This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
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To record the transactions in a Three Column Cash Book, we will list all cash and bank receipts on the debit side and all cash and bank payments on the credit side. The three columns refer to Discount Allowed, Cash, and Bank. Step 1: Record the opening balances. On March 1, 2026, the business had a cash balance of K3,680,000.00 and a bank balance of K76,590,000.00. These are recorded on the debit side as 'Balance b/d'. Step 2: Record transactions for March 2. Customers R Banda, E Tobwa, and C Chola paid their accounts by bank transfer, each deducting a 5% cash discount. R Banda: Amount due K2,240,000.00. Discount = 0.05 × K2,240,000.00 = K112,000.00. Amount received = K2,240,000.00 - K112,000.00 = K2,128,000.00. E Tobwa: Amount due K3,520,000.00. Discount = 0.05 × K3,520,000.00 = K176,000.00. Amount received = K3,520,000.00 - K176,000.00 = K3,344,000.00. C Chola: Amount due K4,800,000.00. Discount = 0.05 × K4,800,000.00 = K240,000.00. Amount received = K4,800,000.00 - K240,000.00 = K4,560,000.00. These amounts are debited to the Bank column and the respective discounts to the Discount Allowed column. Step 3: Record transactions for March 4, 6, 8, 10, 12, 15. Mar 4: Paid rent of K1,920,000.00 through the bank. This is a credit to the Bank column. Mar 6: Received a loan of K16,000,000.00 from J Kantu via bank. This is a debit to the Bank column. Mar 8: Paid creditors N Bwalya, P Tailoka, and C Wamulume via bank transfer, deducting a 5% cash discount. N Bwalya: Amount due K5,600,000.00. Discount = 0.05 × K5,600,000.00 = K280,000.00. Amount paid = K5,600,000.00 - K280,000.00 = K5,320,000.00. P Tailoka: Amount due K7,680,000.00. Discount = 0.05 × K7,680,000.00 = K384,000.00. Amount paid = K7,680,000.00 - K384,000.00 = K7,296,000.00. C Wamulume: Amount due K12,800,000.00. Discount = 0.05 × K12,800,000.00 = K640,000.00. Amount paid = K12,800,000.00 - K640,000.00 = K12,160,000.00. These amounts are credited to the Bank column and the respective discounts to the Discount Received column. Mar 10: Paid motor expenses of K704,000.00 in cash. This is a credit to the Cash column. Mar 12: B Hansengele paid K1,184,000.00 via bank transfer in full settlement of his K1,232,000.00 account. Discount allowed = K1,232,000.00 - K1,184,000.00 = K48,000.00. This is a debit to the Bank column and Discount Allowed column. Mar 15: Paid wages of K2,560,000.00 in cash. This is a credit to the Cash column. Step 4: Record transactions for March 21, 24, 25, 29, 31. Mar 21: Cash withdrawn from the bank for business use K5,600,000.00. This is a contra entry (C). Debit Cash column and credit Bank column. Mar 24: Cash drawings of K1,920,000.00. This is a credit to the Cash column. Mar 25: Paid T Muchona K2,128,000.00 in cash in full settlement of his K2,240,000.00 account. Discount received = K2,240,000.00 - K2,128,000.00 = K112,000.00. This is a credit to the Cash column and Discount Received column. Mar 29: Bought fixtures for K10,400,000.00 by bank transfer. This is a credit to the Bank column. Mar 31: Received commission of K1,408,000.00 by bank. This is a debit to the Bank column. Step 5: Calculate totals and balances. Sum all entries in each column. Then, calculate the closing balances for Cash and Bank by subtracting the total credits from the total debits for each column. The completed Three Column Cash Book is as follows: |l|l|l|r|r|r||l|l|l|r|r|r| Date & Particulars & Folio & Disc. Allowed (K) & Cash (K) & Bank (K) & Date & Particulars & Folio & Disc. Received (K) & Cash (K) & Bank (K) \\ Mar 1 & Balance b/d & & & 3,680,000.00 & 76,590,000.00 & & & & & & \\ Mar 2 & Debtors (R Banda) & & 112,000.00 & & 2,128,000.00 & Mar 4 & Rent & & & & 1,920,000.00 \\ Mar 2 & Debtors (E Tobwa) & & 176,000.00 & & 3,344,000.00 & Mar 8 & Creditors (N Bwalya) & & 280,000.00 & & 5,320,000.00 \\ Mar 2 & Debtors (C Chola) & & 240,000.00 & & 4,560,000.00 & Mar 8 & Creditors (P Tailoka) & & 384,000.00 & & 7,296,000.00 \\ Mar 6 & Loan from J Kantu & & & & 16,000,000.00 & Mar 8 & Creditors (C Wamulume) & & 640,000.00 & & 12,160,000.00 \\ Mar 12 & B Hansengele & & 48,000.00 & & 1,184,000.00 & Mar 10 & Motor Expenses & & & 704,000.00 & \\ Mar 21 & Bank (Contra) & C & & 5,600,000.00 & & Mar 15 & Wages & & & 2,560,000.00 & \\ Mar 31 & Commission Received & & & & 1,408,000.00 & Mar 21 & Cash (Contra) & C & & & 5,600,000.00 \\ & & & & & & Mar 24 & Drawings & & & 1,920,000.00 & \\ & & & & & & Mar 25 & T Muchona & & 112,000.00 & 2,128,000.00 & \\ & & & & & & Mar 29 & Fixtures & & & & 10,400,000.00 \\ Totals & & & 576,000.00 & 9,280,000.00 & 105,214,000.00 & Totals & & & 1,416,000.00 & 7,312,000.00 & 42,696,000.00 \\ & & & & & & Mar 31 & Balance c/d & & & 1,968,000.00 & 62,518,000.00 \\ Totals & & & 576,000.00 & 9,280,000.00 & 105,214,000.00 & Totals & & & 1,416,000.00 & 9,280,000.00 & 105,214,000.00 \\ Apr 1 & Balance b/d & & & 1,968,000.00 & 62,518,000.00 & & & & & & \\ The final balances are: Cash: K1,968,000.00 Bank: K62,518,000.00 Send me the next one 📸