Theory question 106
Cash BookThe following information were extracted from the books of Adjuah Enterprises for the month of January, 2007.
January 1: Cash in hand ¢500,000; cash at bank ¢59,500.
3: Bought goods for cash ¢2,500.
4: Withdrew ¢6,700 from bank for private use.
9: Received from the following, cheques in full settlement of their accounts, in each case deducting cash discount of 5% – Nana ¢5,000 – Ngiah ¢7,000 – Prince ¢13,000
15: Paid ¢8,500 to Sarah by cheque in full settlement of a debt of ¢9,000.
17: Received ¢15,000 cheque from Johnson stores in full settlement of a debt of ¢16,000.
19: Paid ¢45,000 cash into bank.
21: Bought 200 shares in Mawudeka Ltd. for ¢241,500. Payment made in cash.
22: Cash sales paid direct into bank ¢9,000.
24: Paid the following by cheque in each case deducting 2½% cash discount. – Yayra ¢22,000 – Kekeli ¢37,000 – Klenam ¢40,000
25: Withdrew ¢5,000 from bank for office use.
29: Paid salaries in cash ¢115,000
31: Cash drawings ¢4,000
You are required to prepare a three-column cash book for the month of January, 2007.
Show the model answer
Three-column cash book (Discount / Cash / Bank on each side), January 2007:
Debit side: Jan 1 balances b/f cash 500,000, bank 59,500; Jan 9 Nana bank 4,750 (disc 250), Ngiah bank 6,650 (disc 350), Prince bank 12,350 (disc 650); Jan 17 Johnson stores bank 15,000 (disc 1,000); Jan 19 cash (contra) bank 45,000; Jan 22 sales bank 9,000; Jan 25 bank (contra) cash 5,000
Credit side: Jan 3 purchases cash 2,500; Jan 4 drawings bank 6,700; Jan 15 Sarah bank 8,500 (disc 500); Jan 19 bank (contra) cash 45,000; Jan 21 investment in Mawudeka Ltd shares cash 241,500; Jan 24 Yayra bank 21,450 (disc 550), Kekeli bank 36,075 (disc 925), Klenam bank 39,000 (disc 1,000); Jan 25 cash (contra) bank 5,000; Jan 29 salaries cash 115,000; Jan 31 drawings cash 4,000
Totals: discount allowed ¢2,250; discount received ¢2,975; cash ¢505,000 each side; bank ¢152,250 each side
Balances c/d at 31 Jan (b/d 1 Feb): cash ¢97,000; bank ¢35,525
Mark contra entries 'C' in the folio column.
Discounts are 5% and 2½% of the debts; payments into the bank and withdrawals for office use are contra entries.