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Double Column Cash Book

The Double Column Cash Book is an extension of the single column cash book, with an additional column for discounts on both the debit and credit sides. This allows businesses to track both cash transactions and discount amounts offered or received during the period.

Key Features:

  • Two Columns on Each Side:
  • Cash Column: Records all cash transactions such as cash receipts and cash payments.

  • Discount Column: Records discounts related to transactions with debtors (customers) and creditors (suppliers).

  • Debit Side (Discount Allowed):

  • The debit side discount column records the discount allowed to debtors (customers). This occurs when the business offers a reduction in price to customers who make early payments or for other promotional reasons.

  • Credit Side (Discount Received):

  • The credit side discount column records the discount received from creditors (suppliers). This happens when the business receives a reduction in the amount payable to suppliers for early payment or other negotiated discounts.

Ledger Posting:

At the end of the accounting period, the totals from the discount columns are posted to their respective ledger accounts:

  • Discount Allowed to Customers:

  • The total from the debit side discount column is posted to the Discount Allowed ledger account, with the entry: "To Total As Per Cash Book".

  • Discount Received from Creditors:

  • The total from the credit side discount column is posted to the Discount Received ledger account, with the entry: "By Total As Per Cash Book".

Example:

Suppose a business records the following transactions: - Receives Rs. 10,000 in cash from a debtor, with a discount of Rs. 500. - Pays Rs. 5,000 to a creditor, receiving a discount of Rs. 200.

In the double column cash book: - On the debit side (cash received from debtor): - Cash = Rs. 10,000, Discount = Rs. 500. - On the credit side (cash paid to creditor): - Cash = Rs. 5,000, Discount = Rs. 200.

At the end of the period: - The Rs. 500 discount allowed to the debtor is posted to the Discount Allowed to Customers ledger. - The Rs. 200 discount received from the creditor is posted to the Discount Received from Creditors ledger.

Format for the double-colounm cash book

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Conclusion:

The Double Column Cash Book simplifies the process of recording both cash transactions and discounts. It helps businesses track discounts offered to customers and discounts received from suppliers, providing a comprehensive view of cash flow and discount activity. At the end of the period, the totals from the discount columns are transferred to the respective ledger accounts, ensuring accurate financial records.

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