DK Goel Solutions Class 11 Accountancy Chapter 11 Books of Original Entry Cash Book

Short Answer Questions

Question 1. What is Sub-division of Journal?

Solution  1: It is convenient to maintain a separate book for each such class of transactions-one to record cash transactions, another to record credit purchase of goods and yet another to record credit sale of goods. All of these books are called the books of original entry or primary entry or subsidiary books - it is a special form of Journal, a sub-division of Journal.

Question 2. Name the various books of original entries.

Solution  2: Below are the books of original entries:-

1. Cash Book
2. Purchases Book
3. Sales Book
4. Purchases Return Book
5. Sales Return Book
6. Bills Receivable Book
7. Bills Payable Book
8. Journal Proper

Question 3. Elucidate the following statements:-

(a) ‘Only cash transactions are recorded in Cash Book’.

(b) ‘Cash Book is both Journal and Ledger’.

Solution  3: (a) Only Cash transactions are recorded in Cash Book because only cash or bank related transactions are recorded in this book. Also Cash Book always shows a debit balance. Cash Column in the Cash Book cannot show a credit balance because cash payments cannot exceed cash receipts. At best, it can show nil balance when total cash receipt are equal to total payment.

(b) Cash Book is both Journal and Ledger because cash Book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period. Generally, it is made on monthly basis. This is a very popular book and is maintained by all organisations, big or small, profit or not-for-profit. It serves the purpose of both journals as well as ledger account.

Question 4. How does a Cash Book serve ‘Dual Purpose’?

Solution  4: Cash book plays both roles as an original books and a ledger. Cash Book serves the dual purpose or both books of original entry and the Ledger. When we are make cash book no need to make a separate cash account. A transaction is only to be recorded in cash book or cash account if there is either inflow or outflows of cash. Thus cash book serves dual purpose. 

Question 5. What is Contra entry? How will you recognise it from among other entries in Cash Book? 

Solution  5: Some transactions are recorded in a Two-Column Cash Book which relate to both cash and bank, i.e., balance of one will decrease and the other will increase due to such transactions. Such transactions are entered on both sides of the Cash Book. Such entries are knows as Contra Entries. Let us take an example to understand it better.

(a) Cash deposited into the Bank 10,000: In this transaction, Bank Account is to be debited and Cash Account is to be credited. Debit aspect is recorded on the debit side of the Bank Column and credit aspect is recorded on the credit side of Cash Column.

(b) Cash withdrawn from Bank for Office Use 1,000: In this transaction Cash Account is to be debited and Bank Account is credited. Debit aspect is recorded on the debit side of the Double Column Cash Book in the Cash Column and credit aspect is recorded on the credit side of the Double Column Cash Book in the Bank Column.

Against such entries, the letter 'C' is written in the L.F. column to indicate that these are contra transactions and are not posted into the Ledger Account.

Question 6. State three advantages of Sub-Division of Journal.

Solution  6: The three advantages of Sub-Division of Journal are:-

(i) Division of work according to ability.

(ii) Easiness in posting.

(iii) Time Saving

Question 7. Explain how the following transactions would be recorded in a Cash Book with Cash and Bank Columns?

(i) Deposit of Cash into Bank

(ii) Withdrawal of money from Bank for office use.

(iii) Deposit of cheque (received from other) into Bank.

(iv) Dishonour of cheque deposited into Bank.

Solution  7: (i) Deposit of Cash into Bank:-

Journal entry:

Bank a/c Dr.

To Cash A/c

In the above transaction both the account are affected a cash account and bank account. Hence it is contra entry because cash and bank both accounts is affected on same time. The cash account is credited this shows by recording the amount in the cash column of the cash book on the credit side to show a decrease in the asset of cash and the bank account is debited and this is shown by recording a debit in the bank column of the cash book.

(ii) Withdrawal of money from bank for office use:-

Journal entry:

Cash a/c Dr.

To Bank A/c

In the above transaction both the account are affected a cash account and bank account. Hence it is contra entry because cash and bank both accounts is affected on same time. The bank account is credited this shows by recording the amount in the bank column of the cash book on the credit side to show a decrease in the asset of cash and the cash account is debited and this is shown by recording a debit in the cash column of the cash book it show the increase in the cash.

(iii) Deposit of cheque (received from other) into Bank:-

In this case we should pass a journal entry in Journal proper.

Cheque-in-hand A/c

To Debtors A/c

On the debit side "To Cheque-in-hand a/c" and on credit side “By Debtors a/c” with the same amount recorded.

