Kofo, a trader, paid a creditor ₦19,000 by cheque in full settlement of a debt of ₦20,000.… — JAMB UTME

Kofo, a trader, paid a creditor ₦19,000 by cheque in full settlement of a debt of ₦20,000. How should this transaction be recorded in Kofo's two-column cash book (Cash and Bank)?

Credit Bank column with ₦19,000Cevap
B
Debit Cash column with ₦19,000
C
Credit Bank column with ₦19,000 and credit Discount Allowed column with ₦1,000
D
Debit Bank column with ₦20,000

Cevap

Credit Bank column with ₦19,000

When a payment is made by cheque, the transaction represents an outflow of funds from the bank account. Therefore, it is entered on the credit side of the two-column cash book in the Bank column with the actual amount paid (₦19,000).

Adım Adım Çözüm

Identify the mode of payment and the actual cash/bank outflow

The payment was made by cheque, which means money leaves the bank account, requiring an entry of ₦19,000 in the Bank column.

Payments reduce the bank balance and must be recorded on the credit side of the Cash Book.

Determine the correct side of the two-column cash book

Credit side (payments side) under the Bank column for ₦19,000.

In a two-column cash book (Cash and Bank), all cheque payments are credited to the Bank column.

Anahtar Kavram

Recording payments by cheque in a two-column cash book

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