INTRODUCTION: This is the book for recording receipts and payments of money in cash or cheque.
NOTE: No credit transaction should be recorded in the cash book.
CASH ACCOUNT: This is the account which is used for recording money received and paid with cash. The balance is referred to as CASH IN HAND. All cash received must be debited while cash paid will be credited to the cash account.
Illustration 1:
Enter the following transactions in the cash account of Olaide
N
July 1 Cash in hand 1,500
July 3 Cash to Okola 250
July 5 Cash Sales 500
July 6 Cash purchases 700
July 7 Bought Stationery 50
July 9 Paid Insurance 30
July 10 Paid wages 25
July 12 cash sales 155
SOLUTION
DR CASH ACCOUNT CR
N N
July 1 bal. b/f 1,500 July 3 Okola 250
July 5 sales 500 July 6 Purchaser 750
July 12 sales 115 July 7 Stationery 50
July 9 Insurance 30
July 10 wages 25
Bal. c/d 1,010
2,115 2,115
BANK ACCOUNT: The bank account is a record of money deposited into the bank and money withdrawn from the bank. All cheques received must be debited while cheques issued out must be credited.
Illustration 2:
Enter the following transactions in the bank account of Ogundele.
N
June 1 Cash in hand 2,500
June 3 Paid to Okocha by cheque 650
June 5 Sold goods and received cheque 450
June 6 Received Cheque from Agali 230
June 7 Sent Cheque to Komolafe
June 9 Bought goods with cheque 300
SOLUTION
DR BANK ACCOUNT CR
N N
June 1 bal. b/f 2,500 July 3 Okocha 650
June 5 sales 450 July 6 Purchaser 750
June 6 sales 230 July 7 Stationery 50
July 9 Insurance 30
July 10 wages 25
Bal. b/d 1,910 Bal. c/d 1,010
3,180 3,180
See also