Reference no: EM132579481
Question - Vincent K is a sole trader who records all his cash and bank transactions in a three-column Cash Book. On 1 August, his cash in hand was RM68 but he had a bank overdraft of RM1,692.
The following are her transactions for the month of August:
August 2 Received a cheque of RM160 from Patrick in full settlement of a debt of RM168
August 10 Cash sales paid directly to bank RM2,086
August 12 Drew a cheque RM75 in favour of Winifred Engineering, in settlement of an outstanding debt
August 14 Paid RM35 cash for stationery
August 16 Paid Frederick Sung the sum of RM86 by cheque in settlement of an amount owed to him of RM90
August 18 Drew a cheque for office cash RM150
August 20 Cash sales RM1,120; cash kept in the office safe
August 21 Received interest of RM60 and paid this into the bank. The sales of the previous day were also banked in 24 Paid telephone charges by cheque RM147
August 26 Received a cheque of RM704 from Benny Chan in settlement of his account amounting to RM720
August 28 Paid RM40 out of cash for office expenses
August 30 Paid RM254 to Larry Heng by cheque in full settlement of the RM270 balance on his account
August 30 The bank notified Vincent K that it had charged RM20 bank charges to his account
Required -
(a) State three (3) purposes for preparing a Cash Book.
(b) Define the two (2) types of cash discounts in the 3-column Cash Book and the purpose of a cash discount.
(c) Draw up the 3-column Cash Book of Vincent K for the month of August. Balance up the cash and bank columns, bringing down the balances at 1 September.
(d) Total up the two discount columns and post the amounts to the relevant accounts in the General Ledger.