Subsidiary Books - Cash Transaction

Samir K Mahajan

CASH BOOK

A cash book is a special journal which is used to record all cash receipts and cash payments.

The cash book is a book of original entry or prime entry since transactions are recorded for the first time from the source documents.

The cash book is a ledger in the sense that it is designed in the form of a cash account and records cash receipts on the debit side and cash payments on the credit side.

Thus, the cash book is both a journal and a ledger.

Cash Book will always show DEBIT BALANCE as cash payments can never exceed cash available.

Samir K Mahajan

KINDS OF CASH BOOK

Subsidiary Books - Cash Transaction

Single Column Cash Book

Double Column Cash Booko Cash book with discount and cash columnso Cash book with cash and bank columnso Cash book with discount and bank columns

Triple Column Cash Book with cash, bank and discount columnsPetty cash Book

Samir K Mahajan

SINGLE COLUMN CASH BOOK

Single column cash book (simple cash book) has one amount column in each side. All cash receiptsare recorded on the debit side and all cash payments on the credit side.

In fact, this book is nothing but a Cash Account. Hence, there is no need to open cash account in theledger.

Debit Side Single Column Cash Book of ........... Credit side

Date Particular R.N. L.F. Amount (Rs)

Date Particular V.N. L.F. Amount (Rs)

Samir K Mahajan

SINGLE COLUMN CASH BOOK contd.

i. Date :This column appears in both the debit and credit side. It records the date of receivingcash at debit side and paying cash at credit side.

ii. Particulars :This column is used at both debit and credit side. It records the names of parties(personal account), heads (nominal account) and items (real account) from whom payment hasbeen received and to whom payment has been made.

iii. Receipt Number (R.N):This refers to the serial number of the cash receipt.

iv. Voucher Number (V.N) :This refers to the serial number of the voucher for which payment ismade.

v. Ledger Folio (L.F):This column is used in both the debit and credit side of cash book. Theledger page (folio) of every account in the cash book is recorded against it.

vi. Amount :This column appears in both sides of the cash book. The actual amount of cashreceipt is recorded on the debit side. The actual payments are entered on the credit side.

Samir K Mahajan

Balancing :The cash book is balanced like any other account. The total of the receipt (debit side) column will always be greater than the total of the payment column (credit side).

In the beginning of the next period, to show the cash balance in hand, the balance amount is recorded in the debit side as “To balance b/d or c/f”.

The difference will be written on the credit side as “By Balance c/d or b/f”.

SINGLE COLUMN CASH BOOK contd.

Samir K Mahajan

SINGLE COLUMN CASH BOOK: EXAMPLE

Enter the following transactions in a Single column Cash Book

1980Jan 1 : Cash in hand ------------- Rs 11200Jan.5 : Received from Akash ---- Rs 300Jan 7 : paid rent --------------------- Rs 30Jan 8 : sold goods ------------------ Rs 300Jan10 : Paid TanishQ----------------- Rs 700Jan 27: Purchased furniture ------- Rs 200Jan 31 : paid salaries ---------------------- Rs 100

Samir K Mahajan

SINGLE COLUMN CASH BOOK: EXAMPLE

Cash Book of ________

Dr Receipts payments Cr

Date Particular R.N. L.F. Amount (Rs)

Date Particular V.N. L.F. Amount (Rs)

1980Jan 1

Jan.5

Jan. 8

Feb 1

To Balance b/d

To Akash

To Sales

To Balance b /d

11 200

300

300

1980 Jan. 7

Jan. 10

Jan. 27

Jan. 31

Jan 31

By rents

By TanishQ

By Furniture

By Salaries

By Balance c/d

30

700

200

100

10770

11800 11800

10,770

Samir K Mahajan

DOUBLE COLUMNS CASH BOOK/CASH CASH BOOK WITH DISCOUNT AND CASH COLUMNS

On either side of the single column cash book, another column is added to record discount allowed and discount received.

