Comprehensive Problem and Solution of Cash Book

 

 

Meaning of Cash Transactions

A cash transaction is a transaction where payment is settled immediately.

A cash transaction is the opposite of a credit transaction.

Cash transactions are classified into cash receipts and cash payments.

Cash transactions also include:

Transactions made through cash,

Transactions made through cheque,

Transactions made through plastic money like debit card, credit card, smart card etc.

Transactions made through Bank App

Transactions made through online payment in Nepal are eSewa, Khatli, Connect IPS, iPay etc.

Transactions made through online payment in Pakistan are EasyPaisa, JazzCash, Upaisa, GoLootLO, PayPak etc.

Transactions made through online payment in India are Paytm, BHIM, InstaMojo, PayU India, Citrus Pay, CCAvenue, EBS Payment Gateway etc.

Transactions made through online payment in international like Western Union, PayPal, MasterCard etc.

Virtual money Bitcoin, Litecoin, Ethereum, Zcash, Dash, Ripple, Monero etc.

 

 

Keep in mind (KIM)

Credit transaction is settled in future date. ‘On credit’ or ‘on account’ is mentioned on the credit transaction.

 

 

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Concept of Cash Book

Cash book is a sub-division of a journal.

It records all transactions related to cash in the cash book.

There are different types of cash books.

They are single column cash book, double column cash book, triple column cash book and petty cash book.

 

In large firms, generally cash book is divided into two parts.

They are cash disbursement journal and cash receipts journal.

In cash disbursement journal, all cash payments like operating expenses, account payable, petty cash etc are recorded.

In cash receipt journal, all cash receipts like goods sold in cash, account receivable, sales of assets etc are recorded.

 

 

Types of Cash Book

There are four types (kinds) of cash books; they are:

Simple or single column cash book

Double column cash book

Triple column cash book

Petty cash book

 

 

Endorsement of a Cheque

Endorsement of cheque means changing the ownership of cheque or bill. 

To endorse cheque, payee puts signature on back side of the cheque.

He/she allows permission to pay amount of cheque to endorsed person.

Suppose Manju Chaudhary received a cheque from Manoj Sharma $/₹/Rs 8,000 endorsed to Rekha Thapa with proper notice is called endorsement.

 

There are three types of cheque; bearer, order and crossed cheque.

Bearer cheque does not need to endorse.

Crossed cheque cannot endorse.

Only order cheque is endorsed.

 

 

Dishonour of a Cheque

When cheque presents for payment but there is not sufficient amount in the bank account, it is called dishonor of a cheque.

There are lots of reasons for dishonour of cheque.

Some major reasons are:

There is not sufficient amount at bank,

Date is not written correctly,

Name of payee is not written,

Amount of words and figure does not match,

Drawer’s signature does not match with computer or signature specification card,

Cheque is overwritten, spoiled, torn and spotted,

Drawer has given order to stop payment etc.

 

 

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Comprehensive Question and Solution of Cashbook

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country 

PROBLEM: 6A

Usha Marbles (P) Ltd has following information:

July 1	Cash in hand	100,000
July 2	Deposited in the bank	25,000
July 3	Equipment purchased for cash	25,000
July 4	Sundry expenses paid	1,000
July 5	Goods purchased	10,000
July 6	Cheque issued to Bhim in full settlement (creditors of $15,000)	14,500
July 7	Goods sold to Arjun for cash	5,000
July 8	Cheque received from Nakul in full settlement (debtors of $20,000)	19,000
July 8	Nakul’s cheque deposited into bank	−
July 10	Withdrawn from the bank for office use	5,500
July 12	Domestic expenses paid in cash	500
July 14	Advance salary paid to Mr Gautam	2,000
July 15	Bank had paid life insurance premium as per instruction	10,000
July 16	Goods sold to Sahadev for $10,000; he issued cheque less 3%.	−
July 17	Electricity bill paid	3,000

Required: Triple column cash book                                                                                

[Answer: Balance: Cash = 44,000; Bank = 23,700]

SOLUTION:

