A two column or double column cash book is a type of cash book that has two columns for cash and bank transactions. The goal is to save space and to locate all cash transactions in one place. Therefore, when physical cash is received or paid, it is recorded in the same book in which a bank transaction, such as bank transfer, is done.
Format for a double column cash book
| Date | Particular | Folio | Cash | Bank | Date | Particular | Folio | Cash | Bank |
|---|---|---|---|---|---|---|---|---|---|
| 2025 | NGN | NGN | 2025 | NGN | NGN | ||||
| 01 Jan | Balance b/f | 25,000 | 187,000 | 2025 |
The table shows that the cash book is separated into two parts. The debit and credit sides. Both sides have columns for date, particular, folio, cash, and bank. Remember that the debit side is when cash or a bank transfer is received by the entity and the credit side is for the amount paid to other persons either via cash or bank.
A more simplified format can be used inside of the above one. In this article, the second format is used. This is drawn below.
| Date | Detail | Reference | Cash (Dr) | Bank (Dr) | Cash (Cr) | Bank (Cr) |
|---|---|---|---|---|---|---|
| 2025 | NGN | NGN | NGN | NGN | ||
| 2025 | Balance b/f | 25,000 | 187,000 | 0 | 0 |
Contra entry
Contra entry occurs with a double column and three column cash book. It simply means to set against or cancel. That means a particular transaction cancels out another with a particular amount. Contra entry involves the movement of cash to bank and that of bank to cash. How? The same sum of money is moved from one account to the other, this will simply cancel out themselves. Thereby not affecting the balances of the accounts. Note that contra entry is an internal accounting transaction. That is it does not involve a third party.
Cash lodgement to the bank
When the physical cash in the office vault is above the acceptable maximum, it is lodged to the bank. Therefore, the company will debit its bank column of the cash book to reflect that money is received and credit the cash column to show that money was paid.
Cash withdrawn from the bank
In this case, money is moving from the bank to the business vault or cash till. When this occurs the cash column is receiving the money so it is debited and the bank column is making the payment and therefore it is credited.
Balancing two column cash book
The cash column and bank column should always have a debit balance as you can see from the format. This shows that the entity has cash in hand of N25,000 and N187,000 cash at bank. However, it is possible for the cash at the bank to be on the credit side. This occurs if the company had applied for an overdraft facility from the bank. Therefore, the amount in the credit side of the bank column of the cash book is reflecting the overdraft amount in the bank.
Worked Example for double column cash book
Paul Enterprises has the following transactions for the first six working days of January 2025.
02 Jan. Opening balances:
Cash N25,000
Bank N187,000
03 Jan. Withdraw N32,000 from the bank for business use.
06 Jan. Paid for Utility N15,000 for cash.
07 Jan. Generator repair payment of N19,000 cash.
08 Jan. Sold goods to Toluwa on credit for N102,000 and to George for cash of N31,000.
09 Jan. Sold goods and received the money via bank transfer of N74,000.
10 Jan. Received from Toluwa the amount owed by her and lodged the amount to the bank on the same date.
You are required to prepare a two column cash book for the above transactions.
Solution to two column cash book
Two Column Cash Book
| Date | Detail | Reference | Cash (Dr) | Bank (Dr) | Cash (Cr) | Bank (Cr) |
|---|---|---|---|---|---|---|
| 2025 | NGN | NGN | NGN | NGN | ||
| 2025 | Balance b/f | 25,000 | 187,000 | 0 | 0 | |
| 03 Jan | Bank | C | 32,000 | 0 | 0 | 0 |
| 03 Jan | Cash | C | 0 | 0 | 0 | 32,000 |
| 06 Jan | Utility bill | GL 7 | 0 | 0 | 15,000 | 0 |
| 07 Jan | Generator repair | GL 8 | 0 | 0 | 19,000 | 0 |
| 08 Jan | Sales | GL3 | 31,000 | 0 | 0 | 0 |
| 09 Jan | Sales | C | 0 | 74,000 | 0 | 0 |
| 10 Jan | Toluwa | SL26 | 102,000 | 0 | 0 | 0 |
| 10 Jan | Bank | C | 0 | 102,000 | 0 | 0 |
| 10 Jan | Cash | C | 0 | 0 | 102,000 | 0 |
Explanation
The January 2 information represents opening balances for cash and bank. Remember that cash and bank balances should be on the debit side unless in cases of overdraft.
For January 3, cash was withdrawn from the bank. Implying that cash is received and the bank is making payment. So, debit cash column and credit bank column. You can notice that the reference or folio number is written as “C” used to represent control entry. This is rarely used in recent times.
On January 6 and 7, utility bills and generator repair transactions took place. Since they are payments in cash, they are credited to the cash column. The use of GL 7 and GL 8 shows where they can be found in the general ledger.
January 8, goods were sold on credit to Toluwa for N102,000. Cash books don't record credit transactions. Therefore, it is not posted. However, the second transaction was a cash sale of N31,000. Since cash was received, it is debited to the cash column.
For January 9, a bank transfer was made in respect of a sale. This goes to the bank column (debit side) of the cash book.
Finally, Toluwa made payment for the goods sold to her on January 8 with cash. The N102,000 was then lodged to the bank. The cash received will be debited to the cash column. The SL26 used shows where you can find the transaction in the sales ledger. The contra entry shows that the bank received the money. Therefore, debit the bank column of the cash book and credit the cash column with the amount.
