Concept Of Cash Transactions
Cash transactions refer to cash receipts and payments. The receipts of cash from various sources and payments of cash on various heads are important routine transactions of a business. The main sources of cash receipts are the sale of goods and services, the sale of old assets, the contribution of capital, loan borrowed, interest, rent, commission, and other receipts from customers.
- To have a systematic and permanent record of all cash transactions in a separate book.
- To obtain reliable and detailed information of all the cash receipts and payments easily and immediately.
- To keep an effective control over a misappropriation of cash transactions.
- To know main sources and heads of payment of cash.
- To know cash balances.
The cash book is a complete record of all the receipts and payments, which are made either in cash or through the bank. It has two sides. The debit side shows cash receipts and the credit side shows cash payments. All the cash and cheques received and deposited are shown on the cash receipt side. All the payments made in cash and or by cheques are shown on the payment side. At the end of the given period, its balance is obtained to know the amount of cash and bank balances.
Single column cash book, Double column cash book and triple column cash book are the types of cash book.
Contra Entry is the act of recording a transaction both on the receipt and payment sides of the cash book. It completes the double effect of the transactions entering the amount one on the cash column and next on the bank column. Again such entry, the alphabet ‘C’ is mentioned in the L.F column. The alphabet ‘C’ indicates that the entry is contra and the posting is not necessary. Contra entry is passed for the deposited and withdrawn for office use.
Single Column Cash Book ( Cash Column )
The following transactions are extracted from the books of Mr. Bhakti Sharma:
Bhadra-1 Commencement of business with cash of Rs 120,000
Bhadra-5 Sold goods in cash of Rs 40,500
Bhadra-6 Paid salaries of Rs 30,500
Bhadra-10 Purchased furniture of Rs 45,000
Bhadra-15 Received from the debtor of Rs 12,500
Bhadra-25 Purchased stationery of Rs 500
Bhadra-30 Paid to the creditors of Rs 15,000
|05-01||To balance b/d||120,000||05-06||By salary a/c||30,500|
|05-05||To sales a/c||40,500||05-10||By Furniture a/c||45,000|
|05-15||To Debtor’s a/c||12,500||05-25||By Stationery a/c||500|
|05-30||By Creditor’s a/c||15,000|
|05-31||By balance c/d||82,000|
|06-01||To balance b/d||82,000|
The following transactions are extracted from Mr. Jackson’s Books for the month of Shrawn:
Shrawn-1 Opening cash balance of Rs 25,000
Shrawn-5 Received cash from debtors of Rs 42,000
Shrawn-10 Purchased goods of Rs 12,500
Shrawn-12 Paid wages of Rs 7,200
Shrawn-13 Withdrawn cash by the owner of Rs 5,200
Shrawn-14 Paid rent of Rs 1,550
Shrawn-25 Purchased a machine of Rs 15,000
Required: Single column cash book
|04-01||To balance b/d||25,000||04-10||By Purchase a/c||12,500|
|04-05||To Debtor’s a/c||42,000||04-12||By Wages a/c||7,200|
|04-13||By Drawing a/c||5,200|
|04-14||By Rent a/c||1,550|
|04-25||By machine a/c||15,000|
|04-31||By balance c/d||25,550|
|05-01||To balance b/d||25,550|
Single Column Cash Book ( Bank Column )
On Jestha 1, Mr. Luca Pacioli commenced a business with depositing cash of Rs 175,000 into Nepal Bank Ltd. The following transactions are provided during the month:
Jestha-4 Received a cheque from Amir of Rs 40,000
Jestha-5 Withdrew from the bank for personal use of Rs 3,700
Jestha-15 Received interest by cheque of Rs 5,000
Jestha-25 Deposited cash into the bank of Rs 12,000