(iv) Dishonour of cheque deposited into Bank:-

In this case we should pass a journal entry in Journal proper.

Debtor a/c Dr

To Bank a/c

On the credit side "By Debtor a/c" and amount will be credited into the bank account.

Question 8.

(i) Give the similarities of Cash Book with Journal.

(ii) Give the similarities of Cash Book with ledger.

Solution 8:

(i) Similarities of Cash Book with Journal:-

1. Just like a journal, transactions in the cash book are recorded for the first time from source documents.
2. Just like a journal, transactions in the cash book are recorded date-wise, i.e. in a chronological order, as and when they place.
3. Just like a journal, transactions from cash book are also posted to the relevant accounts in the ledger.
4. Just like a journal, a cash book also contains a ledger folio column.

(ii) Similarities of cash book with ledger:-

1. Form of cash book closely resembles to a ledger account. It has two equally divided sides having identical columns. The left side (receipts side) is the debit side and the right side is the credit side and the right side (payment side) is the credit side.
2. Cash book itself serves as a cash account also and as such when a cash book is maintained, Cash account is not opened is not opened in the ledger. The cash book, hence, is a part of ledger also.
3. Just like a ledger account, the words ‘To’ and ‘By’ are used in a cash book also.
4. It is balanced just like a ledger account.

Question 9. What are Contra Entries? Why these are not posted into the Ledger?

Solution  9: Contra entries means entries which are recorded on both sides of the cash book. These entries are made while depositing or withdrawing cash from the bank. Contra entries are affect the two accounts, Cash Account and Bank Account. These two accounts appear together in the Cash Book only so, the effect of Entries is completed in Cash Book and there is no need to post them in the ledger.

Question 10. Explain the Statement ‘Cash book is a journalised Ledger’.

Solution  10: Cash book is a journalised Ledger, it is a journal since cash and bank transactions are first recorded in it and a ledger since it serves the purpose of a cash account also. When a cash book is prepared, no separate Cash Account is opened in the ledger.

Question 11. Distinguish between Cash Book and Cash A/c.

Solution  11: Cash Book:- Cash Book is a book of prime entry in which cash and bank transactions are recorded in a chronological order, i.e., as they occur. Cash receipts are recorded on the debit side of the Cash Book and cash payments on the credit side. A balance is struck by deducting the total cash payments from the total cash receipts to know the cash in hand necessary and useful information.

Cash Account:- A cash account is a ledger account used for record day to day cash transactions of the business. On the debit side of the account cash receipts are recoded and or other side cash payments are recorded. Cash Account is an account which is traced cash transactions of the company. Cash book is a type of ledger.

Question 12. What is a Petty Cash Book?

Solution  12: Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made.

Question 13. Prepare a proforma of Petty Cash Book with imaginary figures.

Solution  13:

Question 14. What is an imprest system of Petty Cash Book?

Solution  14: The imprest system of Petty Cash is explained below. Under this system, an estimate is made of amount required for petty expenses for a certain period (say for a week, a fortnight or a month). The amount so ascertained is given to the petty cashier in the beginning of a period and is reimbursed the amount paid by him during the period. Thus, he will again have the fixed amount in the beginning of the new period. This amount is called imprest money. This system of paying advance in the beginning and reimbursing the amount spent from time to time is called imprest system.

Practical Questions

Question 1.  Enter the following transactions in a Single Column Cash Book∶−

2020                                                                                              (Rs.)

1               Commenced business with cash                                 25,000

3               Bought goods for Cash                                             10,000

3               Paid Carriage                                                            200

4               Sold goods for Cash                                               6,000

10            Received from Ram                                                1,000

12            Paid to Shiv Kumar                                                 2,600

15             ash Sales                                                              8,400

18            Purchased furniture for cash for office                     5,000

20            Paid for Advertisement                                            500

20            Purchased goods from Mahesh on credit                 6,000

24            Paid to Mahesh                                                    4,000

25            Paid Wages                                                            400

27            Received for Commission                                    1,500

28            Withdrew for personal use                                  2,200

31            Paid salary                                                           700 

Solution 1:

Point of Knowledge:-

The Balancing of cash book done like any other account. Debit Column (Receipt column) is always greater than the Credit Column(payment column).

Question 2.         Enter the following transactions in M/s Mukerjee & Bros. Single Column Cash Book:

2020                                                                                      (Rs.)

