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THREE COLUMN CASH BOOK

When money is received it is recorded on the receipt side and when money is paid, it is recorded on the payment side of cash book.


Example # 1: Cash invested by the owner is the business Rs.400,000.
In this example cash is increased or received in the business. It is recorded on the receipt side cash column as Rs.400,000.

Example # 2: Purchased office furniture for Rs.20,000 cash.
Cash is paid. It is recorded on the payment side cash column of cash book.

Example # 3: Sold merchandise to a customer on credit Rs.20,000.
In this transaction, cash neither received, nor paid. therefore, this transaction will not be recorded in cash book.

Example # 4: Received a cheque from customer Rs.19,000 and allowed him a discount of Rs.1,000.
In this transaction, cheque is received but not deposited into bank so it is treated as cash till it is not deposited into bank. It is recorded on the receipt side cash column as 19,000 and receipt side sales discount column as 1,000.

CONTRA ENTRY
Example # 5: Customer's cheque deposited into bank Rs.19,000.
In this example, cash is decreasing from office and increasing in the bank. it is called contra entry because this affect on the both sides of cash book. it is recorded on the receipt side bank column as 19,000 and payment side cash column as 19,000.

DISHONOURED CHEQUE
Example # 6: Customer's cheque returned by bank bank being dishonoured Rs.19,000.
When we deposited cheque into bank, we recorded it on the receipt side bank column as we received money in our bank account. but now we realize that actually we did not receive money. so it will be recorded on the payment side bank column of cash book as Rs.19,000.



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