The Cash Book: Money Paid Out
Peter Marshall Bsc (Econ) BA MBIM is a Fellow of the Society of Business Teachers, and an experienced educator in business subjects. He is also a prolific author and his books have been translated and sold worldwide. He lives in London, UK.
Posting to the credit page
Now we need to do our first piece of double entry book-keeping. Since the bank has been debited with the money the cashier paid in, the cashier must be credited with the same amount. Otherwise, the cashier will appear to remain indebted for a sum he/she no longer has.
Step by step
- 1.Enter the date of the paying-in slip in the date column of the right hand (credit page) of the cash book.
- 2.In the second (name) column, enter the word ‘bank’, since it is the bank which is taking the money from the cashier.
- 3.In the fifth (cash) column, enter the amount of the payment. You have now given the cashier credit for that amount—and so you should! He no longer has it: he has given it to the bank.
- 4.Now let’s do the other credit side entries. Take the first of the receipt vouchers for cash paid out for the period (day, week, month). Enter the date (taken from the receipt voucher) in the appropriate column of the right hand page (see step 1 on the previous page).
- 5.In the second column enter the name of the person to whom the cash was paid.
- 6.Discount details probably won’t be relevant here; such discounts arise from early settlement of credit accounts, usually by cheque rather than by cash. If any such account was settled in cash, the cashier would know about it: he would have been the one to arrange payment. In such cases enter the details in the fourth (discount) column.
- 7.In the fifth column enter the amount of cash paid out.
- 8.Turn to the first cheque book counterfoil for the period. In the first column of the right hand (credit) page, enter the cheque date.
- 9.In the second column enter the name of the payee (the person to whom the cheque is payable).
- 10.In the fourth column enter details of any discount received. You will find this from the copy of the payment advice slip outwards.
- 11.In the sixth (bank) column, enter the amount of the cheque.
- 12.When required, total both the debit and credit columns for both cash and bank. Enter balancing items, so that both sides add up to the same figure, narrating them ‘balance c/d’.
- 13.Bring down the balancing items on the opposite sides as the opening balances for the next period, narrating them ‘balance b/d’.
