All 26 Cash Book & Petty Cash questions
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What entries arise from bank charges, interest, and standing orders in the cash book? Why might the petty cash book not balance and how do you investigate? How is the receipt of capital or a loan recorded in the cash book? How are drawings recorded in the cash book? How is petty cash treated at the period end for the financial statements? How do you record dishonoured (bounced) cheques in the cash book? How is the analysis (columnar) cash book useful and how is it posted? How do you post the totals of an analysed petty cash book with VAT? How do you record wages paid net, with deductions, through the cash book?
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What is the treatment of cash discounts versus the cash received in the cash book?

Intermediate

Answer

When a customer settles early taking a cash discount, the cash book records the actual cash in the bank/cash column and the discount in the discount-allowed column; together they clear the invoice. The cash column affects the double entry immediately; the discount column is a memorandum posted in total to discounts allowed.
Invoice 500, pay 490 + 10 discount: Bank 490 + Discount allowed 10 = 500 cleared.
Real-world example Early payment records 490 in the bank column and 10 in the discount column to settle a 500 invoice.

Common follow-ups: Which part is a memorandum? | How is the invoice fully cleared?

Sales & Purchase Ledgers Control Accounts Cash Book & Petty Cash
All 26 Cash Book & Petty Cash questions