Vincent K is a sole trader who records all his cash and bank transactions in a

three-column Cash Book. On 1 August, his cash in hand was RM68 but he

had a bank overdraft of RM1,692.

The following are her transactions for the month of August:

August

2 Received a cheque of RM160 from Patrick in full settlement of a debt of

RM168

10 Cash sales paid directly to bank RM2,086

12 Drew a cheque RM75 in favour of Winifred Engineering, in settlement of

an outstanding debt

14 Paid RM35 cash for stationery

16 Paid Frederick Sung the sum of RM86 by cheque in settlement of an

amount owed to him of RM90

18 Drew a cheque for office cash RM150

20 Cash sales RM1,120; cash kept in the office safe

21 Received interest of RM60 and paid this into the bank

The sales of the previous day were also banked in

24 Paid telephone charges by cheque RM147

26 Received a cheque of RM704 from Benny Chan in settlement of his

account amounting to RM720

28 Paid RM40 out of cash for office expenses

30 Paid RM254 to Larry Heng by cheque in full settlement of the RM270

balance on his account

30 The bank notified Vincent K that it had charged RM20 bank charges to his account

Required:

(a) State three (3) purposes for preparing a Cash Book.

(b) Define the two (2) types of cash discounts in the 3-column Cash Book

and the purpose of a cash discount.

(c) Draw up the 3-column Cash Book of Vincent K for the month of

August. Balance up the cash and bank columns, bringing down the

balances at 1 September.

(d) Total up the two discount columns and post the amounts to the relevant

accounts in the General Ledger.