TERM: 2nd TERM

SUBJECT: BUSINESS STUDIES

CLASS: JSS 2

REFERENCE

WABP Junior Secondary Business Studies 2 by Egbe Ehiametalor et’al.

WEEK TEN

TOPIC: CASH BOOK

CONTENT

Meaning
Types of cashbook
Single column
Two column
Items on a cashbook
Cash column
Bank column
Discount column

THE MEANING OF CASH BOOK

The cashbook is a book of account which is used to record all money received and all money paid out within a period of time. Cash consists of bank notes, coins and cheque. A cash book serves a dual function of a ledger account and a book of original entry.

THE NATURE OF THE CASHBOOK

The cashbook has two sides. The left-hand side (i.e. the debit side) and the right-hand side (i.e. the credit side)

The debit side of the cash book is the receiving side while the credit side of the book is the giving side. When an organization receives money, this will be recorded on the debit side of the cash book. However, when the organization gives out money, a record of such money is made on the credit side of the cash book. Thus, satisfying the double entry principle of credit the giver and debit the receiver.

TYPES OF CASHBOOKS

There are three types of cashbooks namely (i) the simple cash Book (i.e. one Column cashbook (ii) the Two-Column cash book (i.e. Double Column Cashbook) (iii) The Three Column Cashbook.

SINGLE COLUMN CASHBOOK

This is the type of cashbook kept by some petty traders. In most cases, these traders do not keep any account with the bank. All receipts from trading are kept at home.

The simple cash book has a single column on the debit side for cash receipts and another single column on the credit side for cash payments. It is therefore called a one-column cash book. Its format is as shown below.

DR CR

Date	Particulars	Folio	Amount	Date	Particulars	Folio	Amount

EVALUATION

Why is the cashbook both a book of original entry and a ledger account?
Mention the three types of cashbook we have.

READING ASSIGNMENT

Spectrum Business Studies for JS2 pg 69

Business Studies for JS2 by lawal et’al pg42-46.

Balancing Cashbook:

Add up the figures on the debit side of the cashbook
Add up the figures on the credit side of the cashbook.
Determine the difference between the figures obtained in (1) and (2) above
On the side with the lower figure, write ‘balance c/d’ which is just the amount necessary to equalise the two totals.
Bring down the ‘balance c/d’ to the next period as balance b/d
Write down the total of the credit and the total of the debit on the same line.

PREPARATION OF A SINGLE COLUMN CASH BOOK

AN ILLUSTRATION

Mr. Aluko commenced business on 1 March 2003, with a capital of N2, 000,000.00

March 2. Bought in cash some calculators for resale N500, 000.00

March 3. Paid in cash for office pins bought for resale N250, 000.00

March 4. Received from J. Rowland, a customer, cash for goods sold N300, 000.00

March 6. Received from N. Malo, another customer, cash for goods sold N200, 000.00

March 10. Paid cash for energy bill N55, 000.00

March 15. Paid cash for advertisements N75, 000.00.

Aluko’s transactions can be recorded in the two sides of the cashbook as follows:

Date	Particulars	Folio	Amount	Date	Particulars	Folio	Amount
1/3/03	Capital	5	2,000,000.00	2/3/03	Purchases	19	500,000.00
4/3/03	J Rowland	8	300,000.00	3/3/03	Purchases	38	250,000.00
6/3/03	N. Malo	18	200,000.00	10/3/03	Energy bill	70	55,000.00
				15/3/03	Advertise- ment	92	75,000.00
					Bal c/d		1,620,000.00
			2,500,000.00				2,500,000.00
1/4/03	Bal b/d		1,620,000.00

EVALUATION QUESTIONS

What are the steps involved in balancing a cashbook?
Draw out the formats of (a) single column and (b) double column cashbooks.

PREPARATION OF DOUBLE COLUMN CASHBOOK WITH CONTRA ENTRY

This type of cashbook is maintained in businesses which operate both cash and bank transactions. It has a column each for cash and bank transactions. The two columns are located on both the debit and credit sides of the cashbook.

When money is received, either in cash or by cheque, the cash column which receives is debited and the cash column which gives is credited. This type of entry which involves the payment of cash into the bank is called a contra entry. It is usually indicated as C in the folio column. It means the transfer of an item from one side of the account to an identical side of another account.

The format of a two column cash book is shown below:

Dr. Cr.

Date	Particulars	Folio	Cash	Bank	Date	Particulars	Folio	Cash	Bank

An Illustration:

Record the transactions of Mr. Hassan two column cash book. Balance the cashbook. Bring down balances of cash at hand and cash in bank at the end of the period.

2004

Feb. 2 Paid N3,000,000.00 into the business as capital

Feb. 4 Paid N200,000.00 of the working capital into a bank

Feb. 10 Made cash purchases of N70,000.00

Feb. 17 Made cash sales of N90,000.00

Feb. 20 Made purchases by cheque N70,000.00

Feb. 27 Made cash sales of N70,000.00

Feb. 28 Expenses for office paid in cash N90,000.00

Feb. 29 Cash paid into bank N200,000.00

Feb. 30 Salary of attendant paid by cheque N30,000.00

DR HASSAN’S TWO COLUMN CASH BOOK CR

Date	Particulars	Folio	Cash	Bank	Date	Particulars	Folio	Cash	Bank
2/2/04	Capital		3,000,000		4/2/04	Bank	C	200,000
4/2/04	Cash			200,000	10/2/04	Purchases		70,000
17/2/04	Sales		90,000		20/2/04	Purchases			70,000
					28/2/04	Office Exp.		90,000
27/2/04	Sales		70,000
29/2/04	Cash			200,000	29/2/04	Bank	C	200,000
					30/2/04	Salary			30,000
					30/2/04	Bal. c/d		281,000	30,000

References

Spectrum Business Studies For JSS2. Pages 71 and 7

Business Studies for JSS2 Lawal et al. Pages 4 and 47

EVALUATION

What is Contra Entry?

WEEKEND ASSIGNMENT

Record the following transactions in a two-column cash book. Balance the cashbook and bring down the balance of cash in hand and cash at bank at the end of the period. Do not prepare other ledger accounts.

Mr. Ahmed.

July 2 introduced N5,800 cash into the business as capital

July 4 Paid N3,700 of the capital into the bank

July 10 Purchased goods worth N600

July 15 Cash sales N900

July 20 Purchased goods worth N1,400 by cheque

July 25 Cash sales totaling N1,300

July 28 Office expenses paid for in cash N60

July 29 Cash paid into bank N2,000

July 30 Wages paid by cheque N150

READING ASSIGNMENT

(1) Spectrum Business studies for JSS Book 2 Page 69

(2) Business studies for JSS 2 by Lawal et al page 42 -46.

GENERAL EVALUATION

Mention two types of office we have.
What department is responsible for payment of staff salary?
Explain the three types of trade.
Write out the first six consonant of pitman shorthand.
List seven aids to trade.

WEEKEND ASSIGNMENT

…… …….. is used to record all money received and paid out within a period of time (a) minute book (b) cash payment (c) cash book (d) cash received.
There are …… types of cash book. (a) 2 (b) 3 (c) 4 (d) 5.
All petty traders keep their cash receipts in the bank (a) Yes (b) No (c) Let me go home and ask (d) I think so.
There are …………. Sides to a cash book (a) 2 (b) 3 (c) 4 (d) 5.
All money paid out are recorded in the ………….side of the Cash book.

(a) debit (b) credit (c) side (d) upward

All money received are recorded on the …….side of the cash book (a) credit (b) debit (c) upward (d) downward.

THEORY

Mr. Ahmed.