Double Column Cash Book With Emphasis On Contra-Entry - SS1 Accounting Lesson Note

A double-column cash book is a financial record that contains two separate columns for recording both cash and bank transactions in the same book. The book is divided into two sections: the debit section and the credit section. This type of cash book is more detailed and comprehensive compared to a single-column cash book. Below is the format of the two-column cash book:

Credit (Cr)

Date 

Particulars 

Folio 

Cash 

Bank 

Date 

Particulars 

Folio 

Cash 

Bank 

 

In the debit section, all cash transactions are recorded, such as cash sales, cash purchases, and cash expenses. In the credit section, all bank transactions are recorded, such as deposits and withdrawals. When cash is moved from the company's office to the bank, the entry in the two-column cash book is a debit entry in the bank column, indicating an increase in the company's bank balance, and a credit entry in the cash column, indicating a decrease in the company's cash balance. On the other hand, when cash is withdrawn from the bank and brought back to the office, the entry is a debit entry in the cash column, indicating an increase in the company's cash balance, and a credit entry in the bank column, indicating a decrease in the company's bank balance. 

Each transaction is recorded in both the debit and credit sections, showing the amount of cash received or paid and the corresponding bank transaction. This allows for easy tracking and reconciliation of cash and bank balances. For example, if a business receives a payment of ₦1000 in cash and deposits it into their bank account, the bookkeeper would record the transaction in the debit section as a receipt of ₦1000 and in the credit section as a deposit of ₦1000. This ensures that both the cash and bank balances are accurately recorded in the same book.

A contra entry is a transaction that involves both cash and bank accounts in the same book but in opposite columns of the two-column cash book. A two-column cash book is a financial record that has separate columns for cash and bank transactions. Contra-entries are used to record transactions where cash is both received and paid out, resulting in an offsetting effect on the cash balance.

In a contra entry, the same amount is recorded in both the cash and bank columns of the two-column cash book, but with opposite signs. For example, if a business withdraws ₦5000 from its bank account and receives the same amount in cash, the bookkeeper would record the transaction as a debit of ₦5000 in the bank column and credit of ₦5000 in the cash column.

Contra-entries are also used to record bank transactions where money is deposited or withdrawn from the business bank account. The same amount will be recorded in both the debit and credit columns, as money is going out of or coming into the business account.