Debit Side

(Cash book with Discount and Cash Column ) Credit side

Date Particular R.N. L.F. Discount Allowed (Rs)

Amount (Rs)

Date Particular V.N. L.F. Discount Received (Rs)

Amount (Rs)

Samir K Mahajan

Cash Book of ______

DOUBLE COLUMNS CASH BOOK/CASH CASH BOOK WITH DISCOUNT AND CASH COLUMNS contd.

Balancing:

It should be noted that in the double column cash book, cash column is balanced like anyother ledger account.

But the discount column on each side is merely totalled.

The total of the discount column on the debit side shows the total discount allowed tocustomers and is debited to Discount Allowed Account.

The total of the discount column on the credit side shows total discount received and iscredited to Discount Received Account.

Samir K Mahajan

DOUBLE COLUMNS CASH BOOK/CASH BOOK WITH DISCOUNT AND CASH COLUMNS : Example

Enter the following transactions in a Double column Cash Book

1980Jan 1 : Cash in hand ------------- Rs. 11200

Jan.5 : Received from Akash ---- Rs. 290Discount Allowed – Rs. 10

Jan 7 : paid rent --------------------- Rs. 30

Jan 8 : sold goods ------------------ Rs. 300

Jan10 : Paid Laxmi----------------- Rs.695Discount Received ------- Rs. 5

Jan 27: Purchased furniture ------- Rs 200

Jan 31 : paid salaries ---------------------- Rs 100

Samir K Mahajan

Cash Book of ________

Dr Receipts Payments Cr

Date Particular R.N.

L.F.

Amount Date Particular V.N.

L.F.

Amount (Rs)

Discount allowed (Rs)

Cash (Rs)

Discount Received (Rs)

Cash (Rs)

1980Jan 1

Jan.5

Jan. 8

Feb 1

To Balance b/d

To Akash

To Sales

To Balance b/d

10

11 200

290

300

1980 Jan. 7

Jan. 10

Jan. 27

Jan. 31

Jan 31

By rents

By Laxmi

Furniture

By Salaries

By Balance c/d

5

30

695

200

100

10765

10 11790 5 11790

10765Samir K Mahajan

TRIPLE COLUMN CASH BOOK

Large business concerns receive and make payments in cash and by cheques.

Where cash discount is a regular feature, a Triple Column Cash Book is more advantageous.

This cash book has three amount columns (cash, bank and discount) on each side.

All cash receipts, deposits into bank and discount allowed are recorded on debit side

All cash payments, withdrawals from bank and discount received are recorded on credit side.

Cash and bank columns are balanced

Discount columns are merely totalled

Samir K Mahajan

TRIPLE COLUMN CASH BOOK contd.

Dr Receipts Triple Column Cash Book Payments Cr

Date Particular R.N. L.F. Discount

Allowed

Cash (Rs.) Bank (Rs)

Date Particular

V.N. L.F. DiscountRecieved

Cash (Rs.) Bank (Rs)

Samir K Mahajan

Contra Transactions

Contra transactions: Transactions which affect cash in hand (cash balance) and cash atbank (bank balance) simultaneously

When cash is deposited in bank, it will decrease cash in hand and increase in cash at bank.

Decrease in cash in hand will be shown by “by bank A/C ” in credit side and the amount will be shown in ‘cash column’ of credit side

increase in ‘cash at bank’ will be shown by “to cash A/C or office A/C’ in debit side and the amount will be shown in ‘bank column’ of debit side

Samir K Mahajan

Contra Transactions contd.

When cash is deposited in bank

Debit Side Double Column Cash Book Credit side

Date Particular Cash (Rs.) Bank (Rs) Date Particular Cash(Rs.)

Bank (Rs)

2014 Jan 31

To Cash A/C XXXX 2014 Jan 31

By Bank A/C XXXX

Samir K Mahajan

Contra Transactions contd.

When cash is withdrawn from bank for business , it will decrease cash in bank and increase in cash at hand .

Decrease in ‘cash at bank’ will be shown by “to Bank A/C ” in debit side and the amount will be shown in ‘cash column’ of debit side

increase in ‘cash at hand ’ will be shown by “by cash A/C or office A/C’ in credit side and the amount will be shown in ‘bank column’ of credit side

Samir K Mahajan

Contra Transactions contd.

