Cash Book

A few weeks ago we looked at recording invoices and credit notes in the Sales/Sales Returns Day Book and the Purchases/Purchase Returns Day Book now we need to record payments made and received

The cash book records payments made by a business and monies received

Transactions are recorded in date order

CASH BOOK

Discount Allowed

Discount ReceivedCash (£) Cash (£)Bank (£) Bank (£)Date DateDetails Details

01 Jun 06 Balances b/d 200.00 750.00

04 Jun 06 Bennetts Ltd 414.9410.64

04 Jun 06 Chadwick Ltd 134.553.45

11 Jun 06 Greens Solicitors 550.5614.11

08 Jun 06 Business Supplies 325.70

20 Jun 06

08 Jun 06

Halls Ltd 148.203.80

Paper & Printing 390.0010.00

200.00 200.00

30 Jun 06 Balances c/d 200.00

01 Jul 06 Balances b/d 200.00

1,850.05 1,850.05

986.15

986.15

13.8028.20

The left hand side of the cash book is for receipts (money in) and the right hand side is for payments (money out)

Once you have completed your cash book when a business receives it’s bank statement you should be able to match each payment and receipt with what has gone through the bank account

The balance carried down would be the closing balance on your bank statement

For example if you had £100.00 receipts and £20.00 payments. At the end of the month you would have a balance carried down of £80.00 (£100.00-£20.00)

You will see contra entries in the cash book

A contra entry means that the opposite double-entry transaction is in the same account so you have an entry in the receipts side and in the payments side of the cash book

Contras You may see the following transactions:

Cash is withdrawn from the bank for use in the business

You would record the withdrawal of cash on the payments side (credit side) of the cash book in the bank column

Because it states the cash is being used in the business adding this cash drawn out of the bank would be a receipt to the cash account which is why it is recorded on the receipts side (debit side) of the cash book in the cash column

Contras You may see the following transactions:

Cash is paid into the bank

You would record the receipt of the cash on the receipts side (debit side) of the cash book in the bank column

Because by banking the cash you are reducing the amount of money in the cash account you would need to record a payment on the payments side (credit side) of the cash book in the cash column