In this article, we will learn in-depth about the double or two-column cash book including its definition, format, and much more.
What is a double column cash book?
A double-column cash book is one that has two money columns – a cash column and a bank column – on both sides for recording cash and bank transactions.
In this cash book, all cash receipts and bank deposits are recorded on the debit side, while all cash payments and check payments are recorded on the credit side.
The debit balance of a double-column cash book shows how much money a company has in hand and how much money it has in the bank on a given date.
A credit balance of the bank column could indicate a bank overdraft or an excess of withdrawals over deposits.
How do you make a double or two-column cash book?
The method for preparing a double or two-column cash book is nearly identical to the method for preparing a single-column cash book.
To avoid the complexity of posting bank transactions in a single-column cash book, the double-column cash book system was introduced.
All bank transactions are explicitly recorded in bank columns in this cash book. When making a double column cash book, keep in mind that all forms of cash receipts should go in the cash column on the debit side, and all bank deposits should go in the bank column on the debit side.
Cash payments, on the other hand, are recorded in the credit side’s cash column, while check payments are recorded in the credit side’s Bank column.
It is important to note that in a double-column cash book, two accounts, a cash account, and a bank account, are maintained simultaneously. As a consequence, there is no need to prepare a bank account or a cash account in the ledger.
In this section, we’ll learn how to record cash and bank transactions in a double-column cash book.
1.Opening cash in hand and bank balance:
Under the heading balance B/D, cash in hand and cash at the bank are reported in the cash column and then the second column of the double column cash book, respectively.
In the bank column of the credit side, the opening bank credit balance or overdraft, if any, is written.
For example, suppose you had $10,000 in cash and $30,000 in the bank on April 1, 2021.
These should be recorded in the double column cash book as follows:
2. Cash receipts and disbursements:
Cash receipts are recorded in the cash book’s debit cash column, while cash payments are recorded in the cash book’s credit cash column.
For example, a $2,000 cash purchase and a $4,000 cash selling.
Cash transactions should be recorded in the credit side’s cash column $2,000 under the heading purchase account, and cash sales should be recorded in the debit cash column $4,000 under the heading sales account.
The following is a record of this transaction:
3. Cheque receipts:
Cheque receipts are recorded in the debit cash column and are equivalent to cash till deposited into a bank.
For example, a $6,000 check was received from Paul.
The following is a record of this transaction:
4. Payment by cheque:
Cheque payments should be recorded in the cash book’s credit Bank column.
For example, pay Devid $8,000 with a check. Under the heading Devid account, $8,000 should be recorded in the credit Bank column.
The following is a record of this transaction:
5. Cheque receipt deposited in the bank on the same date :
Cheque receipts deposited in the bank on the same day are recorded in the cash book’s Debit Bank column.
If the cheque is deposited the next day, the receipt should be recorded in the debit cash column on the day of receipt, and the deposit in the bank should be recorded in the Debit Bank column under the heading “Cash Account” and the credit cash column under the heading “Bank Account” as a contra entry.
For example, on April 3, 2011, a customer sent a $3,000 check, which was deposited on the same day.
The following is a record of this transaction:
However, if the above check is deposited on April 4, 2011, the following transaction will be recorded:
6. Cash withdrawn from bank for owner’s personal use:
Under the heading “drawings,” the transaction cash withdrawn from the bank for the owner’s personal use should be recorded in the credit cash column.
For example, $800 was withdrawn from the bank for the owner’s personal use and then cashed.
The following is a record of this transaction:
7. Cheque received from vendor and handed it over to creditor:
A $2,000 cheque collected from a customer and handed over to a supplier should be recorded in the debit cash column under the heading “Accounts Receivable” and the $2,000 for handing it over to the supplier should be recorded in the credit cash column under the heading “Accounts Payable.”
The following is a record of this transaction:
8. Cash deposited at bank and cash was withdrawn from bank for office use:
Cash deposits in banks should be recorded in the Bank column of the debit side under the heading cash, and then again in the cash column of the credit side under the heading Bank.
It’s a contra entry. This means that for the same amount of money, both debit and credit are affected.
The transaction cash withdrawn from the bank for office use should be entered in the debit cash column under the heading ‘Bank’ and then again in the credit Bank column under the heading ‘Cash.’
This is also a contra entry since the cash balance rises, debiting the cash column for a specific amount of money, while the bank balance decreases, crediting the Bank column for the same amount of money.
Both sides use the symbol “C” at the end of each entry.
On April 10, 2021, $4000 cash was deposited at a bank. On April 11, 2021, $3000 was withdrawn from the bank.
The following is a record of these transactions:
9. Notes Receivable sent to the bank for collection:
Notes receivable sent to the bank for collection are to be recorded in the debit bank column under the heading ‘Note Receivable’.
For example, a note receivable of $1000 is sent to the bank for collection.
The following is a record of this transaction:
10. Notes Receivable sent to the bank for collection dishonored:
Notes receivable sent to the bank for the collection being dishonored is to be recorded in the credit bank column under the heading ‘Account Receivable’.
For example, note receivable $2000 sent to the bank for collection return dishonored.
The following is a record of this transaction:
11. Cash deposit in the bank by customer:
The customer deposits $3000 directly into the bank account. This should be entered in the debit bank column under the heading “Accounts Receivable.”
The following is a record of this transaction:
12. Bank Interest Credited:
The bank pays a certain rate of interest on bank deposits.
For example, the bank provides $200 as interest on deposit amount.
The following is a record of this transaction:
13. Bank Charge:
For providing services to the clients, the bank charges a fee. This bank charge is recorded in the credit bank column of the cash book.
For example, a bank charges $100 as a bank fee.
The following is a record of this transaction:
How many columns are there in the double or two-column cash book?
A double or two-column cash book has a total of twelve (12) columns, with the debit and credit sides each having six (6) columns.
What is the Format of Double or two Column Cash Book?
The format of double or two-column cash book is as follows:
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