When cash is withdrawn from bank for business

Debit Side Double Column Cash Book Credit side

Date Particular Cash (Rs.) Bank (Rs) Date Particular Cash(Rs.)

Bank (Rs)

2014 Jan 31

To Bank A/C XXXX 2014 Jan 31

By Cash A/C XXXX

Samir K Mahajan

TRIPLE COLUMN CASH BOOK: Example

Enter the following transactions in a triple column Cash Book

1980Jan 1 : Commences business with cash Rs 30000 Jan 3 : pays Rs 19000 in to bank current account Jan.4 : received cheque Rs 600 from ToshiJan 7 : pays into bank Toshi’s cheque Rs 600Jan 10 : pays Patel by cheque Rs.330 and allowed discount of Rs 20 Jan10 : Sima pays into his bank account Rs 475 Jan 12: receives cheque for Rs. 450 from Vora and allowed him discount Rs 10Jan 14: receives cash for Rs 75 and cheque for Rs 100 for cash salesJan 20 pays into bank Rs. 1000Jan 23 : pays by cheque Rs 280 for cash purchases Jan30 : pays sundry expenses in cash for Rs 50 Jan 31 : draws a cheque Rs. 400 for office useJan 31 : draws a cheque Rs. 275 for private use useJan 31 : pays Anita Rs 375 in cash and is allowed discount Rs 25Jan 31 : Pays rent Rs 200 and by cheque Jan 31 : purchases goods Rs 300 for cash Jan 31 : receives cheque for commission for Rs 500 from Manohar and pays the same into bank

Samir K Mahajan

Cash Book

Dr Receipts Payments Cr

Date Particular L.F. Amount (Rs)

Date Particular L.F. Amount

(Rs)

Discount (Rs)Alowed

Cash(Rs)

Bank (Rs)

Discount (Rs)

Recieved

Cash (Rs)

Bank (Rs)

1980Jan 1 Jan 3Jan 4Jan 7Jan 10Jan 12Jan 14Jan 20 Jan 31 Jan 31

To capital A/CTo Cash A/C To Toshi A/C To Cash A/C To Sima A/C To Vora A/CTo Sales A/C To Cash A/C To Bank A/C To Commission A/C

To Balance b/d

(C)

(C )

(C ) ( C )

10

30000

600

450175

400

19000

600475

1000

500

1980Jan 3Jan 7Jan 10Jan 20Jan 23Jan 30Jan 31 Jan 31 Jan 31 Jan 31 Jan 31Jan 31

By Bank A/C By Bank A/CBy Patel A/CBy Bank A/C By Purchase A/C Sundry Expense A/CBy Cash A/C By Drawing A/CBy Anita A/C By Rent A/C By Purchase A/C By Balance c/d

(C)(C )

(C)

(C)

20

25

19000600

1000

50

375

30010300

330

280

400 275

200

20090

10 31625 21575 45 31625 21575

10300 20090

Samir K Mahajan

Cash Book contd.

Samir K Mahajan

Example: prepare a cash book from the followings:

1980Jan 1 : Cash balance Rs 20000 and bank balance 30000Jan.4 : Received cheque Rs 500 from RakhiJan 7 : Deposit Rakhi’s cheque Rs 500 in bank Jan10 : Keya pays into business’ bank account Rs 475 Jan 23 : Rakhi’s cheque is dishonoured Jan 24: Recieves Rs 750 from SunainaJan 29 : Draws a cheque Rs. 800 for office useJan 30 : Draws a cheque Rs. 700 for private use Jan 30: Took cash Rs. 600 per personal use Jan 31 : Receives cheque for Rs 500 from Manihara and pays the same into bank

Cash Book

Dr Receipts Payments Cr

Date Particular L.F. Amount (Rs)

Date Particular L.F. Amount (Rs)

Cash(Rs)

Bank (Rs)

Cash (Rs)

Bank (Rs)

1980Jan 1 Jan 4Jan 7Jan 10Jan 12Jan 29Jan 31

Feb 1

To balance b/dTo RakhiTo Cash A/C To KeyaTo SunainaBank A/C Manihara

To Balance b/d

(C )

(C )

20000 600

750800 500

30000

600475

1980Jan 7Jan 23Jan 29Jan 30Jan 30Jan 31

By Bank A/CBy RakhiCash A/C Drawing A/CDrawing A/C By Balance c/d

(C)

(C )

600

600

600800 700

Samir K Mahajan

PETTY CASH BOOK

Petty means ‘small’. In every organisation, a large number of small payments such asconveyance, carriage, cartage, postage, telegrams and other expenses (collectively recordedunder miscellaneous expenses) are made. These are generally repetitive in nature.

