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Explain how the following transactions would be recorded in a cash book with Cash and Bank columns?
I) Deposit of cash into Bank
ii) Withdrawal of money from Bank for office use
iii) Deposit of cheques (recieved from others) into Bank
iv) Dishonour of cheques deposited into Bank
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The following answer is what I have been able to write,but the main problem is,I need a much elaborate answer as the marks alloted for this question is 20 and the answer I wrote is not enough for that.Quote:
Originally Posted by morgaine300
1. Deposit of cash into Bank:
This transaction will be recorded in a cash books by crediting the cash account and debiting the bank account.
2. Withdrawal of money from Bank for office use:
This transaction is opposite of the transaction described above. It will be recorded by debiting the cash account and crediting the bank account.
3. Deposit of cheques (received from others) into Bank:
A cheque received from another party remains an unrealized cheque till it is deposited in the bank account. Therefore the deposit of a cheque in the bank will be reflected by crediting the bank account and crediting the unrealized cheque account.
4. Dishonour of cheques deposited into Bank:
This transaction is opposite of the transaction of depositing the cheque in the bank. When the cheque is deposited in the bank it was assumed that the cheque will be honoured and accordingly the bank account was debited. When the cheque is dishonoured the accounting entries will be reversed by crediting the bank account and debiting the unrealized cheque account.
I really can't imagine what else she wants. You've said how they would be recorded. I don't know what is meant by a "cash book." A check register would not have entries in it. I'm assuming this would be like a combo cash receipts/cash payments journal. Therefore, I don't know how much room you have, whether you have descriptive columns, that type of thing. You've said what the entries were. If it needs to have descriptive stuff, you add things like "Withdrawal for office use" on the 2nd one, etc. For checks, customer names. I can't tell you more than that cause I don't know what the cash book contains. (We don't have anything we call by that name.)Quote:
The following answer is what I have been able to write,but the main problem is,I need a much elaborate answer as the marks alloted for this question is 20 and the answer I wrote is not enough for that.
The entries on the first two are right.
That depends. Do you always put checks received into this unrealized check account? We don't do that here. We just don't record them at all until they're deposited and most companies don't leave checks lying about undeposited for more than a few days -- as long as everything is caught up by a month-end it shouldn't matter. I think that's an odd practice. I'm curious - do you bother with that if you deposit them the very day you get them? If you always put them into that unrealized check account, then this would be correct. If you don't always do that, then you're making an assumption.Quote:
3. Deposit of cheques (received from others) into Bank:
A cheque received from another party remains an unrealized cheque till it is deposited in the bank account. Therefore the deposit of a cheque in the bank will be reflected by crediting the bank account and crediting the unrealized cheque account.
A dishonored check becomes a receivable cause the customer still owes you. Theoretically, here we can usually deposit a check a second time and see if it goes through, but that would not be something taught in an accounting class. It would be taught that it's now a receivable.Quote:
4. Dishonour of cheques deposited into Bank:
This transaction is opposite of the transaction of depositing the cheque in the bank. When the cheque is deposited in the bank it was assumed that the cheque will be honoured and accordingly the bank account was debited. When the cheque is dishonoured the accounting entries will be reversed by crediting the bank account and debiting the unrealized cheque account.
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