Jestha-27 Paid interest on overdraft of Rs 1,000
Jestha-28 Purchased furniture and paid by cheque of Rs 35,000
Required: Single column cash book with bank column
|02-01||To balance b/d||175,000||02-05||By Drawing a/c||3,700|
|02-04||To Amir a/c||40,000||02-07||By interest a/c||1,000|
|02-15||To interest a/c||5,000||02-28||By Furniture a/c||35,000|
|02-25||To Cash a/c||12,000||02-31||By balance c/d||192,300|
|03-01||To balance b/d||192,300|
The following transactions are extracted from the books of Mr. Basanta for the month of Marga assuming that all transactions were settled through bank:
Marga-1 Opening bank balance of Rs 250,000
Marga-4 Cheque received from Sajan of Rs 40,000
Marga-6 Purchased goods for Rs 105,000
Marga-10 Paid for sundry expenses of Rs 15,000
Marga-15 Paid for school fees of the owner’s son of Rs 5,000
Marga-22 Sold goods for Rs 60,000
Marga-28 Withdrew from bank for personal use of Rs 3,000
Required: Cash Book with Bank column
|08-01||To balance b/d||250,000||08-06||By Purchase a/c||105,000|
|08-04||To Sajan a/c||40,000||08-10||By Sundry expenses a/c||15,000|
|08-22||To sales a/c||60,000||08-15||By Drawing a/c||5,000|
|08-28||By Drawing a/c||3,000|
|08-31||By balance c/d||222,000|
|09-01||To balance b/d||222,000|
Double Column Cash Book ( Cash and Discount Columns )
The following information is related to a business:
Jan-1 Cash in hand Rs 10,000
Jan-3 Bought goods for Rs 500
Jan-7 Deposited cash into the bank of Rs 650
Jan-13 Paid to Hari Rs 450 in full settlement of Rs 500
Jan-20 Received Rs 750 from Subash and discount allowed Rs 150
Jan-25 Withdrew from bank for office use Rs 1,000
Jan-27 Purchased books for the proprietor Rs 750
Required: Cash book with cash and discount columns
|01-01||To balance b/d||10,000||–||01-03||By Purchase a/c||500||–|
|01-20||To Subash a/c||750||150||01-07||By Bank a/c||650||–|
|01-25||To bank a/c||1,000||–||01-13||By Hari a/c||450||50|
|01-27||By Drawing a/c||750||–|
|01-31||By balance c/d||9,400|
|02-01||To balance b/d||9,400|
Double Column Cash Book ( Bank and Discount Columns )
The following information is taken from the books of Mr. Sabin assuming that all transactions were settled through the bank:
Baisakh-2 Mr. Sabin started a business with Rs 30,000 by opening the bank account
Baisakh-7 Purchased office equipment by issuing a cheque of Rs 2,500
Baisakh-9 Purchased goods for Rs 5,000 from Subash and paid 3,000 partially
Baisakh-15 Sold goods for Rs 4,000 to Mr. Shakya and received a cheque of Rs 2,000 partially
Baisakh-22 Issued a cheque of Rs 1,800 to Mr. Subash in full settlement of Rs 2,000
Baisakh-25 Withdrew from the bank for personal expenses by the owner of Rs 700
Baisakh-27 Received a cheque of Rs 1,700 from Mr. Shakya in full settlement.
Baisakh-29 Issued a cheque for sundry expenses of Rs 750
Baisakh-30 Mr. Sabin brought additional capital of Rs 5,000 and deposited into the bank.
Required: Cash book with bank and discount columns
|01-02||To balance b/d||30,000||–||01-07||By Purchase a/c||2,500||–|
|01-15||To Sales a/c||2,000||–||01-09||By Purchase a/c||3,000||–|
|01-27||To Shakya a/c||1,700||300||01-22||By Subash a/c||1,800||200|
|01-30||To Capital a/c||5,000||01-25||By Drawing a/c||700|
|01-29||By sundry expenses a/c||750|
|01-31||By balance c/d||29,950|
|02-01||To balance b/d||29,950|
Double column cash book ( Cash and Bank Columns )
Mr. Khetan has started a business with cash of Rs 75,000 and bank balance of Rs 125,000 on 1st January. The other information is as follows:
January-7 Deposited into the bank Rs. 40,000
January-10 Sold goods for Rs 15,000 to Ram and received a cheque.