If all these payments are handled by the cashier and are recorded in the main cash book, theprocedure is found to be very cumbersome.

The cashier may be overburdened and the cash book may become very bulky.

To avoid this, large organisations normally appoint one more cashier (petty cashier) andmaintain a separate cash book to record these transactions.

Such a cash book maintained by petty cashier is called petty cash book.

Samir K Mahajan

PETTY CASH BOOK cont.

The petty cashier works on the Imprest system.

Imprest means ‘money advanced on loan’.

Under this system, a definite sum, say Rs. 2,000 is given to the petty cashier at the beginning

of a certain period. This amount is called imprest amount.

The petty cashier goes on making all small payments out of this imprest amount and when

he has spent the substantial portion of the imprest amount say Rs.1,780, he gets

reimbursement from the head cashier after submitting the petty cash book to the headcashier and satisfying the accounts with the vouchers.

Thus, he again has the full imprest amount in the beginning of the next period.

The reimbursement may be made on a weekly, fortnightly or monthly basis, depending on

the frequency of small payments.

(In certain cases, the petty cash system is operated through the main cash book itself. In such

instances, the petty cash book is not maintained independently.)Samir K Mahajan

PETTY CASH BOOK contd.

As in the case of any other cash book, petty cash book also has the debit side and the credit side.

The debit side has very infrequent entries because cash receipt by the petty cashier is mainlyfrom the cashier at the beginning or close of a specified period.

The credit side has many columns. For each important petty expenses there is a seperate column,

These analytical columns helps to know the actual amount spent on each and every type of pettyexpenses for the specified period.

Petty Cash Book contd.

Samir K Mahajan

PETTY CASH BOOK contd.

Each petty payment is first entered in the total payments column, and then recorded in therespective analytical column, so that

i. the total amount spent on each expenses for a particular period can be easily ascertained byadding up the respective column.

ii. only the periodical total of each column is posted to the ledger.

iii. the total petty payment for any period can be easily ascertained from the total paymentscolumn.

The analytical petty cash book may be designed according to the requirements of the business.

Petty Cash Book contd.

Samir K Mahajan

Dr Petty Cash Book Cr

Amount Received

C.B.F.N Date Particular V.

N.

Amount Paid

Analysis of Payment

Rs. Rs. Postage and Telegraph

Printing and Stationary

Carriage Office Expenses and Repairs

Sundries

L.f.

Petty Cash Book contd.

Samir K Mahajan

Explanation of columns in the analytical petty cash book

1. Receipts: This is the first column of the petty cash book. Amount received by the petty cashier for meeting petty expenses and the opening balance of petty cash will be recorded in this column.

2. C.B.F.N: This refers to Cash Book Folio Number. In this column we write the page number of the cash book where cash paid by the cashier is recorded.

3. Date: In this column, the date of receipt / payment of cash is recorded.

4. Particulars: This column records the details of the receipts / payments. Cash received in the beginning is shown as ‘To cash’ and all the petty expenses are shown as ‘By expenses’ (name of the expense).

5. V.N.: The serial number of the voucher (cash payment) is written in this column.

Petty Cash Book: Contd.

Samir K Mahajan

6. Total Payments: This column records the amount of every expense. At the end of the week or month expenses are totalled and afterwards balanced. The total expenses of the week or the month is compared with the total of the receipts column and the balance is obtained.

7. Postage and Telegrams: This column records postal expenses like post card, envelope, inland letter, postagestamps, registered letter, parcel, telegrams and telephone charges.

