Cashbook

It is a record of cash receipts and payment that confirms to the double entry
system.
Cashbook is one of the most important books maintained in a business.
There are various forms cashbook.
First, there is the split between the cash and bank transactions, which leads to a
two-column cashbook.
Second, there is the recognition of discounts received and allowed which are best
captured in the cashbook thus a three-column cashbook.
Third, there is the petty office cash transaction, which by their very nature and for
purpose of control is best, recorded in a separate book, the petty cash book.
And lastly, in some businesses particularly small business, cash may be analyzed in
columns to present the total of each head of receipts and payment of cash. This is
the analytical cashbook.

Two-column cashbook

A business may operate a bank current (business) account through which

business transaction are settled i.e. Receipts may be made by way of
cheque, cash may be deposited to this account and similarly payment may
be made by cheque drawn against the bank account.

A special column must be introduced in the cashbook to account for such

transactions. This leads to a 2 – column cashbook; a column for cash
transactions and a column for transactions through bank.

Each column represents a separate account, cash account and bank account,
each with its own double entry.

Dr Cr

DATE DETAIL F CASH BAN DATE DETAIL F CASH BAN

S K S K
EXAMPLE 1.

The balance in the business a/c of Mr. Ouma as at 1/1 2023 stood at Ksh. 4,000,000.
The cash as at that day was Ksh. 1,000,000. During the month of Jan 2023 the
following transactions took place.
1. 2/1/2023 Paid rent by cheque Ksh. 1,000,000
2. 3/1/2023 Cash sales Kshs. 1,000,000
3. 4/1/2023 Paid for electricity cash sh. 500,000
4. 8/1/2023 Received from credit customers payment by cheque as follows;
Musau 2,000,000
Onyango 4,000,000
Juma 3,000,000
5. 12/1/2023 Paid telephone bill by cheque Ksh. 3,000,000
6. 15/1/2023 Cash sales Ksh. 15,000,000
7. 16/1/2023 Deposited Ksh. 12,000,000 to the bank account.
8. 20/1/2023 Paid suppliers by cheque as follows:
Njoroge 1,000,000
Kamau 3,000,000
Otieno 2,000,000
9. 22/1/2023 Drew Ksh. 2,000,000 from bank for office use.
10. 25/1 2023 Cash purchases Ksh. 1,500,000
11.28/1/2023 Drew for personal use Ksh. 500,000 cash
Required: Draw a two-column cashbook for the month of January 2023
Three column cashbook
Cash receipt from customer may attract a discount (i.e. a cash discount awarded to
encourage prompt payment).
Likewise payment to suppliers may earn a cash discount (i.e. discount received).
Discounts are best captured at the same time and in the same manner as the
corresponding cash transaction.
They are best captured in the Cashbook by introducing a 3 rd column i.e. the discount
column.
EXAMPLE 2

The balance of bank current account of Mr. Nzioka as at 1/1/2022 was Ksh.
6,000,000. At the same time the balance of cash at hand was Ksh. 2,000,000.
Transactions during the month of January were.
1. 2/1/2022 Paid sh. 1,000,000 by cheque for motor vehicle expenses
2. 3/1/2022 Cash sales sh. 3,000,000
3. 4/1/2022 Salaries and wages paid for sh. 2,000,000 cash
4. 8/1/2022 Received from credit customer’s payment by cheque net of
discount as follows.
RECEIPT DISCOUNT
Mwangi 2,000,000 100,000
Maina 4,000,000 200,000
Okumu 3,000,000 150,000
5. 12/1/2022 Paid telephone by cheque Ksh. 3,000,000
6. 15/1/2022 Cash sales Ksh. 15,000,000
7. 20/1/2022 Paid suppliers by cheque net of discount as follows
PAYMENT DISCOUNT
Mutua 1,000,000 100,000
Katua 3,000,000 300,000
Wambua 2,000,000 200,000
8. 21/1/2022 Made Sales of Kshs 12,000,000 which were paid via Cheque.
9. 23/1/2022 Paid suppliers by cheque as follows:
Njoroge 1,000,000
Kamau 3,000,000
Otieno 2,000,000
10.25/1/2022 Cash purchases Ksh 1,500,000
11. 28/01/2022 Drew for personal use sh 500,000 cash.

Required: Draw the three column cashbook for the month of January 2022

Read on the petty cashbook and analytical cashbook