January-15 Withdrew Rs 5,000 from the bank for office use and Rs 2,000 for personal use.
January-25 Received dividend of Rs 8,000
January-30 Paid for sundry expenses Rs 800
Required: Cash book with cash and bank columns
|01-01||To balance b/d||75,000||125,000||01-07||By bank a/c||‘C’||40,000|
|01-07||To Cash a/c||‘C’||40,000||01-15||By cash a/c||‘C’||5,000|
|01-10||To sales a/c||15,000||01-15||By Drawing a/c||2,000|
|01-15||To Bank a/c||‘C’||5,000||01-30||By Sundry expenses a/c||800|
|01-25||To dividend a/c||8,000||01-31||By balance c/d||47,200||173,000|
|02-01||To balance b/d||47,200||173,000|
The following transactions were recorded in the books of Mr. Robinson for the month of January :
January-1 Opening balances of cash and bank of Rs 30,000 and Rs 160,000 respectively.
January-4 Purchased goods of Rs 30,000 and paid by cheque.
January-9 Sold goods on cash Rs 21,500
January-15 Deposited into the bank Rs 25,000
January-25 Paid wages of Rs 500
January-27 Withdrew cash of Rs 2,500 from the bank for personal use.
January-30 Received commission by cheque of Rs 5,000
Required: Cash book with cash and bank columns
|01-01||To balance b/d||30,000||160,000||01-04||By Purchase a/c||30,000|
|01-09||To sales a/c||21,500||–||01-15||By bank a/c||‘C’||25,000|
|01-15||To cash a/c||‘C’||25,000||01-25||By wages a/c||500|
|01-30||To commission a/c||5,000||01-27||By drawing a/c||2,500|
|01-31||By balance c/d||26,000||157,500|
|02-01||To balance b/d||26,000||157,500|
Enter the following transactions in the cash book of Raj for the month of Asadh with cash and bank columns:
Asadh-1 Opening balances of cash Rs 5,000 and bank overdraft of Rs 10,000
Asadh-3 Mr. Raj brought Rs. 12,000 as additional capital
Asadh-5 Deposited cash Rs 4,000 into the bank.
Asadh-11 Paid Rs 8,000 by cheque to Hari
Asadh-15 Paid for stationery Rs 400
Asadh-29 Received a cheque of Rs 1,000 from Hari
|03-01||To balance b/d||5,000||03-01||By balance b/d||10,000|
|03-03||To Capital a/c||12,000||03-05||By bank a/c||‘C’||4,000|
|03-05||To cash a/c||‘C’||4,000||03-11||By Hari a/c||8,000|
|03-29||To Hari a/c||1,000||03-15||By Stationery a/c||400|
|03-31||To balance c/d||13,000||03-31||By balance c/d||12,600|
|04-01||To balance b/d||12,600||04-01||By balance b/d||13,000|
Mr. B.K. started a business with cash of Rs 22,000 and bank balance of Rs 100,000 on 1st February. The other related information is given below:
February-2 Purchased goods for Rs 10,000 from Anil and paid Rs 6,000 by cheque.
February-5 Sold goods to Mr. Bijay for Rs 8,000 and received a cheque.
February-8 Paid by cheque to Anil Rs 4,000
February-12 Deposited Binay’s cheque into the bank.
February-21 Paid salary by cheque of Rs 8,000
February-23 Paid rent Rs 4,000 and wages of Rs 1,000
February-25 Deposited the remaining balance of cash except Rs 500 into the bank.
