AB Traders** maintains a Double Column Cash Book (with Cash and Bank columns) for recording its cash and bank transactions. From the following transactions for the month of January 2024, prepare the Cash Book:
1. **January 1, 2024:** Cash in hand ₹25,000; Bank balance ₹50,000.
2. **January 3, 2024:** Received cash from Rahul ₹10,000.
3. **January 5, 2024:** Deposited cash into the bank ₹15,000.
4. **January 7, 2024:** Paid rent by cheque ₹5,000.
5. **January 10, 2024:** Purchased goods for cash ₹8,000.
6. **January 12, 2024:** Received a cheque from Priya ₹12,000 (deposited into the bank on the same day).
7. **January 15, 2024:** Withdrew cash from the bank for office use ₹10,000.
8. **January 18, 2024:** Paid salaries by cheque ₹20,000.
9. **January 20, 2024:** Sold goods for cash ₹18,000.
10. **January 25, 2024:** Paid electricity bill by cash ₹2,500.
11. **January 28, 2024:** Received interest from the bank ₹1,000.
12. **January 30, 2024:** Withdrew cash from the bank for personal use ₹5,000.
**Instructions:**
1. Prepare a Double Column Cash Book (Cash and Bank columns).
2. Balance the Cash Book as of January 31
, 2024.
Solution
To prepare a Double Column Cash Book for **AB Traders** for January 2024, we will create two columns: one for Cash and one for Bank transactions. Each transaction will be recorded in the respective column as per the given information.
### Double Column Cash Book of AB Traders
**For the month of January 2024**
| Date | Particulars | L.F. | Cash (₹) | Bank (₹) |
|--------------|---------------------------|------|----------|----------|
| **2024 Jan 1** | To Balance b/d | | 25,000 | 50,000 |
| **2024 Jan 3** | To Rahul | | 10,000 | |
| **2024 Jan 5** | To Bank (Deposited) | | (15,000) | 15,000 |
| **2024 Jan 7** | By Rent (Paid by cheque) | | | (5,000) |
| **2024 Jan 10** | By Goods (Purchased for cash) | | (8,000) | |
| **2024 Jan 12** | To Priya (Cheque Received) | | | 12,000 |
| **2024 Jan 15** | To Cash (Withdrawn from Bank) | | 10,000 | (10,000) |
| **2024 Jan 18** | By Salaries (Paid by cheque) | | | (20,000) |
| **2024 Jan 20** | To Sales (Sold goods for cash) | | 18,000 | |
| **2024 Jan 25** | By Electricity Bill (Paid by cash) | | (2,500) | |
| **2024 Jan 28** | To Interest (Received from Bank) | | | 1,000 |
| **2024 Jan 30** | By Drawings (Cash withdrawn for personal use) | | (5,000) | |
### Balance the Cash Book:
1. **Cash Balance:**
Total Cash Inflows = ₹25,000 + ₹10,000 + ₹10,000 + ₹18,000 = ₹63,000
Total Cash Outflows = ₹15,000 + ₹8,000 + ₹2,500 + ₹5,000 = ₹30,500
Cash Balance = ₹63,000 - ₹30,500 = ₹32,500
2. **Bank Balance:**
Total Bank Inflows = ₹50,000 + ₹15,000 + ₹12,000 + ₹1,000 = ₹78,000
Total Bank Outflows = ₹5,000 + ₹10,000 + ₹20,000 = ₹35,000
Bank Balance = ₹78,000 - ₹35,000 = ₹43,000
### Closing Balance as on January 31, 2024:
- **Cash Balance (c/d)** = ₹32,500
- **Bank Balance (c/d)** = ₹43,000
| **2024 Jan 31** | To Balance c/d | | 32,500 | 43,000 |
This completes the Double Column Cash Book with the closing balances of cash and bank
2nd method
Here's how we can prepare a **Double Column Cash Book** for **AB Traders** based on the given transactions for January 2024:
---
### Double Column Cash Book (Cash and Bank Columns)
**AB Traders**
For the month of January 2024
| Date | Particulars | L.F. | Cash (₹) | Bank (₹) |
|-------------|------------------------|------|----------|----------|
| **2024** | **Receipts** | | | |
| Jan 1 | Balance b/d | | 25,000 | 50,000 |
| Jan 3 | Rahul (Received cash) | | 10,000 | |
| Jan 5 | Cash deposited to bank | | (15,000) | 15,000 |
| Jan 12 | Priya (Cheque received) | | | 12,000 |
| Jan 15 | Cash withdrawn from bank for office use | | 10,000 | (10,000) |
| Jan 20 | Cash sales | | 18,000 | |
| Jan 28 | Interest received from bank | | | 1,000 |
| **2024** | **Payments** | | | |
| Jan 7 | Rent paid by cheque | | | (5,000) |
| Jan 10 | Goods purchased for cash | | (8,000) | |
| Jan 18 | Salaries paid by cheque | | | (20,000) |
| Jan 25 | Electricity bill paid in cash | | (2,500) | |
| Jan 30 | Cash withdrawn from bank for personal use | | | (5,000) |
| | | | | |
| **Total** | | | 37,500 | 38,000 |
| | | | | |
| **Balance c/d** | | | 37,500 | 38,000 |
### Closing Balances as of January 31, 2024:
- **Cash balance** = ₹37,500
- **Bank balance** = ₹38,000
---
**Explanation of Entries:**
1. On **January 1**, the opening balances are recorded.
2. **January 3**, cash received from Rahul increases the cash balance.
3. **January 5**, cash is deposited into the bank, reducing cash and increasing the bank balance.
4. **January 7**, rent is paid by cheque, reducing the bank balance.
5. **January 10**, goods are purchased for cash, reducing the cash balance.
6. **January 12**, a cheque received from Priya is deposited into the bank, increasing the bank balance.
7. **January 15**, cash is withdrawn from the bank for office use, reducing the bank balance and increasing the cash balance.
8. **January 18**, salaries are paid by cheque, reducing the bank balance.
9. **January 20**, cash sales increase the cash balance.
10. **January 25**, the electricity bill is paid in cash, reducing the cash balance.
11. **January 28**, interest is received from the bank, increasing the bank balance.
12. **January 30**, cash is withdrawn from the bank for personal use, reducing the bank balance.
