Three-Column Running Balance Format (Cambridge International IGCSE Accounting)

Three-column running balance format

What is the three-column running balance format?

• The three-column running balance format is an alternative to the usual double-sided ledger account

  • Bank statements and accounting software usually use this format

• There are five columns

  • Date
  • Details
  • Debit
  • Credit
  • Balance

• An advantage of using the three-column format is that the business can always see the balance of the account

• A disadvantage of using the three-column format is that the business cannot easily see the total debits and total credits of the account

Layout of an account using the three-column running balance format

How do I fill in an account using the three-column format?

• You fill in the date and details as normal

• You enter the amount in either the debit or credit column

  • You use the same rules as for the normal format

• You update the balance after each entry

Exam Hint If the balance changes between debit and credit, such as the bank account, then the words "debit" and "credit" are written after each balance.

If the balance is always a debit or always a credit, then the account might not write this next to the balances.

How do I find the balance after each transaction?

• If the entry and the current balance are both debits or both credits:

  • add the amount to the balance

• If the entry is different to the current balance

  • subtract the amount from the balance

  • If the new balance is a negative number

    • change between a debit balance and a credit balance

Layout of an account using the three-column running balance format

Worked Example Kamala is a trader. Bruno is a credit customer. At 1 December 2025, Bruno owes Kamala $550.

The following transactions take place in December 2025:

• 3 Dec: Bruno settles an invoice for $500 by paying $475 by bank transfer
• 5 Dec: Bruno purchases goods with list price $230 on credit
• 13 Dec: Bruno returns unpaid goods with list price $70

Complete Bruno's account in the books of Kamala.

Bruno

Date	Details	Debit $	Credit $	Balance $
2025
Dec 1	Balance b/d	550		550

Answer:

• 3 Dec: Bruno settles an invoice for $500 by paying $475 by bank transfer

  • $475 is paid into Kamala's bank
  • $25 is discount allowed by Kamala
  • Reduce the amount Bruno owes
  • These are credit entries as the asset is decreasing

• 5 Dec: Bruno purchases goods with list price $230 on credit

  • Increase the amount Bruno owes
  • This is a debit entry as the asset is increasing

• 13 Dec: Bruno returns unpaid goods with list price $70

  • Reduce the amount Bruno owes
  • These are credit entries as the asset is decreasing

Bruno

Date	Details	Debit $	Credit $	Balance $
2025
Dec 1	Balance b/d	550		550
Final answer: 3	Final answer: Bank		Final answer: 475	Final answer: 75
	Final answer: Discount allowed		Final answer: 25	Final answer: 50
Final answer: 5	Final answer: Sales	Final answer: 230		Final answer: 280
Final answer: 13	Final answer: Sales returns		Final answer: 70	Final answer: 210

Worked Example At 1 December 2025, Kamala is £150 overdrawn on her bank account.

The following transactions take place in December 2025:

• 3 Dec: Kamala receives $475 from Bruno by bank transfer
• 11 Dec: Kamala pays $200 for rent by cheque
• 18: Kamala receives a cheque for $180 from Amy

Complete Kamala's bank account. State whether each balance is a debit or credit balance.

Bank

Date	Details	Debit $	Credit $	Balance $
2025
Dec 1	Balance b/d		150	150 credit

Answer:

• 3 Dec: Kamala receives $475 from Bruno by bank transfer

  • This is a debit entry as the bank is increasing

    • The current balance is a credit so subtract
    • A negative answer means the balance changes from a credit to a debit

$150-475=-325$

• 11 Dec: Kamala pays $200 for rent by cheque

  • This is a credit entry as the bank is decreasing

    • The current balance is a debit so subtract

$325-200=125$

• 18: Kamala receives a cheque for $180 from Amy

  • This is a debit entry as the bank is increasing

    • The current balance is also a debit so add

$125+180=305$

Bank

Date	Details	Debit $	Credit $	Balance $
2025
Dec 1	Balance b/d		150	150 credit
Final answer: 3	Final answer: Bruno	Final answer: 475		Final answer: 325 debit
Final answer: 11	Final answer: Rent		Final answer: 200	Final answer: 125 debit
Final answer: 18	Final answer: Amy	Final answer: 180		Final answer: 305 debit