1            Balance of Cash in hand                                       50,000

3            Purchased goods for cash                                     22,000

7            Purchased goods                                                 15,000

10          Purchased goods from Gopi                                  30,000

13          Purchased goods from Gopi for cash                     10,000

15          Sold goods                                                         20,000

18          Sold goods to Vishwakarma                                45,000

20          Sold goods to Raghunandan for cash                   18,000

25          Received commission                                         5,000

30          Paid Rent                                                            

Solution 2:

Point of Knowledge:-

In the cash book only cash transaction are recorded. Credit transactions are not recorded.

The debit side is always greater than the credit as payments are never exceeds the cash available.

Question 3. Enter the following transactions in a Single Column Cash Book:-

2019

Feb.                                                                                          (Rs.)

1                  Mr. Vipin commenced business with Cash                2,00,000

3                  Opened a Bank Account and deposited                    75,000

5                  Purchased goods for Cash                                      30,000

7                  Purchased goods                                                   15,000

10                Purchased goods from Surya Kant                           40,000

12                Paid to Surya Kant                                                 38,800

                    Discount received                                                   1,200

15                Paid Wages in Cash                                                22,500

16                Paid to casual labour                                                 1,500

20                Sold goods to Dev Raj for Cash                             80,000

25                Paid electricity bill in Cash                                     12,000

26                Withdrew Cash from Bank                                     40,000

27                Received for Cash sales                                           5,000

27                Paid for miscellaneous expenses                                   500

Solution 3:

Point of Knowledge:-

The Balancing of cash book done like any other account. Debit Column(Receipt column) is always greater than the Credit Column(payment column).

Question 4.         Enter the following transactions in a Single Column Cash Book:-

2019                                                                                                                                         (Rs.)

Dec. 1           Cash-in-hand                                                                                                25,000

2                     Cash Sales (CGST 6%, SGST 6%)                                                             40,000

4                     Received from X on behalf of Y                                                                   4,000

9                     Paid to Som Pal                                                                                        4,900

                       Discount Received                                                                                      100

12                  Received from Vijay Kumar                                                                     7,800

                       and discount allowed                                                                                200

20                  Bought goods for Cash (CGST 6%, SGST 6%)                                        20,000

21                  Paid Cartage (CGST 6%, SGST 6%)                                                         1,000

23                  Remitted to Dharamvir                                                                            1,880

                       and discount allowed by him                                                                     120

25                  Received M.O. from Mohan                                                                        500

27                  Borrowed from Mahabir                                                                          7,500

29                  Received from Bhushan                                                                           3,900

                       discount allowed                                                                                         100

31                  Paid to Lalit Rs.  2,700 in full settlement of his account of Rs.  3,000 

Solution 4:

Point of Knowledge:-

Cash book is maintained to record only cash transaction so, the credit purchases are not recorded in the cash book.

Question 5.         Enter the following transactions in a Single Column Cash Book of M/s Suchitra Sen & Co.

Solution 5:

Point of Knowledge:-

Cash Book is a book of prime entry in which cash and bank transactions are recorded in a chronological order, i.e., as they occur. Cash receipts are recorded on the debit side of the Cash Book and cash payments on the credit side. A balance is struck by deducting the total cash payments from the total cash receipts to know the cash in hand necessary and useful information.

Question 6.   Write up Cash Book of Bhanu Partap with Cash and Bank Columns from the following transactions:−

Solution 6:

Point of Knowledge:-

Contra Entry is an entry which includes both Cash & Bank Account and it is recorded in both debit & credit side of the double column cash book. When a contra entry posted in cash book there is a reference column, the letter “C” is written this denotes that the entry is a contra entry. This entry will not be posted to any ledger account.

Question 7. Prepare Two Column Cash Book from the following transactions and balance the book on 31st Jan., 2020:-

Solution 7:

Question 8. (A)  Enter the following particulars in the Cash Book with Cash and Bank columns:−

2016       

April 1    Balance of cash in hand Rs.  2,000 and at Bank Rs.  12,000.