Required: Cash book with cash and bank columns
|02-01||To balance b/d||22,000||100,000||02-02||By Purchase a/c||6,000|
|02-05||To sales a/c||8,000||02-08||By Anil a/c||4,000|
|02-25||To Cash a/c||‘C’||16,500||02-21||By Salary a/c||8,000|
|02-23||By rent a/c||4,000|
|02-23||By wages a/c||1,000|
|02-25||By bank a/c||‘C’||16,500|
|02-31||By balance c/d||500||106,500|
|03-01||To balance b/d||500||106,500|
Triple Columns Cash Book (Cash, Bank and Discount Columns)
The following transactions are the transactions of Karun:
Baisakh-1 Commenced a business with cash of Rs 100,000
Baisakh-3 Deposited into the bank Rs 80,000
Baisakh-6 Sold goods to Mr. KK for Rs 5,000 and received cash after 5% discount.
Baisakh-10 Withdrawn cash of Rs 15,000 from the bank for office use and of Rs 5,000 for private use.
Baisakh-15 Purchased goods from Mr. Ganesh for Rs 12,000 and paid cash Rs 7,000 as partial payment.
Baisakh-25 Issued a cheque to Mr. Ganesh after deducting 5% discount as discount in full settlement.
Required: Triple Column Cash Book
|01-01||To balance b/d||100,000||01-03||By bank a/c||‘C’||80,000|
|01-03||To cash a/c||‘C’||80,000||01-10||By cash a/c||‘C’||15,000|
|01-06||To sales a/c||4,750||250||01-10||By Drawing a/c||5,000|
|01-10||To Bank a/c||‘C’||15,000||01-15||By Purchase a/c||7,000|
|01-25||By Ganesh a/c||4,750||250|
|01-31||By balance c/d||32,750||55,250|
|02-01||To balance b/d||32,750||55,250|
The following information is extracted from the books of Mr. Karan Bhatt:
January-1 Opening balance of cash and bank Rs 12,000 and Rs 51,000 respectively.
January-5 Purchased goods for Rs 35,000 from Amir and paid by cheque Rs 25,000 partially.
January-8 Sold goods to Mr. Sanjay for Rs 30,000 and received a cheque of Rs 25,000 partially.
January-18 Paid salary of Rs 10,000 by cheque and wages of Rs 2,000 in cash.
January-20 Received Rs 4,500 from Sanjay in full settlement.
January-22 Issued a cheque of Rs 9,000 to Mr. Amir in full settlement.
Required: Triple column cash book
|01-01||To balance b/d||12,000||51,000||01-05||By purchase a/c||25,000|
|01-08||To sales a/c||25,000||01-18||By Salary a/c||10,000|
|01-20||To Sanjay a/c||4,500||500||01-18||By wages a/c||2,000|
|01-22||By Amir a/c||9,000||1,000|
|01-31||By balance c/d||14,500||32,000|
|02-01||To balance b/d||14,500||32,000|
Following cash related transactions of Mr. Bhandari are given below:
Chaitra-1 Started a business with cash and bank balance of Rs 20,000 and Rs 100,000 respectively.
Chaitra-4 Purchased goods for Rs 100,000 from Achala and paid her partially by cheque of Rs 80,000.
Chaitra-5 Sold goods to Mr. Y for Rs 50,000 and received a cheque of Rs 18,000 as partial payment.
Chaitra-11 Paid rent of Rs 5,000 by cheque.
Chaitra-17 Paid Rs 5,000 to Gopal in full settlement of Rs 6,000
Chaitra-21 Received cash from Mr. Y Rs 31,000 in full settlement.
Chaitra-24 Deposited the remaining cash balance except Rs 2,000 into the bank.
Required: Triple column cash book
|12-01||To balance b/d||20,000||100,000||12-04||By Purchase a/c||80,000|
|12-05||To sales a/c||18,000||12-11||By rent a/c||5,000|
|12-21||To Mr. Y a/c||31,000||1,000||12-17||By Gopal a/c||5,000||1,000|
|12-24||To Cash a/c||‘C’||44,000||12-24||By bank a/c||‘C’||44,000|
|12-31||By balance c/d||2,000||77,000|
|01-01||To balance b/d||2,000||77,000|
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