How to Create Three Column Cash Book in Excel

This way, the company can keep track of discounts given or received and maintain accurate records of its cash transactions. An overview of this procedure is given on the double column cash book page. A three-column cash book is a table with Debit and Credit on each side and each side has three columns. The first column represents the cash transaction (received/paid). The second column contains the transactions into or from the bank account. Finally, the third column shows how much discount is received or paid.

The following is a worked example of a three Column Cash book. Write up a three-column cash book from the following details. Prepare a Three column cash book for the month of January. Sold goods on credit to John, list price $ less 10% trade discount.

Balancing the Three Column Cash Book

A triple column cash book or https://turbo-tax.org/about-casualty-deduction-for-federal-income-tax/ is one which consists of three separate columns on the debit side as well as credit side for recording cash, bank and discount. The discount column on the debit side of the cash book will record discounts allowed and that on the credit side discounts received. Discount columns in both side are not balanced only totaled. Here, the supplier’s account is debited with the original amount owed, the discount received is credited to the discount column, and the actual amount paid is debited from the cash column.

The discount allowed and received are both operating expense and income respectively and are recorded on the debit and credit side of the three column cash book. Remember that a three column cash book is a book of original entry and information from the respective source documents is transferred and not posted. So cash discounts are just listed in their respective columns in the three column cash book and the principle of double entry does not apply at this stage. In the following illustration , we will demonstrate how the cash discounts are recorded in a three column cash book. This type of Cash Book combine discount column on both sideto the cash and bank column. The discounts allowed column is on the debit side, while the discounts received column is on the credit side.

Posting a three column cash book to ledger accounts

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In this step, we will add the amounts that are stored in bank accounts in that period. We will sum up bank transactions both from the credit and debit sides. All cash receipts are entered on debit side of the Cash Book in the cash column and all payments are entered on the credit side of the cash book in cash column. The opening balance of cash in hand and cash at the bank are recorded on the debit side in the cash and bank columns, respectively. You may remember that cash and discounts are closely related.

The Three-Column Cash Book With Discounts Well ExplainedSS1 Financial Accounting Lesson

It is possible that a businessman withdraw some amount from the bank for office. Bank Account gives the benefit and Cash Account receives the benefit. Since, Cash Account and Bank Account appear in Cash Book; both the aspects can be entered in the cash book. When cash is drawn, cash comes in and is debited in the cash book in cash column as “To Bank” and credit in cash book in Bank Column as “To Cash”. This is made up of cash column, bank column and discount column on both sides of the cash book. Separate accounts are maintained in the general ledger for discount allowed and received.

• The first column represents the cash transaction (received/paid).
• In this step, we will calculate the balance brought down and the balance carried down for the month.
• This is because cash at bank decreases as a result of such charges.
• The following transactions took place in the books of Samira during the month of January.

The total of discount column on debit side of cash book represents the total cash discount allowed to customers during the period and is posted to the discount allowed account maintained in the ledger. The total of discount column on credit side represents the total cash discount received from suppliers during the period and is posted to the discount received account maintained in the ledger. Three column cash book records three types of accounts, i.e., cash, bank and discount. This substitutes the creation of cash account, bank account, discount received and discount allowed in the ledger.

Three Column Cash Book Examples

This is the reason why discount columns are also provided in the cash book. The Balance Brought Down and Balance Carried Down for bank accounts are the same as the cash amounts. Here, we will calculate the balance brought down and the balance carried down for the bank transactions. The three-column cash book is a very powerful financial tool. It allows a company to keep track of its transaction for a certain period efficiently. In this article, we will show how to create three column cash book in Excel.