THREE COLUMN CASHBOOK.

Hey Guys, it’s a new day to live and learn. Let’s get straight to work.

Three Column Cashbook is a book that shows or combines Cash, Bank, and Discount on the debit and credit sides. On the debit side of the cashbook is the Discount Allowed column while Discount Received column is on the credit side.

Discount is the reduction in the price of Goods in order to encourage Bulk Purchases and Prompt Payment.

Types of Discount:

1. Trade Discount is an Allowance made by Manufacturers or Wholesalers, to retailers in form of Reduction from price of goods supplied.

2. Cash Discount is a percentage allowance for prompt payment of an account or for payment within a specified period of time.

Classification of Cash Discount:

1. Discount Allowed is the discount given to the customers for prompt payment of their account. It will be entered on the debit side of the three column cashbook and be credited to the personal account of the customer.

2. Discount Received This is the discount received from suppliers for prompt payment of their account. It is credited to the discount received column on the three column cashbook and debited to
the personal account of the supplier.

EXAMPLE 1:

Write up a three column cashbook from the following details of the year 2012.

Jun 1-Balance brought forward, Cash in hand N500, Cash at Bank N13,000.

Jun 2- Received a cash loan of N500 from Prince.

Jun 3- Bought goods for cash N460.

Jun 4- Bought Motor van paying by cheque N150.

Jun 5- Cash withdrawn from the bank N300.

Jun 7- Paid wages in cash N70.

Jun 8- Cash Drawings N100.

Jun 10- Cash Sales paid directly to the bank N980.

Jun 12- We paid the following accounts by cheque less 10% discount in each case- Ben N200, Ariel N250, Eunice N340.

Jun 13- The following paid us their accounts by cheque in each cash deducting 2^1/2% discount- Bobby N200, Theresa N360.

Jun 15- Received a further loan of N50 from Prince by cheque.

Jun 16- We paid Zidanne his account of N90 by cheque.

Jun 18- Cash Sales N200.

Jun 21- Paid rent in cash N18.

Jun 23- Received commission by cheque N120.

Jun 25- The following persons paid us their accounts by cheque in each case deducting 5% discount- Arthur N500, Sally N120, Jack N440.

Jun 26- We paid the following accounts by cheque, in each case deducting 2% discount- Tracy N600, Josh N500, Victor N300.

Jun 28- Paid Insurance by cash N60.

Jun 29- Kenya paid us a cheque of N78 having deducted N2 cash discount.

Dr Three Column Cash Book. Cr
Date Particulars F Cash Bank Discount Date Particulars F Cash Bank Discount
Allowed Received
Jul 1 Bal b/f 500 1300 Jul 3 Purchases 460
Jul 2 Prince 500 Jul 4 Motor Van 150
Jul 5 Bank c 300 Jul 5 Cash c 300
Jul 10 Sales 980 Jul 7 Wages 70
Jul 13 Bobby 195 5 Jul 8 Drawings 100
Jul 13 Theresa 351 9 Jul 12 Ben 180 20
Jul 15 Prince 50 Jul 12 Ariel 225 25
Jul 18 Sales 200 Jul 12 Eunice 306 34
Jul 23 Commission 120 Jul 16 Zidanne 90
Jul 25 Arthur 475 25 Jul 21 Rent 18
Jul 25 Sally 114 6 Jul 26 Tracy 588 12
Jul 25 Jack 418 22 Jul 26 Josh 490 10
Jul 29 Kenya 78 2 Jul 26 Victor 296 6
Jul 28 Insurance 60
Bal c/f 792 13,158
1500 15781 69 1500 15781 107
Bal b/d 792 13158

This concludes our session for today, the key to understanding it is to practice on your own. Answer questions on your own and it would be more clear to you. Until we meet again, remain ever blessed.