8. Printing & Stationery: It includes expenses incurred for purchasing materials such as paper, ink, pencil, eraser, carbon paper and other items of stationery.

9. Cartage / Freight / Carriage: In this column carriage inward of goods is recorded. It includes cartage paid tocoolie, tempo charges etc.

10.Travelling Expenses / Conveyance: In this column fare for hiring auto rickshaw, bus, train, taxi etc., are recorded.

Petty Cash Book: Contd.

Samir K Mahajan

11. Office Expenses & Repairs: Minor repairing charges and petty office expenses like cleaning areincluded in this column.

12.Sundry Expenses / Sundries: In addition to these important expenses, there may be certainexpenses, which may not have specific columns for them. Expenses like refreshment, charity, tips,amount paid to scavengers etc., are recorded in this column.

13.L.F.:This refers to the page number of the ledger where the respective account is recorded.

Petty Cash Book contd.

Samir K Mahajan

Balancing Petty Cash Book

At the end of the period i.e., week or month the total payments column and individual expensescolumns are totalled.

It should be ascertained that the total of petty expenses column must be equal to the total ofpayments column.

The total payments column is compared with the total of receipts column and balance isobtained. The closing balances is shown as ‘By Balance c/d’.

The closing balance is carried forward to the beginning of the next week or month. It is shown as‘To Balance b/d’.

Petty Cash Book contd.

Samir K Mahajan

Posting of Entries in the Petty Cash Account

The petty cash book is balanced periodically. The difference between the total receipts and total payments is the balance with the petty cashier. The balance is carried to the next period and the petty cashier is paid the amount actually spent.

A petty cash account is opened in the ledger. It is debited with the amount given to petty cashier. Each expense account is individually debited with the periodic total as per the respective column by writing “petty cash account” and the petty cash account is credited with the total expenditure incurred during the period by writing sundries as per petty cash book. The petty cash account is balanced. It reflect the actual cash with the petty cashier.

Petty Cash Book contd.

Samir K Mahajan

Example: Mr Mohit, the pettycahier of M/s Samaira Tradersreceived Rupees 2,000 on May01, 2010 from the Head Cashier.For the month, details of pettyexpenses are listed here under:

Petty Cash Book contd.

Samir K Mahajan

Date2010 May

Details AmountRs.

0203040506080810121314161919202223282930

Auto fareCourier servicesPostal stampsErasers/Sharpeners/Pencils/PadsSpeed post chargesTaxi fare (Rs.105 + Rs.90)RefreshmentsAuto fare Registered postal chargesTelegramCartageComputer stationeryBus fareSTD call chargesOffice sanitation including disinfectant (Rs. 36 + Rs. 24)RefreshmentPhoto stating chargesCourier servicesUnloading chargesBus fare

5540

10522598

1958560423425

1652487604547404015

Petty Cash Book

Amount Received

C.B.F.N

Date Particular VN

Amount Paid

Analysis of Payment

Rs. 2010May

Rs. Postage Telephone and Telegram

Conveyance

Stationary

Miscellaneous

2000 01 Cash Received

0203040506080810121314161919

Auto fareCourier servicesPostal stampsErasers/Sharpeners/Pencils/PadsSpeed post chargesTaxi fare (Rs.105 + Rs.90)RefreshmentsAuto fare Registered postal chargesTelegramCartageComputer stationeryBus fareSTD call charges

5540

10522598

1958560423425

1652487

40105

98

4234

87

55

195

60

24

225

165

85

25

Petty Cash Book contd.

Samir K Mahajan

Analysis Petty Cash Book

Amount Received

C.B.F.N

Date Particular VN

Amount Paid

Analysis of Payment

Rs. 2010May

Rs. Postage Telephone and Telegram

Conveyance

Stationary

Miscellaneous

20

2223282930

Office sanitation including disinfectant (Rs. 36 + Rs. 24)RefreshmentPhoto stating chargesCourier servicesUnloading chargesBus fare

604547404015

40

15

604547

40

31 Balance c/d1487513

325 121 364 390 302

2000 2000

5131487

June

0101

Balance c/dCash Received

Petty Cash Book contd.

Samir K Mahajan