Question 37 of 45advanced🔧 ApplyNumerical6 marks

M/s Ruchi trader started their cash book with the following balances on July 2017: cash in hand ₹1,354 and balance in bank current account ₹7,560. He had the following transaction in the month of July 2017: 03 Cash sales 2,300 05 Purchased goods, paid by cheque 6,000 08 Cash sales 10,000 12 Paid trade expenses 700 15 Sales goods, received cheque (deposited same day) 20,000 18 Purchased motor car paid by cheque 15,000 20 Cheque received from Manisha (deposited same day) 10,000 22 Cash Sales 7,000 25 Manisha’s cheque returned dishonoured 28 Paid Rent 2,000 29 Paid telephone expenses by cheque 500 31 Cash withdrawn for personal use 2,000 Prepare bank column cash book

Correct Answer

Double Column Cash Book of M/s Ruchi Trader

Dr. Side

DateParticularsL.F.Cash (₹)Bank (₹)
2017 July 01To Balance b/d1,3547,560
July 03To Sales A/c2,300
July 08To Sales A/c10,000
July 15To Sales A/c20,000
July 20To Manisha10,000
July 22To Sales A/c7,000
Total20,65437,560

Cr. Side

DateParticularsL.F.Cash (₹)Bank (₹)
2017 July 05By Purchases A/c6,000
July 12By Trade Expenses A/c700
July 18By Motor Car A/c15,000
July 25By Manisha (Dishonoured)10,000
July 28By Rent A/c2,000
July 29By Telephone Expenses A/c500
July 31By Drawings A/c2,000
2017 July 31By Balance c/d15,9546,060
Total20,65437,560

Balances: Cash in hand: ₹15,954 (Debit) Cash at Bank: ₹6,060 (Debit)

Exercise: Numerical Questions | Q: 10
For More Understanding

Explanation

This solution prepares a Double Column Cash Book by recording all cash and bank transactions for M/s Ruchi Trader for July 2017.

  1. Opening Balances: The cash balance (₹1,354) and bank balance (₹7,560) are entered on the debit side.
  2. Receipts: Cash sales are recorded in the cash column (debit), and cheques received and deposited immediately (Sales ₹20,000 and Manisha ₹10,000) are recorded in the bank column (debit).
  3. Payments: Expenses paid in cash (Trade Expenses ₹700, Rent ₹2,000) are recorded in the cash column (credit). Payments made by cheque (Purchases ₹6,000, Motor Car ₹15,000, Telephone ₹500) are recorded in the bank column (credit).
  4. Dishonoured Cheque: Manisha's cheque was returned dishonoured on July 25. This reverses the previous receipt entry, so ₹10,000 is entered on the credit side in the bank column.
  5. Drawings: Cash withdrawn for personal use (₹2,000) is credited to the cash column.
  6. Balancing: The cash and bank columns are totaled and balanced separately to find the closing balances.

Solution Steps

  1. Step 1: Enter Opening Balances on the Debit side: Cash ₹1,354 and Bank ₹7,560.

  2. Step 2: Enter Cash Receipts on Debit side (Cash column): July 03 (₹2,300), July 08 (₹10,000), July 22 (₹7,000).

  3. Step 3: Enter Bank Receipts on Debit side (Bank column): July 15 (₹20,000) and July 20 (₹10,000).

  4. Step 4: Enter Cash Payments on Credit side (Cash column): July 12 (₹700), July 28 (₹2,000), July 31 (₹2,000).

  5. Step 5: Enter Bank Payments on Credit side (Bank column): July 05 (₹6,000), July 18 (₹15,000), July 25 (₹10,000 for dishonoured cheque), July 29 (₹500).

  6. Step 6: Total the Cash columns (Dr: 20,654; Cr: 4,700) and Bank columns (Dr: 37,560; Cr: 31,500).

  7. Step 7: Calculate Closing Balances: Cash Balance c/d = 20,654 - 4,700 = ₹15,954. Bank Balance c/d = 37,560 - 31,500 = ₹6,060.

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