19 Sep discount allowed in cash book
To avail that facility, the business enterprise paid the full amount through cheque on the same day.On 18-01-2008, a business enterprise draws a cheque of Rs. 500 in respect of bank charges.Bad Debts A/c Dr. (with the amount not received from debtors)On 31-1-2008, a business enterprise received Rs. The double-column cash book system has been introduced to avoid complexity in posting bank transactions in the single column cash book.The total debit discount column means expense and the total credit discount column means income.Double Entry System: Defined, Features & Principle ExplainedAmong the financial transactions of concern, cash transactions carry much more importance.Trial Balance Errors and Rectification of Trial Balance ErrorsThe advantages of treble column cash book are stated below,Here all bank transactions are directly recorded in bank columns.The cash book is called ledger because of its above-mentioned characteristics. (xi) Discounting Bills Receivable from the Bank:(xvi) Discount Allowed Earlier, Disallowed Later on:It should be noted that ‘Contra’ is a Latin word which means ‘against’. This is discount received from suppliers for prompt payment (as explained in the page on cash discount). 4,500, received from Kabir on 30.1.2008, had been dishonoured.Sometimes, discount is received by a business enterprise for making payment to the creditors before time.
Kabir paid the entire sum on the same day through cheque. 5,000 to the business enterprise. Some of the popular cards are HSBC, SBI Cards, BOB Card, ICICI Bank Card, HDFC Cards and Andhra Bank Card etc.A bearer cheque received from a party and not deposited in the bank, can be given to any third party for making the similar payment to the latter. On the same day, a bill for the same amount was drawn upon Vijay for two months. If payment is received through cheque and cheque is dishonoured, the entry on the credit side of the cash book is made by entering the amount of dishonoured cheque in the bank column and name of the party in the particular column of the cash book.On 29-01-2008, the business enterprise endorsed a cheque of Rs.
(iii) Cheque Received and Deposited on Another Day:On 31-01-2008, an intimation was received from the bank that a cheque for Rs.
It is very much evident from the above discussion, cash book is both journal and ledger as it contains all features of journal and ledger and serves purposes of both.The owner can know the accurate cash the position of his business from the cash book.
‘T’ form cash book contains two sides: the left-hand side means the debit side and the right-hand side means the credit side.Bank Reconciliation Statement (Definition, Types, Template)Like the double column, cash book cash receipts and bank deposits are recorded in the debit cash column and bank column respectively of the treble column cash book and cash payments and payment by cheque are recorded in the credit cash column and bank column respectively.The cash book containing three money columns on both sides is called a treble column cash book. However, if the payment is received through cheque then the net amount received shall be recorded in the bank column on the debit (receipts) side of the cash book. However, if the payment is made through cheque, then net amount paid shall be recorded in the bank column on the credit side of the cash book.
(iv) The seller submits all the forms received by him on goods sold/services rendered on credit basis to his bank, generally daily.For this purpose, entry on the credit side of the cash book is made by entering the amount of dishonoured cheque in the bank column and name of the party in the particular column of the cash book.Amount deposited in bank is recorded on the debit (receipt) side of bank column showing increase in bank and credit (payment) side under the cash column showing decrease in cash.It is treated as cash received on the date of receipt and recorded in the cash column on receipts side.
Banks issue such cards directly or with collaboration of some other agencies. This, credit balance of bank is known as bank overdraft. The bank overdraft shall appear on the credit side of the cash book under the bank balance.
(vi) The card holder gets a monthly statement from the bank. Bank charged 1% commission on sales through Debit/Credit Cards.On 31-01-2008, a business enterprise issued a cheque of Rs.
To Discount Allowed A/c (with the amount of discount allowed earlier) Example: On 31-1-2008, an intimation was received from the bank that a cheque for Rs. 4,500 from Ramesh (one of the debtors) as 50% of the amount due from him as Ramesh had become insolvent.
Discount received $400 has been debited to discount allowed account. This limit is decided by the bank authorities and depends upon the reputation and need of the business enterprise.
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