No. 1(a): Preparation of Cash Book for the month of 31st March 2018.
1. 26th March 2018 the total of the cheque to Jeff’s Air-Con:
Cheque will equal $7,500 less a 5% discount.
The discount equals 5% x $7500 = $375.
Therefore the cheque total equals = $7,500 - $375 = $7,125.
2. 30th March 2018 the total of the cheque received from Layby Stores:
Invoice total on the 13th March sent to Layby Stores equals $2,250 less 20% trade discount.
The discount equals 20% x $2,250 = $450.
Therefore the invoice total equals = $1,800.
19th March 2018 the total of the credit note sent to Layby Stores equals $200 less 20% trade discount.
The discount equals 20% x $200 = $40.
Therefore the credit note total equals $200 - $40 = $160.
This means that the total on Layby Store’s account on the 30th March 2018 = $1800 - $160 = $1640.
Layby Stores was given a cash discount of $150 therefore the cheque received from Layby will equal
$1640 - $150 = $1,490.
Now that the workings has been completed the Cash Book for the month ended 31st March, 2018 can be prepared.
The author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor.