Overdraft at Bank in Double Column Cash Book

An overdraft at the bank refers to a situation where a company or an individual withdraws more funds from their bank account than what is available in the account. In a double column cash book, the overdraft at bank is recorded on the debit side of the cash book.

Transaction in Double Column Cash Book

When an overdraft occurs at the bank, it means that the company has borrowed money from the bank. This borrowing is recorded in the double column cash book under the bank column on the debit side.

The transaction for an overdraft at bank in the double column cash book can be illustrated as follows:

Debit Side:
- The opening balance of cash and bank is recorded in the respective columns.
- Cash receipts are recorded in the cash column.
- Bank receipts, such as deposits and other inflows of funds, are recorded in the bank column.
- Any payments made by cash are recorded in the cash column.
- Any payments made by bank, including cheques issued or electronic transfers, are recorded in the bank column.
- The total of the cash and bank columns is calculated at the end of each period.

Credit Side:
- The opening balance of cash and bank is recorded in the respective columns.
- Cash payments are recorded in the cash column.
- Bank payments, such as cheques issued or electronic transfers, are recorded in the bank column.
- Any cash received is recorded in the cash column.
- Any funds received through bank receipts, such as deposits or other inflows, are recorded in the bank column.
- The total of the cash and bank columns is calculated at the end of each period.

Overdraft at Bank:
- If the closing balance in the bank column is negative, it indicates an overdraft at the bank.
- The amount of the overdraft is entered in the bank column on the debit side.
- The closing balance in the cash column is not affected by the overdraft.

Conclusion

In the double column cash book, an overdraft at the bank is recorded on the debit side under the bank column. This represents a situation where the company has withdrawn more funds from the bank account than what is available, resulting in a negative balance. Proper recording of such transactions in the cash book helps in maintaining accurate financial records and tracking the company's cash and bank balances.

Here overdraft is liability.
And entry will be By balance b/d