Triple Column Cash Book

Date	Receipt	LF	Cash	Bank	Dis	Date	Payment	LF	Cash	Bank	Dis
Jul 1	To Balance b/d	−	100,000	−		Jul 2	By Bank account	C	25,000	−
Jul 2	To Cash account	C	−	25,000		Jul 3	By Equipment A/c	−	25,000	−
Jul 7	To Sales A/c	−	5,000	−		Jul 4	By Sundry expenses	−	1,000	−
Jul 8	To Nukul’s A/c	−	−	19,000	1,000	Jul 5	By Purchase account	−	10,000	−
Jul 10	To Bank account	C	5,500	−		Jul 6	By Bhim’s account	−	−	14,500
Jul 16	To Sales		−	9,700	300	Jul 10	By Cash account	C	−	5,500
						Jul 12	By Drawing account		500	−	500
						Jul 14	By Advance salary		2,000	−
						Jul 15	By Drawing account		−	10,000
						Jul 17	By Electricity bill		3,000	−
						Jul 17	By Balance c/d		44,000	23,700
			110,500	53,700	1,300				110,500	53,700	500
Jul 18	To Balance b/d		44,000	23,700

 

 

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Journal Entry and Ledger	http://tiny.cc/caakkz
Ledger	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cashbook	http://tiny.cc/889jkz
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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country 

PROBLEM: 6B

SVS Trade Link has following balances on 1^st April: (amount in hundred)

Debit balance	Credit balance
Cash amount  $6,540	Bank balance $290
Debtors accounts:	Creditors accounts:
Birendra (SL 13) $1,200	Abhishek (PL 51) $4,400
Deepika (SL 14) $400	Ritendra (PL 52) $1,000
Nilima (SL 15) $2,800	Upendra (PL 53) $600

RV = receipt voucher; PV = payment voucher

Additional information:

April 5:          Cheque received from Birendra deducted discount of $30. (RV 24)

April 10:        Setteled Ritendra’s account by cheque, deducting 5% discount. (PV 51)

April 12:        Cash deposited into bank 1,500.

April 15:        Nilima settled her account by cheque 97.5% (RV 25)

April 20:        Deepika paid cash after deducted cash discount 5%. (RV 26)

April 25:        Paid to Upendra by cheque less cash discount of $30 (PV 52)

April 29:        Cash paid to Abishek less cash discount @ 2.5%. (PV 53)

April 30:        Salary paid in cash $920.

Required: Triple column cash book

[Answer: Balances: Cash = $210; Bank = $3,590]

SOLUTION:

Triple Column Cash Book

Date	Receipt	RV	LF	Cash	Bank	Dis	Date	Receipt	PV	LF	Cash	Bank	Dis
Apr 1	To Balance b/d			6,540			Apr 1	By Balance b/d				290
5	To Birendra’s A/c	24	SL13		1,170	30	10	By Ritendra’s A/c	51	PL52		950	50
12	To Cash account		C		1,500		12	By Bank account		C	1,500
15	To Nilima’s A/c	25	SL15		2,730	70	25	By Upendra’s A/c	52	PL53		570	30
20	To Deepika’s A/c	26	SL14	380		20	29	By Abhishek’s A/c	53	PL54	4,290		110
							30	By Salary account			920
							30	By Balance c/d			210	3,590
				6,920	5,400	120					6,920	5,400	190
May 1	To Balance b/d			210	3,590

 

 

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country 

PROBLEM: 6C

SM Traders maintains BRS on weekly basis. Following balances available on first week of May:

May 1:      Cash balance of $35,000 bank balance (Cr) $70,000.

May 2:      Cash $48,500 and cheque of $29,000 received from Ritika in full settlement of $78,000.

May 2:      School fee paid of daughter $6,500.

May 2:      Interest on overdraft charged by bank $930.

May 3:      Cheque received from Ritika being dishonoured and noting expenses paid $500.

May 4:      Internet bill paid by bank as per instruction $3,500.

May 5:      Advance commission received in cash $1,750

May 7:          Different cheques issued for payment of $90,000 but only $50,000 presented for payment on first week. 

May 7:      Cheques of $1,50,000 deposited for collection but only $1,30,000 realised by bank.

May 7:      Cash deposited into bank after leaving $1,500 in the office.

