Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Payments by cheques Q8 Payments by cheques, though do not after the cash balance, must be recorded in the cash book as it is the
Payments by cheques Q8 Payments by cheques, though do not after the cash balance, must be recorded in the cash book as it is the book of original entry for bank transactions also. Such payments are, therefore, assumed to have been made in cash by withdrawing the amounts from the bank. Hence they are first recorded on the debit side of the cash book as 'To Bank' and then entered on the credit side assuming that the payments are made in cash. Direct Deposit by a customer Direct payments by customers to our bank account are treated as if cash is received from them and then deposited into bank by us. Thus, direct deposits by customers to the bank and payments by cheques come on both sides of cash book. As such items come both on the debit side and credit side of cash book they are called contra items and the entries are called contra entries. IUustration 5 Enter the following transactions in a single column cash book and post them to ledger accounts 2003 Feb 1 Balance b/d Cash 2,000 Bank 3.000 3 Paid into bank 1.200 4 Cheque received from Sankar 2,200 6 Paid into bank Sanker's cheque 2.200 8 With drew from bank for office 1.300 9 Paid to Vimal 500 11 Received cash from Bindu 2,100 13 Rent paid by cheque 600 15 Paid for stationery 100 17 Cheque received from Raj and sent to bank 800 21 Ramu, a customer paid directly to the bank account 1,300 24 Withdrew for office use 500 26 Withdrew in cash for personal purpose 2,300 Salary paid by cheque 600 28 Cash sales 3,200 28 Drew cheque for personal purpose 700 27
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started