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Double Column Cash Book


In Double column cash book, there are two columns of amount on each side of the cash book. Now-a-days bank transactions are very large in number. In many organisations, as far as possible, all receipts and payments are affected through bank. A businessman generally opens a current account with a bank. The Bank, do not allocate any interest on the balance in current account but charge incidental charges, for the services rendered by them.

Pay-in-slip: For depositing cash/cheques in the bank account, we fill up the pay-in-slip. It contains a counterfoil also which is returned to the customer (depositor) with the signature of the cashier, as an acknowledgement of receipt.

Specimen copy of pay-in-slip:

 

Cheque: The bank issues blank cheque forms, to the account holder for withdrawing money. The depositor writes the name of the party to whom the payment is to be made after the words Pay printed on the cheque.

Bearer Cheque: The Cheque have the printed word bearer, which means payment is to be made only to the person whose name has been written after the words “pay” or the bearer of the cheques. A bearer cheque can be passed on by mere delivery.

Order Cheque: When the world 'bearer' is struck off by drawing a line, the cheque becomes an order cheque. It means payment is to be made to the person whose name is written on the cheque or to his order after proper identification. An order cheque can be transferred by endorsement and delivery. Endorsement means the writing of instructions to pay the cheque to a particular person and then singing it on the back of the cheque.

Crossed Cheque: In general practice Cheques are crossed. The payment of a crossed cheque cannot be made direct to the party on the counter. It is to be paid only through a bank. When two parallel lines are drawn across the cheque, it is said to be crossed.
 
Specimen copy of Cheque:

 

Types of Crossing

​In case of an A/c payee only crossing, the amount of the cheque can be deposited only in the account of the person whose name appears on the cheque.

​When the name of the bank is written between two parallel lines, it becomes a special crossing and the payment can be made only to the bank whose name has been written between the two lines.

Though this is rarely in practice, a cheque can be transferred by the payee (the person in whose favor the cheque has been drawn) to another person, if it is not crossed A/c payee only.

When the bank transactions are large; it is convenient to have a separate column for bank transactions in the cash book itself instead of recording them in the journal. This facilitates getting information on of the bank account from time to time.

Like cash transactions, all payments into the bank are recorded on the left side and all withdrawals/ payments through the bank are recorded on the right side. Both the cash deposited and withdrawn from the bank are recorded in the cash book. When cash is paid into the bank, the amount deposited is written on the left side in the bank column and at the same time the same amount is entered on the right side in the cash column. The reverse entries are recorded when cash is withdrawn from the bank for use in the office. Against such entries the word C, which stands for contra is written in the L.F. column indicating that these entries are not to be posted to the ledger account.

The bank column is balanced in the same way as the cash column. However, in the bank column, there can be credit balance also because of overdraft taken from the bank. Entries in respect of cheques received should be made in the bank column of the cash book. When a cheque is received, it may be deposited into the bank on the same day or it may be deposited on another day. In case, it is deposited on the same day the amount is recorded in the bank column of the cash book on the receipts side. If the cheque is deposited on another day, on the date of receipt it is treated as cash received and hence recorded in the cash column on the receipts side. On the day of deposit to the bank, it is shown in the Bank Column on receipt (Dr.) side and in the Cash Column on the payment (Cr.) side. This is a contra entry.

If a cheque received from a customer is dishonoured, the bank will return the dishonoured cheque and debit the firm's account. In this case, the firm will make an entry on the credit side of the cash book by entering the amount of the dishonoured cheque in the bank column and the name of the customer in the particulars column. This entry will restore the position prevailing before the receipt of the cheque form the customer and its deposit in the bank. Dishonour of a cheque means return of the cheque unpaid, generally due to insufficient funds in the customer's account with the bank. If the bank debits the firm on account of interest, commission or other charges for bank services, the entry will be made on the credit side in bank column. If the bank credits the firm's account, the entry will be made on the debit side of the cash book in the appropriate column.

The format of double column cash book is shown in figure 4.5.

Cash Book
Dr. Cr.

Date

Particulars

L.F.

Cash

Rs.

Bank

Rs.

Date

Particulars

L.F.

Cash

Rs.

Bank

Rs.

 

 

 

 

 

 

 

 

 

 

 

We will now learn how the transactions are recorded in the double column cash book. from the following example:

Problem#2
The following transactions related to M/s Tools India:


 

The double column cash book based upon above business transactions will prepared as follows:

Solution:

Posting of the Double Column Cash Book

When the bank column is maintained in the cash book, the bank account also is not opened in the ledger. The bank column serves the purpose of the bank account. Entries marked C (contra entries) are ignored while posting from the cash book to the ledger. These entries represent debit or credit of cash account against the bank account or vice versa.

 

We will now see how the transactions recorded in double column cash book are posted to the individual accounts.
Purchases Account
Dr. Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

2005

Sept 04

Sept 17


Bank

Cash

 


12,000

17,400

       

Sales Account
Dr. Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

       

2005

Sept 08

Sept 16

 

Cash

Bank

 

 

6,000

4,500

Machinery Account
Dr. Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

2005

Sept 13



Bank

 

 

5,500

       

Stationery Account
Dr.  Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

2005

Sept 20


Bank

 


1,100

       

Rohit's Account
Dr. Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

2005

Sept 24



Bank

 



1,500

       

Rent Account
Dr. Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

2005

Sept 30



Bank

 



2,500

       
 
Salary Account
Dr. Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

2005

Sept 30



Bank

 



3,500

       




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