Three column cash book

SUBJECT – BUSINESS STUDIES
CLASS – JSS2
WEEK – 6/7
TOPIC – THREE COLUMN CASH BOOK

THREE COLUMN CASH BOOK
The three column cash book is the one with the addition of discount column to the columns in the two columns cash book i.e. the cash, the bank and the discounts. The discount which may be received or allowed is added to the debit and credit side of the cash book. Discount allowed is recorded on the debit side of the cash book and has a credit balance in the ledger. The discount received is recorded on the credit side of the cash book and is debited in the ledger.
Types of Discount
Cash discount and
Trade discount

1. Cash discount: A cash discount is a deduction given to buyers for paying their debts within a specified period of time. This is divided into discount allowed and discount received.
   Discount Allowed: This is the cash discount allowed to a debtor which is usually deducted from the amount the debtor owes when making payment.
   Discount received: The discount received is the cash discount received by a business from a creditor.
2. Trade Discount: A trade discount is a deduction made by the seller before charging the buyer with the price of the goods. It is normally allowed for customers who purchase large quantity of goods.
   FORMAT OF A THREE COLUMN CASH BOOK
   Date
   Particular
   Folio
   Discount Allowed
   N
   Cash

N
Bank

N
Date
Particular
Folio
Discount Received
N
Cash

N

Bank

N

Example
Enter the following transaction in the three column cash book of ADAACA for the month of July 2009.
July 1 Cash in hand N500
July 1 Cash at bank N800
July 4 Sold goods for cash N1,000 less 10% cash discount
July 5 Paid salaries by cash N85
July 8 Received cheque from Wale N700 less 5% discount
July 12 cash paid into bank N900
July 15 Paid Titi by cheque N400 less 4% discount
SOLUTION
ADAACA THREE COLUMN CASH BOOK
Date

1/7

4/7

8/7

12/7

Particular

Bal b/f

Sales

Wale

Cash

Bal b/d
Folio

C
Discount Allowed
N

100

35

135
Cash

N
500

900

1,400

415
Bank

N
800

665

900

2,365

1,981

Date

5/7

12/7

15/7
Particular

Salaries

Bank

Titi

Bal c/d
Folio

C
Discount Received
N

16

16
Cash

N
85

900

415

1,400
Bank

N

384

1,981

2,365

,