Transfer of Discount column in Cash Book

When a business receives or gives a discount, it is recorded in the cash book as a separate column called the Discount column. At the end of the accounting period, the total amount of discount recorded in the Discount column on the debit side of cash book needs to be transferred to the relevant account.

Transfer to Discount Allowed Account

Discount allowed is the discount given to the customers as an incentive to pay the dues within the given time frame. The transfer of the Discount column on the debit side of cash book to the Credit side of Discount Allowed Account is incorrect because it will increase the balance of the Discount Allowed Account, which is supposed to be reduced. Therefore, option A is incorrect.

Transfer to Discount Received Account

Discount received is the discount received from the suppliers for making the payment within a given time frame. The transfer of the Discount column on the debit side of cash book to the Credit side of Discount Received Account is also incorrect because it will increase the balance of the Discount Received Account, which is supposed to be reduced. Therefore, option B is incorrect.

Transfer to Discount Allowed Account

Discount allowed is the discount given to the customers as an incentive to pay the dues within the given time frame. The transfer of the Discount column on the debit side of cash book to the Debit side of Discount Allowed Account is correct because it will reduce the balance of the Discount Allowed Account, which is supposed to be reduced. Therefore, option C is the correct answer.

Transfer to Discount Received Account

Discount received is the discount received from the suppliers for making the payment within a given time frame. The transfer of the Discount column on the debit side of cash book to the Debit side of Discount Received Account is incorrect because it will increase the balance of the Discount Received Account, which is supposed to be reduced. Therefore, option D is incorrect.