Name - Manish KumarClass - XI Section - FRoll No. - 24

● Cash Book● Purchase Book / Purchase

Journal● Sales Book / Sales Journal

Contents

Cash Book is a book of prime entry in which cash and bank transaction are recorded in a chronological order, i.e., as they occur. Cash receipts are recorded on the debit side of the Cash Book and cash payments on the credit side. A balance is struck by deducting the total cash payments from the total cash receipts to know the cash in hand, a necessary and useful information. The no. of cash transactions in a firm is generally large, therefore, it is convenient to have a separate Cash Book to record such transactions.

Cash Book

Features of Cash Book

1. Only cash transactions are recorded in the Cash Book.

2. Cash and cheque receipts are recorded on the debit side while cash and cheque payments are recorded on the credit side.

3. It record only one aspects of the transaction, i.e., cash.

4. Cash and bank transactions are recorded in the Cash Book in a chronological order, i.e., in other they take place.

5. It performs the function of the both Journal and the Ledger at the same time.

Kinds of Cash BookThere are three types of Cash Books:

(1) Simple Cash Book or Single Column Cash Book: For according cash transaction only.

(2) Two-Column Cash Book (Cash Book with cash and bank column): For recording cash and bank transactions.

(3) Three-Column Cash Book (Cash Book with cash, bank and discount columns): In this cash book there are three column of amount on both the sides. The first for discount, the second for cash and the third for bank transactions. Discount allowed is recorded on the debit side, while discount received is recorded on the credit side.

A Simple Cash Book looks like an A/C, with one A/C column on each side. Left-hand side records receipts of cash and the right-hand side records payments. The ruling is as follows:Dr. Cr.

(1) Simple Cash Book or Single Column Cash Book

Date Particulars V.No L.F Amt Date Particulars

V.No L.F Amt

In the column for:(1) Date: Date of transaction is written(2) Particulars: The name of the A/C under which cash

has been received or payment has been made is written. In an existing business, Cash Book starts with the Opening Balance of cash written on the receipts side as ‘To Balance b/d’. A new business will not have an opening balance.

(3) Voucher No. (V. No.): The document supporting a transaction is called a voucher. There are two types of cash vouchers: Receipt Voucher and Payments Voucher. Generally, a Voucher has a serial number which is written in the column.

(4) Ledger Folio (L.F): It records the page number in the Ledger where the amount has been posted in the A/C.

(5) Amount: The amounts received are written on the debit side amount paid are written on the credit side.

A Two-Column Cash Book or Double Column Cash Book is a Cash Book with two column on each side; one column for recording cash transactions and the other column for recording bank transactions, i.e., deposit of cheques or cash, issue of cheques and withdrawal of cash, etc. We can say that a Two-Column Cash Book represents two A/C. The ruling of a Two-Column Cash Book is as follows:

Dr. Cr.

(2)Two-Column or Double Column Cash Book(Cash Book with Cash and Bank Column)

Date

Particulars L.F

Cash

Bank Date

Particulars L.F

Cash

Bank

Petty Cash Bank is the book which s used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash A/C.

Petty Cash Book

Advantages of Petty Cashi. Control Over Mistakes: The Petty Cash Book is checked by

the cashier at regular intervals so that a mistake, if committed, is soon rectified.

ii. Control Over Petty Expenses: Petty expenses are kept within the limits of imprest since the petty cashier can never spend more than the available petty cash.

iii. Control Over Fraud: Under this system defalcation of cash can be minimized since the Petty Cashier is not allowed to draw cash as and when he desires.

Types of Petty Cash Books:1. Simple Petty Cash Book2. Analytical Petty Cash Book

A Simple Petty Cash Book is identical with a Cash Book. Any cash which the Petty Cashier receives will be left hand side cash column (debit column) any cash which he pays out will be recorded on the right hand side payment column. The date and particulars of every transaction will be written in the same date and particulars column. Dr. Cr.

1. Simple Petty Cash Book

Amount Received

Cash Book Folio

Date

Particulars V. No.

