Balancing the Cash Book (Cambridge International IGCSE Accounting)

Balancing the cash book

How do I balance the cash book?

• Balance the cash columns just like any other ledger account

  • Ignore the other columns
  • Remember the balance is always brought down onto the debit side

• Balance the bank columns just like any other ledger account

  • Ignore the other columns

  • The balance will be brought down onto the:

    • debit side if the business has money in the bank
    • credit side if the business is overdrawn

• Do not balance the discount columns

  • You just need to total them up
  • They will likely be different totals

Where do I put the totals for the discount columns?

• The cash book is the book of prime entry for discount

  • It records the discounts allowed and received
  • It is not part of the double entry system for discount

• Enter the discount in the relevant accounts

• The total on the left-hand side is the discount allowed

  • Debit the whole total to the discount allowed account

    • Label the entry as “cash book”
    • You do not need to put a separate entry for each transaction

  • Credit the relevant trade receivables accounts in the sales ledger

• The total on the right-hand side is the discount received

  • Debit the relevant trade payables accounts in the purchases ledger

  • Credit the whole total to the discount received account

    • Label the entry as “cash book”
    • You do not need to put a separate entry for each transaction

Worked Example Yana’s cash book for January 2024 is shown below. Balance the cash book and bring down the balances at 1 February 2024.

Yana

Cash Book

Date	Details	Discount Allowed $**	Cash $	Bank $	Date	Details	Discount Received $	Cash $	Bank $
2024 Jan 1	Balance b/d		20	850	2024 Jan 4	Electricity			250
Jan 10	Bank		300		Jan 10	Cash			300
Jan 11	Sales			50	Jan 18	Liza	30		320
Jan 21	Tobey	9		171	Jan 28	Rent			500
					Jan 31	Wages		200

Answer:

Balance the cash account:

• Total of the cash debit entries = $320

• Total of the cash credit entries = $200

• Difference in the cash totals = $120

  • This goes on the credit side as that total is the smallest

Balance the bank account:

• Total of the bank debit entries = $1 071

• Total of the bank credit entries = $1 370

• Difference in the bank entries = $299

  • This goes on the debit side as that total is the smallest

Yana

Cash Book

Date	Details	Discount Allowed $	Cash $	Bank $	Date	Details	Discount Received $	Cash $	Bank $
2024 Jan 1	Balance b/d		20	850	2024 Jan 4	Electricity			250
Jan 10	Bank		300		Jan 10	Cash			300
Jan 11	Sales			50	Jan 18	Liza	30		320
Jan 21	Tobey	9		171	Jan 28	Rent			500
Final answer: Jan 31	Final answer: Balance c/d			Final answer: 299	Jan 31	Wages		200
		Final answer:**	Final answer: **	Final answer:** **	Final answer: Jan 31	Final answer: Balance c/d	Final answer:** **	Final answer: 120	Final answer:**
		Final answer: 9	Final answer: 320	Final answer: 1 370			Final answer: 30	Final answer: 320	Final answer: 1 370
Final answer: Feb 1	Final answer: Balance b/d		Final answer: 120		Final answer: Feb 1	Final answer: Balance b/d			Final answer: 299