Three Column Cash Book – JSS2 Business Studies Lesson Note (Second Term)

 THREE COLUMN CASH BOOK

This is made up of a cash column, bank column, and discount column on both sides of the cash book.

1. CASH DISCOUNT: This is an allowance received or reduction made when cash is paid promptly. It is classified into discount allowed and discount received.
2. Discount Allowed – This is an allowance or reduction given by the business organization to debtors/customers for prompt payment of cash. It is an expense and is posted to the debit side of the profit and loss account and cash book.
3. Discount Received – This is an allowance or reduction granted by creditors/suppliers to the business organization for prompt payment. It is a revenue item and credited to both the profit and loss account and the cash book.
4. CONTRA ENTRY: This is a situation whereby a double entry for a particular transaction is completed in the same book of account. It is represented by the letter ‘C’ in the folio column.

Three-Column Cash Book

Dr                                                                                                    Cr.

Date Particulars   F    Dis. allo   Cash Bank Particulars   F      Cash Bank

Example: Olowolayemo started the business with #10,000 cash as of 1st Jan. 2014

Jan 3            Paid rent by cash                                        1,500

Jan 5            Paid Insurance by cash                               250

Jan 7            Received cheques from Mutiat   for          3,000

Jan 9            Cash sales #1000 with 5% discount           

Jan 12          Cash purchase 3% discount                        2,000

Jan 15          Paid office expenses by cheque                   400

Jan 18          Paid transport by cheque                           200

Jan 20          Withdraw #1200 from cash into the bank

Jan 25          Purchase goods by cash with 5% discount 1,500

Olowolayemo

Three-Column Cash Book