Amount Paid

Amount Received

… … …Amount Paid

……

……

An Analytical Petty Cash Book has two sides, the left hand side is used for recording receipts of cash (which will be only from the main cashier) are right hand side, which is used for recording payments. In Analytical Petty Cash Book, a separate column is provided for recording a particular item of expenditure, i.e., postage, stationery, travelling, advertisement, etc. A column is usually provided for ‘sundries’ to record infrequent payments. When a petty expenses is recorded on the right hand total payment column, the same amount is immediately recorded in the appropriate expenses column. At the end of a particular period, all the analysis (expenses) column are added and posted to the debit side of the respective A/C.

2. Analytical Petty Cash Book

Receipts

Date V. No. Particulars

TotalPayment

s

Conveyance

Cartage

Stationery &

Courier

Postage

Sundries

Simple Cash BookQ. 1-Enter the following transaction.2012Jan 1 Reema started business with cash 1,00,000 Jan 2 Opened a bank A/C and deposited 50,000Jan 3 Purchased goods for cash 20,000Jan 3 Sold goods to Ram on credit 5,000Jan 5 Received from Ram 3,000Jan 7 Paid Rent 4,000Jan 8 Sold goods for cash 10,000Jan 10 Withdrew cash for cash from bank 7,000Jan 27 Purchased furniture 15,000Jan 31 Paid salaries 5,000

Questions

Solution:

Dr. Cr.Date Particulars L.

FAmount(R

s)Date Particulars L.

FAmount(Rs

)

2012 2012

Jan 1 To capital A/C 1,00,000 Jan 2 By bank A/C 50,000

Jan 5 To ram 3,000 Jan 3 By purchase A/C

20,000

Jan 8 To sales A/C 10,000 Jan 7 By rent A/C 4,000

Jan 10 To bank A/C 7,000 Jan 27 By furniture A/C 15,000

Jan 31 By salaries A/C 5,000

Jan 31 By balance c/d 26,000

1,20,000 1,20,000

Feb 1 To balance b/d

26,000

Q. 2-Enter the following in Shri Shambunath’s Cash Book and show the balance:

2012March 1 Balance of cash in hand 15,000March 8 Purchases goods for cash from X 3,200March 15 Sold goods to Y 4,800March 20 Received commission 650March 20 Paid commission 550March 28 Paid to Shantaram on A/C 7,150March 31 Paid salary to the office clerk 1,000and office rent 600

Solution:In the Books of Shri Shambunath

CASH BOOK Dr.

Cr.Date Particulars L.

FAmount(Rs)

Date Particulars L.F

Amount(Rs)

2012 2012

Mar 1 To balance b/d

15,000 Mar 8 By purchases A/C

3,200

Mar 20 To commission A/C

650 Mar 20

By commission A/C

550

Mar 28

By Shantaram

7,150

Mar 31

By salary A/C 1,000

Mar 31

By office rent A/C

600

Mar 31

By balance c/d

3,150

15,650 15,650

Apr 1 To balance b/d

3,150

Double column Cash BookQ. 1- Enter the following transaction:

2009Sep 1 Cash in hand 7,500

Bank overdraft 3,500Sep 2 Paid wages 200Sep 5 Cash sales 7,000Sep 10 Cash deposited into bank 4,000Sep 15 Goods purchased and paid by cheque 2,000Sep 20 Paid rent 500Sep 25 Drew from bank for personnel use 400Sep 30 Salary paid 1,000

Solution:Dr. Cr.Date Particular

sL.F

Cash Bank Date Particulars

L.F

Cash Bank

2009 2009

Sep 1 To balance b/d

7,500 Sep 1 By balance b/d

3,500

Sep 5 To sales A/C

7,000 Sep 2 By wages A/C

200

Sep 10 To cash A/C c 4,000 Sep 10 By bank A/C

c 4,000

Sep 20 To balance c/d

1,900 Sep 15 By Purchase A/C

2,000

Sep 20

By rent A/C 500

Sep 25

By drawing A/C

400

Sep 30 By salary A/C

1,000

Sep 30 By balance c/d

8,800

14,500 5,900 14,500 5,900

Oct 1 To balance b/d

8,800 Oct 1 By balance b/d

1,900

Q. 2- Record the following in the appropriatebook of original entry.

2009Jan 1 Cash in hand 12,400Jan 1 Bank Overdraft 1,400Jan 3 Deposited into bank 3,000Jan 5 Received cheque from Sharma 5,400Jan 6 Deposited Sharma’s cheque into bankJan 31 Bank Charge 65

