Page 110 - DCOM101_FINANCIAL_ACCOUNTING_I

Financial Accounting-I

Notes 9. Cash discount is offered as an incentive …………..

(a) for increase in volume of sales.
(b) For prompt payment.
(c) One of the above.
10. ………………. Discount is recorded in the books of the business.
(a) Cash
(b) Trade

(c) Both

9.8 Review Questions

1. Explain the nature of petty cash book.
2. What is the difference between a petty cash book and a simple cash book?
3. Prepare a Cash Book form the transactions given below:

2006 `
July 1 Balance at bank 10,000
July 4 Received a cheque from Pankaj 5,000
July 7 Issued a cheque to Rakesh 6,000
July 10 Received dividend by bank draft 2,000
July 15 Mukesh was paid by issuing a cheque 1,500
July 20 Deposited into bank 7,000
July 24 Interest collected by bank 200
July 28 Dividend collected by bank 500
July 31 Bank charges debited 800
4. Compose three columns Cash Book from the following transactions:
2006 `
Jan. 1 Cash in hand 567
Jan. 1 Cash at bank 12,675
Jan. 2 Received from Ashish and 7,900
Allowed him a discount 100
Jan. 4 Deposited into the bank 5,000
Jan. 6 Furniture purchased for cash 2,500
Jan. 7 Paid to Vikas by cheque 7,800
And received discount 200
Jan. 14 Received from Manish by cheque and Deposited into bank 5,000
Jan.16 Cash Sales 8,000
Jan. 20 Deposited into bank 6,000
Jan. 25 Purchased a Machine and paid by a cheque 12,000
Jan. 26 Paid by cheque to Kishore 1,370
and received discount 30

Jan. 27 Withdrew from bank for office use 2,500
Jan. 28 Purchased goods for cash 5,000
Jan. 29 Paid wages by cheque 4,500
Jan. 31 Paid Rent 500

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