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In a three-column Cash Book, Meera Stores received Rs 9,700 in cash from debtor Kiran in full settlement of Rs 10,000 owed by him. How is this recorded?

The receipt is recorded on the debit side of the Cash Book, with Rs 9,700 in the cash column and Rs 300 in the discount allowed column against Kiran's name. Kiran's account is credited Rs 10,000 in total, since discount is a loss to the firm.

  1. ADebit side: Cash Rs 9,700 and Discount Allowed Rs 300 as column entries against Kiran's nameCorrect
  2. BCredit side: Cash Rs 9,700 and Discount Received Rs 300
  3. CDebit side: Cash Rs 10,000 and Discount Allowed Rs 300
  4. DCredit side: Cash Rs 10,000 and Discount Allowed Rs 300

Explanation

Receipt from a debtor goes on the debit side. Cash column shows Rs 9,700 received and discount column shows Rs 300 allowed (an expense/loss to the firm). Kiran's account is credited with Rs 10,000 in total when posted. Showing cash as Rs 10,000 would overstate cash by Rs 300.

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