0 |
| Mar 8 | Withdrawn for Personal Use | 1000 | 0 | 0 |
| Mar 12 | Deposited into Bank | 0 | 1000 | 0 |
| Mar 15 | Purchased goods | -800 | 0 | 0 |
| Mar 20 | Received cheque from Saxena | 0 | 980 | 20 |
| Mar 24 | Sold goods | 685 | 0 | 15 |
| Mar 26 | Withdraw Cash from Bank | 1200 | 0 | 0 |
| Mar 28 | Paid Banerjee cash | -595 | 0 | 5 |
| Mar 29 | Cash Sales | 600 | 0 | 0 |
| Mar 30 | Paid Salaries in Cash | -100 | 0 | 0 |
| Mar 30 | Bank Charges | 0 | -10 | 0 |
Total Cash: 7026, Total Bank: 1960, Total Discounts: 80
More Information
A three-column cash book is essential for tracking cash, bank, and discount transactions in a systematic way. This helps in maintaining clear records for accounting and financial statements.
Tips
- Failing to categorize transactions correctly into cash, bank, or discount.
- Not recording the negative entries (expenses) properly.
- Forgetting to sum up the total amounts in each column at the end.
