The Three – Column Cash Book

This is similar to the two column cash book except that the discount column is added to both the debit side and the credit side. The debit side, it will be recalled, records receipts while the credit side records payments. The purpose of the discount column in the debit side is, therefore, to record discounts which are allowed to customers when the business receives cash from them. Similarly, the discount column on the credit side is for discounts which the business receives from its suppliers when payments are made to them.

Example

The cash book of S. Essien is maintained with cash bank and discount columns. During the month of March, 19×9, the following transactions took place.

March 1. Cash balances in hand N100, and at bank N1,220.

March 2. Paid J. Okonedo by cheque N105 in full settlement of his account for N110.

March 5. Cash purchases N48, and purchases by cheque N850.

March 10. Cash sales N780

March 12. Cash paid into bank N560

March 15. Received cheque from M. Dantata N650 on account.

March 18. Received cheque from j. Robens N65 in full settlement of his account for N68.

March 23. Paid N650 into bank.

March 26. Cash sales N400

March 28. Drew cash from bank for office use N200.

You are required to balance the cash book and bring down the balances of cash in hand and at bank on 31^st March, 19×9.