Final answer:
To prepare a Double Column cash book with Cash and Bank columns, start with opening balances, record transactions under the appropriate columns, and calculate the closing balances by summing debits and subtracting credits to find the final balance number.
Step-by-step explanation:
To prepare the Double Column cash book with Cash and Bank columns, we start by listing the initial balances followed by each transaction categorized appropriately, either under the cash column or the bank column. Here's how you can go about it:
- Sept. 1: Begin with the opening balances - Cash in hand: ₹7,500 (Debit side under Cash column) and Bank overdraft: ₹35,000 (Credit side under Bank column).
- Sept. 2: Paid wages ₹2,000 (Debit side under Cash column).
- Sept. 5: Cash sales ₹70,000 (Credit side under Cash column).
- Sept. 10: Cash deposited in bank ₹40,000 (Debit side under Bank column and correspondingly a credit under Cash column).
- Sept. 15: Goods purchased against cheque₹20,000 (Debit side under Bank column).
- Sept. 20: Paid Rent ₹5,000 (Debit side under Cash column).
- Sept. 25: Drew from bank for personal use ₹4,000 (Credit side under Bank column and Debit side under Cash column).
- Sept. 30: Salary paid ₹10,000 (Debit side under Cash column).
- To finish, calculate the closing balances for both columns by summing the debit and credit sides separately and then subtracting the total credits from total debits. The final balance number will be the closing balance for both the Cash and Bank columns.
For example, after calculating all the debits and credits, if the total debits for the cash column are ₹85,000 and the total credits are ₹45,000, the closing balance will be ₹85,000 - ₹45,000 = ₹40,000 on the debit side (indicating cash on hand).