Question 32 of 45intermediate🔧 ApplyNumerical6 marks

Prepare a double column cash book with the help of following information for December 2016: 01 Started business with cash 1,20,000 03 Cash paid into bank 50,000 05 Purchased goods from Sushmita 20,000 06 Sold goods to Dinker and received a cheque 20,000 10 Paid to Sushmita cash 20,000 14 Cheque received on December 06, 2016 deposited into bank 18 Sold goods to Rani 12,000 20 Cartage paid in cash 500 22 Received cash from Rani 12,000 27 Commission received 5,000 30 Drew cash for personal use 2,000

Correct Answer

Double Column Cash Book

DateParticularsL.F.Cash (₹)Bank (₹)DateParticularsL.F.Cash (₹)Bank (₹)
20162016
Dec 01To Capital A/c1,20,000Dec 03By Bank A/c (C)50,000
Dec 03To Cash A/c (C)50,000Dec 10By Sushmita20,000
Dec 06To Dinker20,000Dec 20By Cartage A/c500
Dec 22To Rani12,000Dec 30By Drawings A/c2,000
Dec 27To Commission A/c5,000Dec 31By Balance c/d64,50070,000
1,37,00070,0001,37,00070,000

Note:

  1. Transaction on Dec 05 (Purchased goods from Sushmita) and Dec 18 (Sold goods to Rani) are credit transactions and are not recorded in the Cash Book.
  2. Transaction on Dec 14 (Cheque deposited into bank) is a memo entry; the cheque was already recorded on Dec 06.
  3. (C) denotes Contra Entry.
Exercise: Numerical Questions | Q: 5
For More Understanding

Explanation

This numerical problem tests the student's ability to distinguish between cash, bank, and credit transactions.

  1. Credit Transactions: Purchases on Dec 05 and Sales on Dec 18 do not involve immediate cash/bank flow, so they are omitted from the Cash Book.
  2. Contra Entry: The transaction on Dec 03 (Cash paid into bank) affects both cash and bank columns simultaneously. It is recorded on the debit side (Bank column) and credit side (Cash column).
  3. Cheque Receipt: The cheque received on Dec 06 is entered in the Bank column immediately. The deposit on Dec 14 does not require a separate entry in the Cash Book as the bank balance was already increased on the 6th.
  4. Balancing: The Cash column is balanced to find 'Cash in hand' (₹64,500), and the Bank column is balanced to find 'Cash at bank' (₹70,000).

Solution Steps

  1. Step 1: Analyze Transactions

    • Dec 01: Capital (Cash +).
    • Dec 03: Cash to Bank (Contra: Cash -, Bank +).
    • Dec 05: Credit Purchase (No entry).
    • Dec 06: Cheque received (Bank +).
    • Dec 10: Cash paid to creditor (Cash -).
    • Dec 14: Deposit (Already recorded on Dec 06).
    • Dec 18: Credit Sale (No entry).
    • Dec 20: Expense (Cash -).
    • Dec 22: Cash received from debtor (Cash +).
    • Dec 27: Income (Cash +).
    • Dec 30: Drawings (Cash -).

  2. Step 2: Calculate Cash Column Totals

    • Debit Side: 1,20,000 + 12,000 + 5,000 = 1,37,000
    • Credit Side: 50,000 + 20,000 + 500 + 2,000 + (Balancing Figure 64,500) = 1,37,000

  3. Step 3: Calculate Bank Column Totals

    • Debit Side: 50,000 + 20,000 = 70,000
    • Credit Side: (Balancing Figure 70,000) = 70,000
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