Solution:

Dr. Cr.Date Particular

sL.F

Cash Bank Date Particulars

L.F

Cash Bank

2009 2009

Jan 1 To balance b/d

12,400 Jan 1 By balance b/d

1,400

Jan 3 To cash A/C

3,000 Jan 3 By bank A/C

3,000

Jan 6 To cheque in hand A/C (Sharma)

5,400 Jan 31 By bank charge

65

Jan 31 By balance c/d

9,400 6,935

12,400 8,400 12,400 8,400

Feb 1 To balance b/d

9,400 6,935

Simple Petty Cash BookQ.-From the following information, write up

for the 1st week of April 2012:

2012April 1 Received from Chief Cashier for Petty Cash

4000April 2 Bought postage stamps

200April 4 Paid bus fare

120April 5 Purchased stationery for office use

1,000April 6 Paid for milk and sugar for office tea 600April 7 Paid to window cleaner 80

Solution:

Dr. Cr.Amount Received

Cash Book Folio

Date Particulars V. No.

Amount Paid

4,000

2012

Apr 1 To cash A/C

Apr 2 By postage A/C 200

Apr 4 By travelling expenses A/C

120

Apr 5 By stationery A/C 1,000

Apr 6 By office expenses A/C 600

Apr 7 By Miscellaneous expenses A/C

80

By balance c/d 2,000

4,000 4,000

Analytical Petty Cash BookQ.-Prepare an Analytical Petty Cash Book on the Imprest System from the following:

2012Jan 1 Received Rs.1,000 for Petty CashJan 2 Paid bus fare 5Jan 2 Paid cartage 25Jan 3 Paid for postage ant telegram 50Jan 3 Paid wages for casual laborers 60Jan 4 Paid for stationery 40Jan 4 Paid auto charge 20Jan 5 Paid for repairs to chairs 150Jan 5 Bus fare 10

Jan 5 Cartage 40Jan 6Postage and telegrams 70Jan 6 Conveyance charges 30Jan 6 Cartage 30Jan 6 Stationery 20Jan 6 Refreshment to customers 50

Solution:Receipts Date V. No. Particulars Total

PaymentsConveyance Cartage Postage,

Telegrams & Stationery

Wages Sundries

2012

1,000 Jan 1 1 To Cash A/C

Jan 2 1 By conveyance A/C

5 5

2 By cartage A/C 25 25

Jan 3 3 By postage & telegrams A/C

50 50

4 By wages A/C 60 60

Jan 4 5 By stationery A/C

40 40

6 By Conveyance A/C

20 20

Jan 5 7 By repairs of furniture A/C

150 150

8 By conveyance A/C

10 10

9 By cartage A/C 40 40

Jan 6 10 By postage & telegrams A/C

70 70

Jan 6 11 By conveyance A/C

30 30

Jan 6 12 By Cartage A/C 30 30

Jan 6 13 By stationery A/C

20 20

Jan 6 14 By general expenses A/C

50 50

600 65 95 180 60 200

Jan 6 By balance c/d 400

1,000 1,000

400 Jan 8 To balance b/d

600 To cash A/C

Credit purchases of goods dealt in or of materials and stores used in the factory are recorded on the basis of the invoices in the Purchases Book or the Purchase Journal. It means cash purchases of goods other than goods dealt in are not recorded in the Purchases Journal.

Purchase Book/Purchase Journal

Features of Purchases Book1. Credit purchases of goods traded in or material used for

production are recorded in the Purchases Book. Credit purchases of goods or materials not dealt in, such as office furniture or computers for office use are not recorded in the Purchases Book. They are journalized.

