From the following details write up a three column cash book; balance off at the end of March, 2005 and show…

Question

From the following details write up a three column cash book; balance off at the end of March, 2005 and show the relevant discount accounts as they would appear in the general ledger.

ScanSolve AI Tutor · Accepted Answer

Here is the three-column cash book and the relevant discount accounts.

Prepare the Three-Column Cash Book.
We record all cash and bank transactions, along with any discounts allowed or received.
$\begin{array}{|l|l|l|r|r|r||l|l|l|r|r|r|} \hline \textbf{Date} & \textbf{Particulars} & \textbf{Folio} & \textbf{Disc. All.} & \textbf{Cash} & \textbf{Bank} & \textbf{Date} & \textbf{Particulars} & \textbf{Folio} & \textbf{Disc. Rec.} & \textbf{Cash} & \textbf{Bank} \\ \textbf{2005} & & & \textbf{(D)} & \textbf{(D)} & \textbf{(D)} & \textbf{2005} & & & \textbf{(D)} & \textbf{(D)} & \textbf{(D)} \\ \hline \text{Mar 1} & \text{Balance b/f} & & & 211 & 3984 & \text{Mar 2} & \text{T. Ansumana} & & 4 & & 76 \\ \text{Mar 4} & \text{C. Kwaku} & & & & 98 & & \text{C. Kwesi} & & 13 & & 247 \\ \text{Mar 6} & \text{Cash Sales} & & & & 49 & & \text{D. Kodjo} & & 22 & & 418 \\ \text{Mar 9} & \text{R. Kofi} & & 4 & & 156 & \text{Mar 7} & \text{Insurance} & & & 65 & \\ & \text{J. Apiah} & & 16 & & 624 & \text{Mar 12} & \text{Motor Exp.} & & & 100 & \\ & \text{M. Mansah} & & 13.50 & & 526.50 & \text{Mar 21} & \text{Salaries} & & & & 120 \\ \text{Mar 18} & \text{Cash Sales} & & & 98 & & \text{Mar 23} & \text{Rent} & & & 60 & \\ \text{Mar 28} & \text{R. Addai (Loan)} & & & & 500 & \text{Mar 31} & \text{Stationery} & & & & 27 \\ & & & & & & \text{Mar 31} & \text{Balance c/d} & & & 84 & 5049.50 \\ \hline & \textbf{Totals} & & \textbf{33.50} & \textbf{309} & \textbf{5937.50} & & \textbf{Totals} & & \textbf{39} & \textbf{309} & \textbf{5937.50} \\ \hline \text{Apr 1} & \text{Balance b/f} & & & 84 & 5049.50 & & & & & & \\ \hline \end{array}$
- Note on March 30 transaction: "Transfer all but D500 of cash to bank." The cash balance before this transaction was D84 (D211 + D98 - D65 - D100 - D60). Since D84 is less than D500, it is impossible to transfer cash to the bank and still leave D500 in hand. Therefore, no transfer is recorded for this date.
Calculate Discount Totals.
- Total Discount Allowed (Debit side): $4 + 16 + 13.50 = \text{D}33.50$
- Total Discount Received (Credit side): $4 + 13 + 22 = \text{D}39$
Balance the Cash and Bank Columns.
- Cash Column:
  
  Debit Total: $211 + 98 = \text{D}309$
  
  Credit Total: $65 + 100 + 60 = \text{D}225$
  
  Balance c/d: $309 - 225 = \text{D}84$ (Debit balance)
- Bank Column:
  
  Debit Total: $3984 + 98 + 49 + 156 + 624 + 526.50 + 500 = \text{D}5937.50$
  
  Credit Total: $76 + 247 + 418 + 120 + 27 = \text{D}888$
  
  Balance c/d: $5937.50 - 888 = \text{D}5049.50$ (Debit balance)
Show Relevant Discount Accounts in the General Ledger.
Discount Allowed Account
$\begin{array}{|l|l|l|r||l|l|l|r|} \hline \textbf{Date} & \textbf{Particulars} & \textbf{Folio} & \textbf{Amount (D)} & \textbf{Date} & \textbf{Particulars} & \textbf{Folio} & \textbf{Amount (D)} \\ \textbf{2005} & & & & \textbf{2005} & & & \\ \hline \text{Mar 31} & \text{Sundries (Cash Book)} & & 33.50 & \text{Mar 31} & \text{Balance c/d} & & 33.50 \\ \hline & & & \textbf{33.50} & & & & \textbf{33.50} \\ \hline \text{Apr 1} & \text{Balance b/f} & & 33.50 & & & & \\ \hline \end{array}$
Discount Received Account
$\begin{array}{|l|l|l|r||l|l|l|r|} \hline \textbf{Date} & \textbf{Particulars} & \textbf{Folio} & \textbf{Amount (D)} & \textbf{Date} & \textbf{Particulars} & \textbf{Folio} & \textbf{Amount (D)} \\ \textbf{2005} & & & & \textbf{2005} & & & \\ \hline \text{Mar 31} & \text{Balance c/d} & & 39 & \text{Mar 31} & \text{Sundries (Cash Book)} & & 39 \\ \hline & & & \textbf{39} & & & & \textbf{39} \\ \hline & & & & \text{Apr 1} & \text{Balance b/f} & & 39 \\ \hline \end{array}$

From the following details write up a three column cash book; balance off at the end of March, 2005 and show the relevant discount accounts as they would appear in the general ledger.

Step-by-step solution

Prepare the Three-Column Cash Book.

Calculate Discount Totals.

Balance the Cash and Bank Columns.

Show Relevant Discount Accounts in the General Ledger.

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