AccountancyCBSE Class 11 · Recording of Transactions - II

Three-Column Cash Book Class 11: Contra Entries, Discounts and Balancing

Updated 17 October 2026 · Fact-checked

A three-column cash book has cash, bank and discount columns on each side. Receipts go on the debit side, payments on the credit side. A contra entry (cash deposited into the bank, or cash withdrawn from the bank) is entered on both sides of the same book and is marked C. Discount allowed is on the debit side, discount received on the credit side; only their totals are posted to the ledger.

Understand Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries

What it is. One book that serves as the cash account, the bank account and the discount record. Each side has Date, Particulars, L.F. (ledger folio), then Discount, Cash and Bank columns.

What goes where.

Debit side: cash received, cheques deposited, discount allowed (a loss to the business, entered in the discount column of the debit side).
Credit side: cash paid, cheques issued, discount received (a gain, entered in the discount column of the credit side).
Contra entry: both the debit and credit accounts are cash and bank, so the entry appears on both sides and is marked C in the folio. Cash deposited into bank: Bank column debit, Cash column credit. Cash withdrawn from bank for office use: Cash column debit, Bank column credit. A cheque received and deposited the same day goes directly to the bank column (not a contra).
Discount columns are memorandum columns: they are totalled but not balanced. The debit total is posted to Discount Allowed A/c (Dr) and the credit total to Discount Received A/c (Cr).

Balancing. Total each column, subtract the smaller from the larger, carry the balance as c/d on the smaller side and as b/d on the opposite side next period. The cash column can never show a credit balance, because a firm cannot pay out more cash than it has. The bank column may show a credit balance, which is a bank overdraft.

Points to watch.

Settlement with discount: full amount of the debt is credited/debited to the personal account, the cash or bank column shows only the net amount, and the discount column shows the difference.
A cheque deposited and later dishonoured is entered on the credit side of the bank column, and the debtor's account is debited again.
Only transactions that pass through cash or bank appear in the cash book; credit purchases and sales do not.
Posting to the ledger: debit-side items (except contra) are credited to the named accounts; credit-side items are debited to the named accounts.

Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries: key facts

Contra entry: Cash deposited into bank: Bank Dr, Cash Cr
Cash withdrawn from bank: Cash Dr, Bank Cr
Marked C in folio
Entered on both sides; No ledger posting.
Discount columns: Debit side: discount allowed
Credit side: discount received
Totalled, not balanced
Totals posted to the ledger; Memorandum columns.
Balance rule: Cash balance is always debit | Bank balance may be credit: overdraft; Cash cannot be overdrawn.

How to answer Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries questions

A three-column cash book is a recording question first and an arithmetic question second.

1Open the cash and bank columns on the debit side with the opening balances (overdraft goes on the credit side).
2Record each transaction on the correct side; mark contra entries on both sides.
3Enter discounts in the discount columns; the cash or bank column carries the net amount.
4Total the discount columns; balance the cash and bank columns separately.
5State the cash and bank balances and the discount totals to be posted.

Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Cash deposited at the bank counter

Suppose a tea stall owner deposits ₹14,000 of the day's cash into the bank.

Which columns of the cash book change?

Try it first, then show the solutionSolution

The bank column on the debit side rises by ₹14,000.
The cash column on the credit side falls by ₹14,000.
Marked C: contra.

Answer: Debit Bank ₹14,000; credit Cash ₹14,000, entered on both sides of the cash book.

Memory hook: Contra: one book, both sides.

Tricks to remember Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries

Short memory aids. Say each one aloud once, then use it on a question the same day.

C for Contra, C for Cash-bank
If both sides of the entry are cash and bank, put a C.
Use it when: Contra.
Discount allowed is on the debit side
Allowed: given away, a loss, debit. Received: gain, credit.
Use it when: Discount columns.

Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: A contra entry · 1 mark · MCQBoard level

Which of the following is a contra entry?
(a) Goods sold for cash
(b) Cash deposited into the bank
(c) Cheque issued to a creditor
(d) Rent paid in cash

Try it first, then show the solutionSolution

A contra entry has both accounts as cash and bank.