3               Received cash from Madhav Rs.  1,800.

5               Cash Sales Rs.  1,000

6               Purchases by cheque Rs.  745.

9               Paid into Bank Rs.  1,850.

10            Paid cash for freight Rs.  54.

12            Drew from Bank for office use Rs.  600.

13            Issued a cheque in favour of M/s Arun & Sons for Rs.  985.

16            Paid into Bank Rs.  715.

17            Drew Cash for his son’s birthday party Rs.  175.

19            Received a cheque from Navin for Rs.  380 and deposited it into bank on the same day.

20            Cash Sales Rs.  200.

25            Drew from Bank for office use Rs.  200.

26            Purchased furniture for Rs.  1,000 and payment made by cheque.

27            Navin’s cheque dishonoured, Bank charges Rs.  5.

29            Purchased business premises, payment made by cheque Rs.  12,000.

30            Received cheque for Rs.  675 from Harish.

Solution 8: (A)

Question 8. (B)  Enter the following transactions in the Cash Book with Cash and Bank Columns:−

Solution 8:

Point of Knowledge:-

When a cheque is received and deposited into the bank on the same day the amount of the cheque is entered in the bank column on debit side.

When a cheque is received and does not represent on the same day, the amount of the cheque is entered in the cash column.

Question 9. Enter the following transactions in the Cash Book with Cash and Bank Columns ∶−

Solution 9:

Working Note:-

1. On 20^th April, Entry for Credit sales of Rs. 80,000 plus CGST and SGST @ 6% each will he recorded in journal.

Question 10.

(A) Write the following transactions in a Two Column Cash Book and balance the Cash Book:−

Solution 10: (A)

Working Note:-

1. Cheque received from Prem Mohan on 9^th and from Gopal on 20^th will be recorded through Journal. These will be recorded in the Cash Book on the dates of their deposit into the Bank.

2. Since cheque from Prem Mohan has been dishonoured, the discount previously allowed to him would be withdrawn. Entry for discount will be recorded in Journal.

Question 10. (B)   Prepare a Two Column Cash Book from the following transactions∶−

2020          

May 1         Cash at office Rs.  72.

                  Bank overdraft Rs.  1,250.

4                Received from Prem Chand a cheque for Rs.  1,875 in full settlement of his account of Rs.  1,900. The cheque was banked on the same day.

5                Bought goods and paid by cheque Rs.  500.

6                Narinder settled his account of Rs.  700 by a cheque. This was banked on the same day.

9                Paid to Manohar Lal by a cheque for Rs.  420. Discount received Rs.  80.

12              Cash sales to date Rs.  400 of which Rs.  300 were banked.

17              Sold old typewriter for cash Rs.  320.

20              Received a cheque for Rs.  400 from Naresh in full settlement of his account of Rs.  460. The cheque is endorsed to Suresh on 24th May in full settlement of his account of Rs.  420.

25              Received a cheque from Hari Prakash for Rs.  150. The cheque is endorsed to Raj Prakash on 27th May; Discount received Rs.  30.

28              Withdrew from Bank for office use Rs.  100 and for personal use Rs.  100.

29              WIthdrew (from office) for payment of private bills Rs.  425.

30              Paid by cheque salaries Rs.  160 and rent Rs.  100.

31              Bank charges as per Pass Book Rs.  5.

Solution 10: (B)

Point of Knowledge:-

When a cheque is received and deposited into the bank on the same day the amount of the cheque is entered in the bank column on debit side.

When a cheque is received and does not represent on the same day, the amount of the cheque is entered in the cash column.

Question 11.

(A)   Enter the following transactions in the Two Column Cash Book of Mr. Mohan:-

2018                                                                                                                                                                                               (Rs.)

Jan. 1           Cash in Hand                                                                                                                                                            2,200

                    Cash at Bank                                                                                                                                                          50,000

3                  Purchased goods for Rs. 75,000; Trade Discount 20%; CGST 6%, SGST 6%; Payment made by Cheque 

4                  Sold goods for Rs. 40,000; Trade Discount 15%; IGST 12%; Payment received by Cheque          

5                  Received a cheque from Naresh                                                                                                                               1,000

8                  Cheque received from Naresh endorsed to Suresh in full settlement of his account of Rs. 1,050             

10                Paid Life Insurance premium of Mr. Mohan                                                                                                             100

13                Received a cheque from Pawan in full settlement of his account of Rs. 750.                                                        700

16                Pawan’s cheque returned dishonoured by bank                                               

20                Deposited into Bank, balance of Cash in excess of Rs. 250                                    

Solution 11: (A)          

Question 11. (B)   Enter the following transactions in a Two Column Cash Book:-

Solution 11: (B)     

Calculation of Cash deposit into the Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 50,000 - 29,000 + 450

= 50,000 - 29,450

= 20,550

Question 12.       Enter the following transactions in the Cash Book with Cash and Bank Columns∶−

2019          

June 1        Balance of Cash in Hand Rs. 12,000; Overdraft at Bank Rs. 1,500.

