Chapter 9 - Two Column Cash Book


A cash book is a book of prime entry (subsidiary books) where cash and bank transactions are first recorded.  There are three types of cash book:

  • Two column cash book
  • Three Column cash book
  • Petty cash book

Two Column Cash Book

A two column cash book is used to record cash and cheques received and paid during a month. A cash book is the only book of prime entry which is also part of the double entry since cash and cheques received are debited and payments are credited. Rather than keeping the cash account and bank account separately, a cash book enables us to keep these two accounts side by side. It consists of two columns of amount on each side to record Cash and Bank Transactions. Thus, it is more convenient to record and locate cash and bank transactions. It is prepared as follows:

DR                                                                                 CASH BOOK                                                                                  CR

Date

Details

Cash

$

Bank

$

Date

Details

Cash

$

Bank

$


























Contra entry in Two Column Cash Book

Example 1

Jan 3                Withdrew cash from bank for business use $ 450

DR                   Cash Account

CR                   Bank Account

DR                                                                              CASH BOOK                                                                                 CR

Date

Details

Cash

$

Bank

$

Date

Details

Cash

$

Bank

$

Jan 3

Bank ( C )

450


Jan 3

Cash ( C )


450










Example 2

Jan 8                Put cash into bank $ 780

DR                   Bank Account

CR                   Cash Account

CASH BOOK

Date

Details

Cash

$

Bank

$

Date

Details

Cash

$

Bank

$

Jan 8

Cash ( C )


780

Jan 8

Bank ( C )

780











Balances in Two Column Cash Book

  • A debit balance in the cash column represents cash in hand. A cash account cannot have a credit balance
  • A debit balance in the bank column represents cash at bank and a credit balance shows bank overdraft.

Worked Example

  • The following transactions took place in the business of John during the month of January 2020.

Jan

1

Cash in hand                  $ 2 500



Cash at bank                  $ 1 200


2

Purchased goods by cash $ 300


4

Sold goods for cash $ 600


7

Purchased goods by cheque $ 200


9

Sold goods for cheque $ 700


11

Received cheque from Raj $ 1 800


12

Paid Xavier by cheque $ 800


14

Received cheque from Sam $ 1 400


17

Paid Yohan by cheque $1 200


18

Purchased equipment by cash $ 200


19

Paid electricity by cash $ 400


20

Withdrew cash from bank for business use $ 1 300


21

Withdrew cash from bank for family use $ 600


23

Purchased equipment for home use $ 350 by cash


24

Cash sales banked $ 3 500


30

Received cheque from Tamy $ 2 800


31

Paid cheque to Zidane $ 2 000


CASH BOOK

Date

Details

Cash

$

Bank

$

Date

Details

Cash

$

Bank

$

Jan 1

Balance b/f

2 500

1 200

Jan 2

Purchases

300


4

Sales

600


7

Purchases


200

9

Sales


700

12

Xavier


800

11

Raj


1 800

17

Yohan


1 200

14

Sam


1 400

18

Equipment

200


20

Bank ( C )

1 300


19

Electricity

400


24

Sales


3 500

20

Cash ( C )


1 300

30

Tamy


2 800

21

Drawings


600





23

Drawings

350






31

Zidane


2 000





31

Balance c/d

3 150

5 300



4 400

11 400



4 400

11 400

Feb 1

Balance b/d

3 150

5 300






Q1. Prepare a Two column cash book from the following transactions that occurred in the books of Sim.

Jan

1

Cash in hand                  $ 1 500



Cash at bank                  $ 4 200


3

Purchased goods by cheque $ 600


5

Cash sales $ 900


8

Purchased goods by cheque $ 500


9

Cash sales banked $ 700


11

Received cheque from Rajesh $ 2 000


12

Paid Sahir by cheque $ 900


15

Received cheque from Sania $ 1 500


16

Paid Mauree by cheque $1 500


18

Purchased equipment by cash $ 500


19

Paid wages by cash $ 600


20

Withdrew cash for business use $ 1 900


21

Withdrew cash from bank for family use $ 500


22

Purchased equipment for home use $ 450 by cheque


25

Sold goods for cheque $ 3 000


30

Received cheque from Tania $ 2 500


31

Paid cheque to Zoya $ 2 600