Answer: (b) Cash deposited into the bank

Example 2: Settlement with discount · 3 marks · Short answerBoard level

Sunil owes ₹8,000 and pays ₹7,800 in cash in full settlement. Give the effect on the cash book and the personal account. (3 marks)

Try it first, then show the solutionSolution

Cash column (debit): ₹7,800; discount allowed column (debit): ₹200.
Sunil's account is credited with ₹8,000 (₹7,800 + ₹200).
The ₹200 total in the discount column goes to Discount Allowed A/c (Dr) at the end of the period.

Answer: Cash 7,800 and discount allowed 200 on the debit side; Sunil credited 8,000.

Example 3: Three-column cash book · 6 marks · Long answerHarder board level

Record in a three-column cash book and balance: 1 Jan cash ₹20,000, bank ₹50,000. 2 Jan received cheque from Ravi ₹15,000 and deposited it. 4 Jan paid rent by cheque ₹6,000. 6 Jan withdrew ₹10,000 from bank for office use. 8 Jan cash sales ₹12,000. 10 Jan paid Meena by cheque ₹9,000 (she allowed discount ₹300). 12 Jan deposited ₹14,000 cash into bank. 15 Jan received from Sunil ₹7,800 cash in full settlement of ₹8,000. 18 Jan paid salaries in cash ₹5,000. (6 marks)

Try it first, then show the solutionSolution

Cash column debit: 20,000 + 10,000 (contra) + 12,000 + 7,800 = ₹49,800. Cash column credit: 14,000 (contra) + 5,000 = ₹19,000. Balance c/d ₹30,800.
Bank column debit: 50,000 + 15,000 + 14,000 (contra) = ₹79,000. Bank column credit: 6,000 + 10,000 (contra) + 9,000 = ₹25,000. Balance c/d ₹54,000.
Discount columns: debit side (allowed) ₹200; credit side (received) ₹300. Not balanced.
Check: cash side total 49,800 = 19,000 + 30,800; bank side total 79,000 = 25,000 + 54,000.

Answer: Cash balance ₹30,800 (Dr); bank balance ₹54,000 (Dr); discount allowed ₹200; discount received ₹300.

Example 4: Overdraft · 3 marks · Short answerHarder board level

On 1 March the bank column of a firm's cash book showed an overdraft of ₹12,000. During March it deposited cheques of ₹40,000, issued cheques of ₹35,000 and deposited ₹8,000 cash. Find the bank balance on 31 March and say whether the firm is in overdraft. (3 marks)

Try it first, then show the solutionSolution

Debit side: 40,000 + 8,000 = 48,000. Credit side: 12,000 (overdraft b/d) + 35,000 = 47,000.
Net = 48,000 − 47,000 = ₹1,000 debit.
A debit balance in the bank column means the firm has money in the bank, so the overdraft has ended.

Answer: Bank balance ₹1,000 (debit): no overdraft.

Example 5: Impossible balance · 4 marks · Short answerHOTS / competency

The cash column of a three-column cash book shows a credit balance of ₹2,000 and the bank column a credit balance of ₹7,000. Which balance is possible, what does the other indicate, and name two likely causes. (4 marks)

Try it first, then show the solutionSolution

A credit bank balance is possible: it is a bank overdraft of ₹7,000.
A credit cash balance is impossible: the firm cannot pay out more cash than it has.
Likely causes: a receipt left unrecorded (for example cash withdrawn from the bank not shown as a debit to cash), or a payment recorded twice or in the wrong amount.
The cash book must be re-checked before it is balanced.

Answer: Bank overdraft ₹7,000 is possible; cash credit balance indicates an error.

Where students lose marks in Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries

The slips examiners see most often, and what to write instead.