2                  Deposited into Bank Rs. 10,000.

                    Sold goods for Cash Rs. 28,000 and paid half the proceeds into Bank.

3                  Purchased goods for Rs. 7,000 from Manoj & Co. on Credit.

5                  Received a Money Order from Suresh Rs. 500.

8                  Received Rs. 2,800 from Govind. Paid Rs. 1,000 into Bank.

10                Received a cheque for Rs. 7,600 from Subhash in full settlement of Rs. 8,000 dues from him.

12                Settled the account of Manoj & Co. by payment of Rs. 6,600

                    half Cash and half by cheque.

13                Cheque received from Subhash deposited into Bank.

15                Paid for purchase of Machinery by cheque Rs. 20,000.

16                Paid wages for the erection of above Machinery Rs. 1,000.

17                Cheque issued for Rs. 6,000 in favour of Sachdeva & Co. for purchase of furniture.

20                Purchased goods from Kalpana Garments for Rs. 10,500 on credit.

                    Received a Bank Draft for Rs. 4,800 from Damodaran & Co. in full settlement of Rs. 5,000 dues from them. Sent the draft to bank.

24                Bank issued a draft for Rs. 10,000 in favour of Kalpana Garments on our request. Bank charged Rs. 25 for issuing the draft. Account of Kalana Garments was fully settled.

26                Drew from bank for petty cash Rs. 100.

28                Paid salary by cheque Rs. 6,000.

30                Bank Charges Rs. 50 and Interest Rs. 1,620 charged by bank.

                    Deposited into bank the entire balance after retaining Rs. 4,000 at office

Solution 12:

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 28,300 - 14300 + 4,000

= 28,300 - 18,300

= 10,000

Question 13. (A)  Prepare a Cash Book with Cash and Bank Columns from the following transactions:−

2017            

March 1      Cash in hand Rs. 1,800 and at Bank Rs. 11,000.

5                    Received a cheque for commission Rs. 3,960. Cheque was immediately deposited into bank.

7                    Bought goods for cheque Rs. 7,000.

8                    Bought goods for cash Rs. 500.

10                  Purchased a Computer and payment made by cheque of Rs. 5,000.

14                  Paid Trade Expenses Rs. 105.

16                  Paid into Bank Rs. 1,000.

18                  Ramesh who owed us Rs. 500 became bankrupt and paid us 50 paise in a Rs..

20                  Received Rs. 400 from Manohar and allowed him discount Rs. 10.

23                  Withdrew from Bank Rs. 400.

23                  Paid Rs. 300 to Ghanshyam Dass & Co. They allowed us discount Rs. 10.

24                  Received Rs. 2,000 from Hari Ram and deposited the same into Bank.

25                  Withdrew from Bank for private expenses Rs. 300.

27                  Sold goods for cash Rs. 200.

28                  Received cheque for goods sold Rs. 9,000.

29                  Received repayment of a loan of Rs. 5,000 and deposited Rs. 3,000 out of it into Bank.

30                  Bank charges as per Book Rs. 5.

Solution 13: (A)

Working Note:-

Transaction of the 18^th March: The amount of head debts will not be recorded in the Cash Book.

Transaction on 20^th March: It will assume that the cheque has been deposited into the bank on the same day.

Question 13. (B)   From the following transactions, prepare Cash Book with Cash and Bank Columns:−

Solution 13: (B)

Working Note:-

May 6^th : Life Insurance Premium is treated as Drawings.

May 12^th : Entry for receipt of cheque will be recorded in Journal Proper.

May 15^th : To cheque in hand a/c Rs. 28,000 in bank column

May 18^th : by Varun Rs. 28,025 in Bank Column, Entry for discount withdrawn Rs. 2,000 will be passed through Journal Proper.  

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 36,700 - 24,200 + 5,000

= 36,700 - 29,200

= 7,500          

Question 14.  Compile a Two Column Cash Book from the following transactions of Kavita Garments∶−

 2019          

Feb. 1        Cash in hand Rs. 7,500; Cash at bank Rs. 8,000.

3                  Received a cheque of Rs. 5,880 for cash sales. Cheque was immediately deposited into bank.

5                  Received two cheques from Kalpna each of Rs. 10,000.

6                  First cheque received from Kalpna is endorsed to Sunita in full settlement of Rs. 10,200.

                    Second cheque is sent to bank for collection.