2. Cash purchases are not recorded in the Purchases Book since they are recorded in the Cash Book.

3. The entries in the Purchases Book are made on the basis of invoices received from the suppliers with the net amount after Trade Discount (TD).

The ruling of a Purchases Book is as follows: Date

Particulars Invoice No.

L.F

Details Amount

The purchases Book has six columns:

i. Date: In the first column, the transaction date is written.ii. Particulars: In this column, the name of the supplier, name

of the articles and quantities purchased are written.iii. Invoice No.: Invoice number of the goods purchased id

written.iv. L.F: When the Purchases Book is posted to the Ledger, the

page number of the Ledger is written.v. Details: The amount in respect of each article is written in

this column. If the seller has allowed a Trade Discount it is also deducted in this column itself.

vi. The net amount of the invoice is recorded in the extreme right hand column. The total in this column will show the ‘total credit purchases’ made in a period.

Some important Items1. Central Sales Tax2. Value Added Tax (VAT)3. Freight or cartage4. Packing and forwarding expenses

Q. 1-The Rough Book of M/S. Narain & Co. contains the following:

2011February 1 Purchased from M/S. Brown & Co. on credit

5 gross pencils @ Rs.100 per gross 1 gross registers @ Rs.200 per dozen Less: Trade Discount @ 10%

February 2 Purchased for cash from the Stationery Mart: 10 gross exercises book @ Rs.60 per dozen

February 3 Purchased computer printer for office use from M/S. Office Goods Co. on credit for Rs.4,000

Questions

February 4 Purchased on credit from The Paper Co.: 5 reams of white paper @ Rs.100 per ream 10 reams of ruled paper @ Rs.65 per ream Less: Trade Discount @ 10%

February 5 Purchased 1 dozen ink-pots @ Rs.10 each from M/S. Verma Bros. on credit

Prepare the Purchases Book of M/s. Narain & Co.

Solution:Date Particulars L.

FDetails

Amount

2011

Feb 1 M/S. Brown & Co.5 gross pencils @ Rs.100 per gross1 gross registers @ Rs.200 per dozen

Less: Trade Discount @ 10%

5002,400

2,900290 2,610

Feb 4 The Paper Co.5 reams of white paper @ Rs.100 per ream10 reams of ruled paper @ Rs.65 per ream

Less: Trade Discount @ 10%

500650

1,150115 1,035

Feb 5 M/S. Verma Bros.1 dozen ink-pots @ Rs.10 each 120

Feb 28 Purchases A/C …Dr.

3,765

Q.2-Enter the following transactions in Purchases Book of M/S.R.K. Brothers and pass the Journal entry:2011April 1 Purchased goods from Joshi Brothers on credit vide Invoice No.

210:10 Philips tube light @ Rs.40 each, paid VAT @ 10%50 Crompton bulbs @ Rs.10 each, paid VAT @ 10%

April 10 Purchased goods from Rajesh Electric Store vide Invoice No. 18:

25 heaters @ Rs.160 each, paid VAT @ 10% 15 sunny fans @ Rs.600 each, paid VAT @ 10%, 10% TD

April 16 Purchased goods from Sardar Electric Store vide Invoice No. 125: 5 Philips tube light @ Rs.10 each, paid VAT @ 10% 20 power plugs @ Rs.25 each, paid VAT @ 10% The TD is 10% and Freight charges are Rs.75

Solution:Date Particulars L.

FI. No. Detail Cost VAT Freigh

t charg

es

Total

2011Apr 1

Joshi Brothers10 Philips tube light @ Rs.40 each50 Crompton bulbs @ Rs.10 each

Add: VAT @ 10%

210400500

900 90 … 990

90090

990

Apr 10 Rajesh Electric Store25 heaters @ Rs.160 each15 sunny fans @ Rs.600 each

Less: TD @ 10%

Add: VAT @ 10%

184,0009,000

11,700 1,170 … 12,870

13,0001,300

11,7001,170

12,870

Apr 16 Sardar Electric Store5 Philips tube light @ Rs.10 each20 power plugs @ Rs.25 each

Less: TD @ 10%

Add: VAT @ 10%

Add: Freight charges

125600500

990 99 75 1,164

1,100110

99099

1,08975

1,164

Apr 30 Purchase A/C …Dr.

