Question

CASE STUDY Mr. Ramlal is a timber merchant. He uses three – column cash book.

On August 1, 2019, he had cash in hand Rs.90,000 and balance at bank Rs.30,000 (bank overdraft). During the month he completed the following transactions:

August 01: Additional cash introduced by Ramlal in the business: Rs 70,000

August 02: Additional capital introduced was deposited in the bank.

August 02: Credit sales Rs.40,000 to Mr Arun and credit purchases of Rs 65,000 from Mr. Rajan.

August 03: Received a cheque for Rs.25,000 from a customer Raja, deposit into bank in full

                 settlement of his account of Rs.26,500.

August 05:Mr. Arun fully settled his account through cheque by paying Rs.38,500.

August 09: Deposited Mr. Arun’s cheque into bank.

August 10: Sold goods for cash Rs 15000 and deposited 65% of it in the bank.

August 12: Issued cheque to Mr Rajan in full settlement after getting a discount of 10%.

August: Arun’s cheque was dishonored.

August 25: Drew cash for personal use Rs.1,000 and for office use Rs.3,000.

August 30: Deposited in bank the entire cash balance after retaining Rs 3,000 for business use.

Construct a three column cash book in the books of Mr. Ramlal recording the above transactions in that and also show the balances at the end of the month.

Please balance and identify the Contra entry also

Answer 1

Note: Contra entries are marked with the letter 'C' in LF column of three column cash book