8                  Second cheque received from Kalpna is returned as dishonoured by the bank.

                    The bank has debited our account with Rs. 20 as bank charges on this cheque.

10                Received cheque from sale of old furniture Rs. 1,950. Next day, the cheque is endorsed to a creditor Ramesh in full settlement of Rs. 2,000 due to him.

12                Purchased goods from Mohan on Credit for Rs. 8,000.

15                Settled Mohan’s account by giving a cheque for Rs. 4,000 and Cash Rs. 3,900.

16                Goods sold to Pawan for Rs. 6,000. He paid the amount in cash immediately after deducting 5/2 % cash discount.

20                Paid salary by cheque Rs. 5,000.

25                Cash sale to date Rs. 50,000 of which Rs. 40,000 banked.

26                Paid electric bill of Rs. 2,000 for January by cheque. Paid Rent for January Rs. 1,500.

27                Cash purchases Rs. 5,000, issued a cheque.

28                Deposited into bank cash retaining Rs. 7,500.

Solution 14:

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 23,350 - 5,400 + 7,500

= 23,350 - 12,900

= 10,450

Question 15.  Prepare a Petty Cash Book on the Imprest System from the following:

2020          

April 1        Received Rs. 10,000 for Petty Cash.

3                  Paid Cartage Rs. 800.

4                  Paid Bus Fare Rs. 400; Speed Post Rs. 200.

6                  Paid for Stationery Rs. 700.

7                  Paid for Courier Services Rs. 300.

9                  Paid for Taxi fare Rs. 800; Wages Rs. 300.

10                Paid for Wages Rs. 400; Charity Rs. 500

11                Paid for Newspaper bill Rs. 600.

12                Paid for soap Rs. 320; Speed post charges Rs. 300.

13                Paid for Postage Rs. 780.

14                Paid for Repairs of Chairs Rs. 500.

15                Paid for Refreshment to customers Rs. 900. 

Solution 15:

Point of Knowledge:-

Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made. If all these payments are recorded in the Cash Book, it will become unnecessarily large. Also, the main cashier will be overburdened with work.

Question 16.   Record the following transactions in a Petty Cash Book with suitable columns. The book is kept on imprest system, amount of imprest being Rs. 4,000.

 2020              

April 1           Petty cash in hand Rs. 540, Received cash to make-up the imprest.

                        Paid for office cleaning Rs. 100.

April 4           Paid railway fare Rs. 320, bus fare Rs. 280, wages Rs. 150.

April 5           Bought shorthand notebooks for office Rs. 370.

April 7           Paid carriage on parcels Rs. 150, paid for wages Rs. 220.

April 10         Bought stamps for Rs. 300, envelopes for Rs. 450 and an accounts register for Rs. 400.

April 12         Paid for repairs Rs. 200, gave tips to office peon Rs. 150.

April 13         Gave charity Rs. 100, served tea to customers Rs. 250.

April 15         Paid for wages Rs. 160, rewards to servant Rs. 100.

Solution 16:

Working Note:-

The imprest system of Petty Cash is explained below. Under this system, an estimate is made of amount required for petty expenses for a certain period (say for a week, a fortnight or a month). The amount so ascertained is given to the petty cashier in the beginning of a period and is reimbursed the amount paid by him during the period. Thus, he will again have the fixed amount in the beginning of the new period. This amount is called imprest money.

Question 17.       Mr. Yadav, the petty cashier of M/s Triputi Traders received Rs.10,000 on April 1, 2016 from the Head Cashier. Following were the petty expenses :−

Solution 17:

Point of Knowledge:-

Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made. If all these payments are recorded in the Cash Book, it will become unnecessarily large. Also, the main cashier will be overburdened with work.

Question 18.  Record the following transactions in a cash book with cash and bank columns:

Solution 18:

Working Note:-

1. For Jan.7 there is no entry in cash book for this transaction.

Question 19.  Enter the following transactions in two Column cash book and find out the cash and bank balance∶

Solution 19: 

Working Note:-

1. Cheque received on Jun.4 has been deposited in bank on Jan. 7. Hence it will not be recorded in cash book on Jan. 4.

2. On Jan. 7 : To Cheques in Hand A/c Rs. 200

On Jan. 7 : Contra entry will pass for Rs. 30

Question 20.  Enter the following transactions in a Cash Book with Cash and Bank Columns:-

Solution 20:

Question 21.  Enter the following transactions in a Cash Book with Cash and Bank Columns∶-

2017        

March 1       Cash in Hand Rs. 15,000; Bank Rs. 8,000

2                Sold goods to X on credit for Rs. 10,000.

5                Sold goods for Rs. 20,000; received cheque from them, discount allowed 212 %

                  Cheque was deposited into bank on 7th March.