13,590 1,359 75 15,024

Credit sales of goods dealt in by the firm are recorded in a separate register called the Sales Book or Sales Journal. Cash sales are entered in the Cash Book and not in the Sales Book. Credit sales of items other than goods dealt in by the firm are not entered in the Sales Book, they are journalized. Entries in the Sales Book are on the basis of invoices issued to the customers with the net amount after trade discount.

Sales Book/Sales Journal

Features of Sales Book1. Credit sales of goods dealt in are recorded in the Sales

Book. Sale of assets is not recorded in the Sales Book.2. Credit sales of goods other than goods dealt in are not

recorded in the Sales Book. They are journalized.3. Cash sales are not recorded in Sales Book since these are

recorded in the Cash Book.4. Entries are recorded on the basis of invoices.

The ruling for the Sales Book is as shown below:Date

Particulars Invoice No.

L.F Details

Amount

Q.1-Following transactions are of M/S. Kishore & Sons for the month of April, 2011. Prepare their Sales Book:

April 3 Sold to M/S. Gupta & Verma on credit:30 shirts @ Rs.150 each20 trousers @ Rs.300 eachLess: TD @ 10%

April 10 Sold old furniture to M/S. Sehgal & Co. on credit Rs.800April 20 Sold 50 shirts on credit to M/S. Jain & Sons @ Rs.150 eachApril 23 Sold on credit to M/S. Mathur & Jain:

100 shirts @ Rs.175 each 10 overcoats @ Rs.500 each Less: TD @ 10%

Questions

Solution:Date Particulars L.

FDetails

Amount

2011Apr 3 M/S. Gupta & Verma

30 shirts @ Rs.150 each20 trousers @ Rs.300 each

Less: TD @ 10%

4,5006,000

9,450

10,5001,050

Apr 20 M/S. Jain & Sons50 shirts @ Rs.150 7,500

Apr 23 M/S. Mathur & Jain100 shirts @ Rs.175 each10 overcoats @ Rs.500 each

Less: TD @ 10%

17,5005,000

20,250

22,5002,250

Apr 30 Sales A/C …Cr.

37,200

Q.2-From the following transactions, prepare the Sales Book:

2011March 1 Sold to ‘X’, vide Invoice No.2005, 3 chests of tea for Rs.1,800 less TD @ 10%, and VAT is Charged @ 10%March 4 Sold to Mohan & Sons vide Cash Memo No.5785, 20 kg butter @ Rs.150 per kg, less TD @ 5% and VAT is charged @ 10%March 5 Sold to ‘Y’ vide Invoice No.2006, 20 kg Assam Tea @ Rs.60 per kg less TD @ 5%, charged CST @ 10%, freight and packing charges were separately charged in the Invoice at Rs.160March 6 Sold to ‘Z’ vide Invoice No.2007, 20 packs (1 kg) of Darjeeling tea @ Rs.75 per kg less TD @ Rs.100, charged VAT @ 10%

Solution:Date Particulars L.

FInvoice No.

Sale Amoun

t

Trade discoun

t

Net value

CST VAT Freight and

packing

Total

2011Mar 1 X

3 chests of tea, TDallowed 10%, charged VAT 10%

2005

1,800 180 1,620 … 162 … 1,782

Mar 5 Y20 kg Assam tea,TD allowed 5%, charged CST 10%

2006

1,200 60 1,140 114 ... 160 1,414

Mar 6 Z20kg Darjeeling tea, TD allowed Rs.100, charged VAT 10%

2007

1,500 100 1,400 … 140 … 1,540

Mar 31 4,500 340 4,160 114 302 160 4,736

THE END