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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cash Book, Bank Book, Petty Cash Book, Bank Reconciliation Statement

Ravi Traders received a cheque of Rs 9,800 from Mohan in full settlement of Rs 10,000 and deposited it in the bank the same day. In the triple column cash book, the entry on the debit side will be:

Bank is debited with Rs 9,800 actually deposited and the discount column is debited with Rs 200 as discount allowed. The customer's account is credited with Rs 10,000 in total, so the debit side shows bank and discount, not the full amount in bank.

  1. ABank Rs 9,800 and discount Rs 200Correct
  2. BBank Rs 10,000 and discount Rs 200
  3. CCash Rs 9,800 and discount Rs 200
  4. DBank Rs 9,800 only, with discount on the credit side

Explanation

The cheque deposited is Rs 9,800, so the bank column is debited with 9,800. Discount allowed of Rs 200 is a loss and is debited in the discount column. Bank Rs 10,000 would overstate the receipt; discount allowed is not on the credit side.

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