Three Column Cash Book 


Welcome to class! 

In today’s class, we will be talking about three column cash book. Enjoy the class!

Three Column Cash Book 

By the end of the lesson, you should be able to;

  • Post transactions into three column cash book
  • Balance up the three column cash book

Three column cash book

This type of Cash Book combines discount column on both sides to the cash and bank column. The discounts allowed column is on the debit side, while the discounts received column is on the credit side. The principle of double-entry is also applicable in the three-column Cash Book. It must be noted however that the discount allowed and the discount received columns though they have the appearance of account columns, are merely memoranda, from them we can obtain periodic totals that will be entered in the discounts accounts.


From the following information write up a three-column Cash Book of Favour Business Enterprises balance off at the end of the month, and show the relevant discounts accounts as they would appear in the general ledger:


March 1 Balance brought forward:

Cash in hand N21,100

Cash at bank N89,840

”     2 We paid each of the following accounts by cheque, in each case we deducted 5%

cash discount: T. Ankrah N8,000; C. Asafo N26,000; D. Kodjo N44,000

”        4          C. Talabi pays us a cheque for N9,800

”        6          Cash sales paid directly into the bank N14,900

”        7          Paid insurance by cash N6,500

”    9  The following persons paid us the following accounts by cheque, in each case they

deducted a discount of 2%: R. Dambo N16,000; J. Appiah N6,400; R. Andrah N5,200

”          12        Paid motor expenses by Cash N10,000

”        18        Cash sales N98,000

”        21        Paid salaries by cheque N12,000

”        23        Paid rent by cash N6,000

”        28        Received a cheque for N50,000 being a loan from R.Atadika

”        31        Paid for stationery by cheque N8,700


Note: Continuation

 N.B: Note that the discount columns in the Cash Book are totalled and not balanced. They are to be added weekly or monthly at the time the cash and bank columns are balanced and ruled off. the totals of the discount columns are taken to the discounts accounts in the ledger and are entered on the same sides of these accounts as they are found in the Cash Book


  1. Business Accounting 1 Exercise 13.1, 13.2, 13.4A and 13.5A
  2. Simplified and Amplified Financial Accounting Exercise 2x; 5; 6x and 7x

Reading assignment

  1. Simplified and Amplified Financial Accounting page 72 – 86
  2. Business Accounting 1 page 97 – 106
General evaluation
  1. Differentiate between Discounts Allowed and Discounts Received
  2. State four differences between trade Discounts and Cash Discounts
  3. List two similarities between Discounts Allowed and Discounts Received
  4. State ten uses of the General Journal
  5. List ten ledger accounts that have debit balances

Weekend assignment

  1. In which of the following books will trade discount be recorded Cashbook    B. General Ledger     C. Invoices     D. Purchases Day Book
  2. When a discount is allowed the accounting entry is debit discount allowed account and credit Expenses Account    B. Suspense account    C. Debtors Account     D. Creditors account
  3. The process of entering transaction from one book to another is folio    B. casting   C. posting    D. numbering
  4. The column which is not generally balanced but summed up in the three-column cash book is the ___________ column bank    B. cash     C. contra    D. discount
  5. When both debit and credit entries in respect of a transaction are made in the same ledger account this is a ledger entry    B. an accounting entry    C. a folio entry    D. a contra entry


  1. State five reasons why a trader will grant a trade discount to his customer
  2. State four differences between trade discounts and cash discounts


In our next class, we will be talking about the Petty Cash Book.  We hope you enjoyed the class.

Should you any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

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