Mistake: Entering a contra on one side only
Treating deposit as a one-sided entry.
Wrong working
Bank Dr 14,000 only.
Right working
Bank Dr 14,000 and Cash Cr 14,000, both marked C.
Do this: Both sides of a contra appear in the same book.
Usually costs: 1 to 2 marks
Mistake: Balancing the discount columns
Treating them like cash and bank.
Wrong working
Discount balance c/d.
Right working
Discount columns are only totalled and posted to the ledger.
Do this: Total, do not balance.
Usually costs: 1 mark
Mistake: Entering the gross amount in the cash column
Ignoring discount.
Wrong working
Cash Dr 8,000 and discount 200.
Right working
Cash Dr 7,800 and discount allowed 200.
Do this: The cash column carries the actual amount.
Usually costs: 1 mark

Exam tips

Draw the six-column ruling first (discount, cash, bank on each side).
Mark C in the folio for every contra.
Write the discount totals and the account they go to at the foot.
In an overdraft question, put the opening overdraft on the credit side.

Practice questions on Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
The discount column of the debit side of a three-column cash book records:
(a) discount received
(b) discount allowed
(c) trade discount
(d) cash discount on purchases
Hint
Allowed is a loss.
Answer
(b) discount allowed
Q2 · 4 marks · Short answerHarder board level
A cheque of ₹15,000 received from Ravi and deposited on 2 March is returned dishonoured on 9 March. The bank balance on 1 March was ₹30,000 (debit). Show the effect in the cash book and find the bank balance, ignoring bank charges. (4 marks)
Hint
Dishonour reverses the deposit.
Answer
On 2 March, bank debit 15,000 (balance 45,000). On 9 March, bank credit 15,000 (balance 30,000). Ravi's account is debited again with ₹15,000 as he still owes the money. Bank balance ₹30,000.
Q3 · 4 marks · Short answerHarder board level
Pass entries (name the book and the side) for: (i) cash deposited into bank ₹9,000; (ii) cheque of ₹6,000 received from Dev and deposited in the bank the same day; (iii) paid Rao ₹3,900 by cheque in full settlement of ₹4,000 owed. (4 marks)
Hint
Which are contra?
Answer
(i) Contra: bank column debit, cash column credit, ₹9,000. (ii) Not a contra: bank column on the debit side ₹6,000, Dev credited. (iii) Credit side: bank column ₹3,900, discount received column ₹100, Rao debited ₹4,000.
Q4 · 1 mark · Assertion-reasonHarder board level
Assertion (A): The discount columns of the cash book are not balanced.
Reason (R): They are memorandum columns whose totals are posted to the Discount Allowed and Discount Received accounts.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Memorandum columns.
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q5 · 5 marks · Short answerHOTS / competency
A firm's opening cash is ₹18,000 and bank balance ₹42,000. It deposits ₹10,000 cash into the bank, withdraws ₹6,000 from the bank for office use, receives ₹25,000 by cheque, pays ₹30,000 by cheque, pays ₹8,000 in cash expenses and receives ₹12,000 in cash from customers. Find the closing cash and bank balances. What balances would the clerk get if he forgot the withdrawal contra? (5 marks)
Hint
Two contras.
Answer
Cash: 18,000 − 10,000 + 6,000 − 8,000 + 12,000 = ₹18,000. Bank: 42,000 + 10,000 − 6,000 + 25,000 − 30,000 = ₹41,000. If the withdrawal contra were omitted, cash would show ₹12,000 (understated by 6,000) and bank ₹47,000 (overstated by 6,000).

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.What is entered in the discount column on the debit side?Show answer
Discount allowed.
2.Where is a contra entry recorded?Show answer
On both sides of the cash book.
3.Can the cash column show a credit balance?Show answer
No.
4.What does a credit bank balance mean?Show answer
Bank overdraft.
5.Which ledger accounts get the discount totals?Show answer
Discount Allowed A/c (Dr) and Discount Received A/c (Cr).

Three-Column Cash Book: Cash, Bank and Discount Columns with Contra Entries: frequently asked questions

Why are credit transactions not in the cash book?

Only cash and bank transactions pass through it; credit purchases and sales go to the purchases and sales books.

Is a cheque received and deposited the same day a contra?

No; it is a receipt from a party, entered in the bank column against the name of the payer.

Why is discount allowed on the debit side?

It is an expense/loss of the firm, and expenses are debited.