Required: Triple column cash book

[Answer: Balance: Cash = $1,500 given; Bank = $82,320; *Contra entry = $77,250]

SOLUTION

Triple Column Cash Book

Date	Receipt	LF	Cash	Bank	Dis	Date	Payment	LF	Cash	Bank	Dis
May 1	To Balance b/d		35,000	−	500	May 1	By Balance b/d		−	70,000
May 2	To Ritika’s A/c		48,500	29,000		May 2	By Drawing A/c		6,500	−
May 5	To Adv. Comm.		1,750	–		May 2	By Interest on OD		−	930
May 7	To Debtors		–	1,30,000		May 3	By Ranjana’s A/c		−	29,500
May 7	To Cash A/c	C		77,250			(dishonoured)		−	−
						May 4	By Internet bill			3,500
						May 7	By Creditors			50,000
						May 7	By Bank A/c	C	77,250
						May 7	By Balance c/d		1,500	82,320
			85,250	236,250	500				85,250	2,36,250	Nil
May 8	To Balance b/d		1,500	82,320

 

 

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country 

PROBLEM: 6C

MS Enterprises has started business with cash $80,000 on 2^nd January. Other financial data are:

Jan 4:	Business started amount paid into bank.
Jan 5:	Goods purchased by cheque $27,300.
Jan 6:	Goods purchased on credit $2,500
	Advertisement expenses paid by cheque $500
	Rent paid by cheque $700 and payable $1,500
Jan 7:	Drew cash for office use $1,200
	Goods sold by cheque 42,520; by cash $480 and SK Traders $50,000
Jan 8:	Equipment bought by cheque $15,100 and cash discount received $320
Jan 10:	Equipment became unsuitable and sold it for cash $17,115
	Wage paid in cash $500
Jan 11:	Paid into bank equipment sold on Jan 10.
	Stationery bought for cash $50
Jan 12:	Cheque received from SK Traders $39,200 after 2% discount.
Jan 15:	Drew cash from office for personal use $200
Jan 16:	Service charge deducted by bank $120
	Goods purchased in cash $20,000; from AM Suppliers 45,000; by cheque 5,000
Jan 20:	Sales in cash $37,500 and cheque $17,000
Jan 22:	Paid cash to AM Suppliers by cheque $27,900 and received discount $100
Jan 24:	Payments by cheque: rent payable now paid $1,500 and wages $2,000
Jan 28:	Salary paid by cheque $3,600.
Jan 31:	By keeping $38,815 at bank, remaining amount withdrawn for office use

Required: (a) Triple column cashbook; (b) Debtor account; (c) Creditor account

[Answer: (a) Cash balance $91,030; bank balance given $38,815;

(b) Balance $10,000; (c) Balance $17,000; *Contra entry $100,000]

SOLUTION:

Triple Column Cashbook

MS Enterprises

For the month of January

Date	Receipts	LF	Cash	Bank	Dis	Date	Payments	LF	Cash	Bank	Dis
Jan 1	To Capital		80,000			Jan 4	By Bank	C	80,000
4	To Cash	C		80,000		5	By Purchase			27,300
7	To Bank	C	1,200			6	By Advertisement			500
7	To Sales		480	42,520		6	By Rent			700
10	To Equipment		17,115			7	By Cash	C		1,200
11	To Cash	C		17,115		8	By Equipment			15,100	320
12	To SK Traders			39,200	800	11	By Bank	C	17,115
20	To Sales		37,500	17,000		11	By Stationery		50
31	To Bank	C	100,000			15	By Drawings		200
						16	By Bank charge			120
						16	By Purchase		20,000	5,000
						22	By AM Suppliers		27,900		100
						24	By Rent			1,500
						24	By Wages			2,000
						28	By Salary			3,600
						31	By Cash	C		100,000
						31	By Balance c/d		91,030	38,815
			236,295	195,835	800				236,295	195,835	420
Feb 1	To Balance b/d		91,030	38,815

 

SK Traders Account

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jan 7	To Sales account		50,000	Jan 12	By Bank account		39,200
				Jan 12	By Discount allowed account		800
				Jan 31	By Balance c/d		10,000
			50,000				50,000
Feb 1	To Balance b/d		10,000

 

AM Suppliers Account

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jan 22	To Cash account		27,900	Jan 16	By Purchase account		45,000
Jan 22	To Discount received account		100
Jan 31	To Balance c/d		17,000
			45,000				45,000
				Feb 1	By Balance b/d		17,000

 

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