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Two-column cash book

This cash book is so called because it consists of two columns, one each for the cash account and the bank account on the same page. In the cash book, the debit columns for cash and bank are next to each other just as their credit columns are next to each other on the right side. As such, great care should be taken to ensure that cash and cheques received, and cash paid and cheques issued are correctly entered in their respective columns.

All the cash receipts and payments are recorded in the cash book for posting to the ledgers. The cash book is part of the double-entry system as all debit entries in the cash and bank columns are posted to the credit sides of the relevant accounts in the ledgers. The credit entries in the cash and bank columns are debited to the ledgers accounts, thus completing the double entries.

The cash book is a ready record that makes known from whom how much have been received in the form of cash or cheques, and to whom how much have been paid in cash and cheques. Certain information like the bank charges and interest can only be entered in the cash book from the bank account statement as the bank does not issue invoices. When the monthly bank statement is received, a bank reconciliation statement is prepared by checking the debit and credit bank column entries in the cash book against those on the bank statement so that an accurate closing balance of the bank account as at the end of the period can be ascertained.

The opening and closing balances can only be a debit balance for cash, but the opening and closing balances for the bank account can be either a debit or a credit balance. If it is a credit balance, it means the bank account has been overdrawn.

Following is a two-column cash book with postings to ledgers.


A two-column cash book

Date Particulars Folio Cash Bank  
Date Particulars Folio Cash Bank
20XX  
 
 
 
 
20XX  
 
 
 
Jan 01 Balance b/d   500 600 Jan 09 Sonny & Sons PL36 400
Jan 10 Sales GL12 900 Jan 15 Rent GL24 400
Jan 15 Bull & Dog Ltd SL08 800 Jan 17 Bank C* 200
Jan 17 Cash C 200   Jan 23 Purchases GL16   500
Jan 20 Sales GL12 400 500   Jan 25 Shop Fixtures GL56   600
Jan 28 Ding Dong Ltd SL16 300     Jan 31 Wages GL42 800  
              Balance c/d
  600 700
                     
      2,000 2,200         2,000 2,200
                     

C* = Contra


General Ledger

Sales

Date Particulars Folio Amount
Date Particulars Folio Amount
          20XX      
          Jan 10 Bank CB15 900
          Jan 20 Cash & Bank CB15 900


Purchases

Date Particulars Folio Amount
Date Particulars Folio Amount
20XX                
Jan 23
Bank CB15 500  
     


Rent

Date Particulars Folio Amount
Date Particulars Folio Amount
20XX







Jan 15
Cash
CB15 400






Shop Fixtures

Date Particulars Folio Amount
Date Particulars Folio Amount
20XX







Jan 25
Bank
CB15 600






Wages

Date Particulars Folio Amount
Date Particulars Folio Amount
20XX







Jan 31
Cash
CB15 800






Sales Ledger

Bull & Dog Ltd

Date Particulars Folio Amount
Date Particulars Folio Amount
          20XX      
          Jan 15
Cash
CB15 800


Ding Dong Ltd

Date Particulars Folio Amount
Date Particulars Folio Amount





20XX







Jan 28
Cash
CB15 300


Purchases Ledger

Sonny & Sons

Date Particulars Folio Amount
Date Particulars Folio Amount
20XX



 


Jan 09
Bank CB15 400



   



Last Updated (Friday, 03 September 2010 16:13)