10              Purchased goods from Suresh on the terms of 5% Cash discount if the payment is made within 3 days Rs. 20,000.

12              Payment made to Suresh; half in Cash and half by cheque.

14              Received a Bank Draft for Rs. 6,820 from Siya Ram in full settlement of Rs. 7,000 due from him. Sent the draft to th Bank.

16              Settled Pawan’s account of Rs. 5,000 at a discount of 5%.

17              Goods worth Rs. 8,000 were purchased from Sunil on 5th March. Its payment was made today by cheque after deducting 5% cash discount.

18              Withdrawn from Bank Rs. 20,000 and Furniture was purchased for Rs. 15,000; the balanc  taken by the proprietor.

20              Received a cheque from Ravi for Rs. 2,850 in settlement after deducting 5%.

                   Endorsed the cheque to Gopal on 22nd March.

22              Placed an order with ‘Jai Traders’ for goods of the value of Rs. 10,000 and sent a cheque of Rs. 8,000 wih the order.

23              Purchased furniture by cheque of Rs. 6,000.

24              Cash sales Rs. 15,000; half of which deposited into bank.

25              X settled his account by payment of Rs. 10,150; Rs. 150 being the interest charged.

27              Paid rent to Landlord ‘Rakesh’ by cheque Rs. 2,000.

28              Cashed a cheque for Rs. 10,000 and paid salaries in cash Rs. 8,000.

31              Deposited into bank balance of cash in excess of Rs. 5,000.

Solution 21:

Working Note:-

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 42,650 - 22,250 + 5,000

= 42,650 - 27,250

= 15,400

Question 22.  Prepare a Cash Book with Cash and Bank Columns from the following particulars∶−

Solution 22:

Calculation of Cash Deposit into Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 42,650 - 22,250 + 5,000

= 42,650 - 27,250

= 15,400

Question 23. Mr. Lal operates two bank accounts both of which are maintained in the columnar cash book itself. You are required to prepare a proforma of the cash book, record the following transactions therein and draw the closing balances as on 30th June, 2016:

Solution 23:

Point of Knowledge:-

When a cheque is received and deposited into the bank on the same day the amount of the cheque is entered in the bank column on debit side.

When a cheque is received and does not represent on the same day, the amount of the cheque is entered in the cash column.

Question 24. Mr. Chaturvedi maintains two bank accounts. Prepare his columnar cash book from the following particulars:

Solution 24:

Question 25.   Prepare a Cash Book with Cash and Bank columns from the following information for the month of December 2011 in the Books of O'Neil:

2019         

Dec. 1     Cash in Hand Rs.  2,780; Bank Overdraft Rs.  3,125.

2               Cheque worth Rs.  400 issued to the petty cashier.

5               Rs.  350 was paid to Hari & Sons for the supply of stationery on this day.

7               Received a cheque worth Rs.  600 from Pramod against sale of goods.

10            Received Rs.  1,200 for sale of goods.

11            The cheque which was received from Pramod on 7th December was endorsed as favour of Morgan together with Rs.  1,400 in cash.

15            Received Rs.  950 from Sheila.

23            Murarilal paid Rs.  2,000 in cash and Rs.  3,000 in cheque after receiving a discount of Rs.  200 for goods sold to him in November. The cheque was immediately deposited into the Bank.

26            Bought goods worth Rs.  1,700 from Rustom and paid by cheque after receiving a discount of Rs.  170.

30            Interest on overdraft Rs.  50 was charged by the Bank.

30            Cash in excess of Rs.  1,000 was deposited into the Bank.

Solution 25:

Calculation of Cash deposit into the Bank:-

Cash deposit into bank = Balance of cash column of Debit side - Total of Cash Column of Credit side + Cash Balance

= 50,000 - 29,000 + 450

= 50,000 - 29,450

= 20,550         

Question 26.  From the following particulars, prepare a Cash Book with Cash and Bank Columns:

2017        

Jan. 1        Balance of Cash in Hand Rs. 15,000 and Bank Overdraft Rs. 6,000

3              Issued a cheque of Rs. 4,800 to Mr. Black and earned a discount of Rs. 200.

4              Direct deposit by Mr. Kapil in our bank account Rs.3,800. Discount allowed Rs. 200.

5              Given as charity Rs. 100.

7              Issued a cheque of Rs. 500 to the petty cashier.

15            Goods worth Rs. 10,000 were sold to Ganesh on 10th January. Its payment was received today by cheque after deducting 5% cash discount.

