Enter the following transaction in a double column cash book of M/s.Mohit Traders for January 2017: 01 Cash in hand 3,500 01 Bank overdraft 2,300 03 Goods purchased for cash 1,200 05 Paid wages 200 10 Cash sales 8,000 15 Deposited into bank 6,000 22 Sold goods for cheque which was deposited into bank same day 2,000 25 Paid rent by cheque 1,200 28 Drew from bank for personal use 1,000 31 Bought goods by cheque 1,000
Double Column Cash Book of M/s. Mohit Traders For the month ending January 2017
| Date | Particulars | L.F. | Cash (₹) | Bank (₹) | Date | Particulars | L.F. | Cash (₹) | Bank (₹) |
|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||||
| Jan 01 | To Balance b/d | 3,500 | Jan 01 | By Balance b/d (Overdraft) | 2,300 | ||||
| Jan 10 | To Sales A/c | 8,000 | Jan 03 | By Purchases A/c | 1,200 | ||||
| Jan 15 | To Cash A/c (C) | 6,000 | Jan 05 | By Wages A/c | 200 | ||||
| Jan 22 | To Sales A/c | 2,000 | Jan 15 | By Bank A/c (C) | 6,000 | ||||
| Jan 25 | By Rent A/c | 1,200 | |||||||
| Jan 28 | By Drawings A/c | 1,000 | |||||||
| Jan 31 | By Purchases A/c | 1,000 | |||||||
| Jan 31 | By Balance c/d | 4,100 | 2,500 | ||||||
| Total | 11,500 | 8,000 | Total | 11,500 | 8,000 |
Note:
- Cash sales on Jan 10 are recorded in the Cash column.
- Cheque received on Jan 22 and deposited same day is recorded in the Bank column.
- Deposit into bank on Jan 15 is a Contra Entry (Bank column Debit, Cash column Credit).
- Opening Bank Overdraft is recorded on the Credit side as 'By Balance b/d'.
Explanation
The solution is derived by applying the rules of a Double Column Cash Book. The opening Cash balance is entered on the debit side, while the Bank Overdraft (a negative bank balance) is entered on the credit side. Transactions involving cash payments (purchases, wages) are credited, and cash receipts (sales) are debited. The deposit into the bank creates a contra entry affecting both columns. Transactions directly involving the bank (cheque sales, rent, drawings, purchases) are recorded in the bank column. The final balances show Cash in Hand of ₹ 4,100 and a positive Bank Balance of ₹ 2,500.
Solution Steps
Step 1: Record Opening Balances Enter Cash in Hand (₹ 3,500) on the Debit side and Bank Overdraft (₹ 2,300) on the Credit side.
Step 2: Record Cash Transactions Debit Cash Sales (Jan 10: ₹ 8,000). Credit Cash Purchases (Jan 03: ₹ 1,200), Wages (Jan 05: ₹ 200), and Cash deposited into Bank (Jan 15: ₹ 6,000).
Step 3: Record Bank Transactions Debit Cheque Sales deposited same day (Jan 22: ₹ 2,000) and the Contra entry for deposit (Jan 15: ₹ 6,000). Credit Rent (Jan 25: ₹ 1,200), Drawings (Jan 28: ₹ 1,000), and Purchases by cheque (Jan 31: ₹ 1,000).
Step 4: Balance the Accounts Calculate the difference between Debit and Credit sides. Cash: Debit (11,500) - Credit (7,400) = Debit Balance (Asset) ₹ 4,100. Bank: Debit (8,000) - Credit (5,500) = Debit Balance (Asset) ₹ 2,500. (Note: Opening overdraft is already included in the credit side totals).