Match each cash book transaction on the left with its correct entry treatment in a two-col… — JAMB UTME

Match each cash book transaction on the left with its correct entry treatment in a two-column cash book on the right.

Cash paid into the bank accountDebit Bank column, Credit Cash column (Contra entry)
Cash received from a trade customerDebit Cash column
Cheque issued to pay a trade creditorCredit Bank column
Cash withdrawn from the bank for office useDebit Cash column, Credit Bank column (Contra entry)

Answer

Cash paid into bank matches with Debit Bank column and Credit Cash column (Contra entry); Cash received from customer matches with Debit Cash column; Cheque issued to creditor matches with Credit Bank column; Cash withdrawn from bank for office use matches with Debit Cash column and Credit Bank column (Contra entry).

In a two-column cash book, all cash or cheque receipts are debited to their respective columns, while all cash or cheque payments are credited. Transactions involving the transfer of money between the cash till and the bank account affect both columns simultaneously and are classified as contra entries.

Step-by-Step Solution

Apply the double-entry rule for asset accounts (Cash and Bank) in the Cash Book.

Receipts increase asset values and are recorded on the debit side; payments decrease asset values and are recorded on the credit side.

Both Cash and Bank columns function as real/asset accounts.

Identify internal movement of funds between Cash and Bank (Contra Entries).

Paying cash into bank debits Bank and credits Cash. Withdrawing bank funds for office cash debits Cash and credits Bank.

When both sides of a transaction are recorded inside the Cash Book itself, it is designated as a Contra entry.

Identify direct single-column entries.

Cash received from a customer increases cash (Debit Cash column). Cheque paid to a supplier decreases bank funds (Credit Bank column).

External receipts and payments affect only one column (either Cash or Bank) on one side of the Cash Book.

Key Concept

Two-Column Cash Book Debit/Credit Rules and Contra Entries

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