16            Deposited the above cheque into Bank.

17            Goods purchased from Raghu for Rs. 8,000. Payment is made after deducting 3% cash discount.

18            Bought postage stamps Rs. 200.

20            Paid Rs. 4,000 by cheque for furniture purchased.

22            Arun who owed us Rs. 6,000 became bankrupt and paid 60 paise per Rs..

24            Collected from Anil Rs. 5,000 in cash and deposited into bank the next day.

24            Cash purchases of stationery Rs. 200.

25            X settled his account of Rs. 7,000 by cheque of Rs. 6,850.

                Cheque was deposited into the bank on 28th January.

27            Settled Y's account of Rs. 8,000 by cheque after deducting therefrom 21212% cash discount.

29            Cash sales for Rs. 10,000, received cheque.

30            Interest charged by bank Rs. 1,500.

Solution 26:

Question 27. Record the following transactions in a Petty Cash Book drawn with suitable columns and then balance the same:

2017                                                                                                                              (Rs.)

Jan. 1            Petty cashier is given a monthly imprest amount of Rs. 10,000. He spent last month Rs. 9,200 and got the balance from the head cashier today.                                                              

Jan. 2            Paid for Wages                                                                             600

Jan. 3            Paid for sundry expenses                                                              100

Jan. 5            Paid for stationery                                                                       700

Jan. 9            Paid for courier charges                                                               200

Jan. 12          Stamps purchased                                                                      750

Jan. 14          Paid wages to casual labour                                                         500

Jan. 16          Stationery purchased                                                                  400

Jan. 19          Paid for general expenses                                                            610

Jan. 20          Paid for cartage                                                                          800

Jan. 22          Paid for advertising                                                                      900

Jan. 24          Paid for postage                                                                          400

Jan. 25          Paid for Taxi Fare                                                                         840

Jan. 27          Paid for entertainment                                                                  600

Jan. 29          Paid for carriage                                                                           500

Jan. 31          Paid for petty repairs                                                                      700

Solution 27:

Working Note:-

The imprest system of Petty Cash is explained below. Under this system, an estimate is made of amount required for petty expenses for a certain period (say for a week, a fortnight or a month). The amount so ascertained is given to the petty cashier in the beginning of a period and is reimbursed the amount paid by him during the period. Thus, he will again have the fixed amount in the beginning of the new period. This amount is called imprest money. This system of paying advance in the beginning and reimbursing the amount spent from time to time is called imprest system.

Question 28.  Enter the following transactions in the petty cash book with appropriate analysis columns:

Solution 28:

Working Note:-

The expiration of the method of posting a Petty Cash Book is explained below as: Petty cash given to the Petty Cashier for small payments is recorded on the credit side of the Cash Book as 'By Petty Cash Account' and is posted to the debit side of the Petty Cash Account in the Ledger. All payments are recorded in the particulars column as 'By Particular Petty Expenses Account' and the amount is posted in the total column along with individual Petty Expenses column.

Question 29. Enter the following transactions in a petty cash book in analytical form. The book is kept on imprest system, amount of imprest being Rs. 5,000.

 2020            

April 3           Petty Cash in hand Rs. 420. Received cash to make-up the imprest.

                    Bought stamps for Rs. 300.

April 5        Paid for office cleaning Rs. 200 and repairs to furniture Rs. 250.

April 7        Paid bus fare Rs. 440, railway fare Rs. 330, wages Rs. 200.

April 8        Paid for charity Rs. 350

April 9        Bought shorthand note book for office Rs. 250, Carriage on parcels Rs. 280.

April 10     Bought envelopes Rs. 450, served refreshment to customers Rs. 150.

April 12     Paid for conveyance Rs. 300. Wages Rs. 200. Stapler pins Rs. 280.

April 15     Gave tips to office peon Rs. 250.

Solution 29:

Working Note:-

Petty Cash Book is the book which is used for the purpose of recording expenses involving petty amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is prepared by Petty Cashier and acts as the Petty Cash Account. It is maintained as in a business besides large payments, number of small payments, such as for conveyance, stationary, cartage, etc., have to be made. If all these payments are recorded in the Cash Book, it will become unnecessarily large. Also, the main cashier will be overburdened with work