1. **State the problem:** You need to prepare a 3-Column Cash Book for December 2023, detailing transactions affecting Bank, Cash, and Discounts accounts starting from opening balances Bank $5500 and Cash $7000. 2. **Setup the columns:** The 3-Column Cash Book has three cash columns on both debit and credit sides: Cash, Bank, and Discount Allowed/Received. 3. **Process each transaction:** - Opening balances: - Cash Debit: $7000 - Bank Debit: $5500 - 2 Dec: Paid a cheque $1000 loan (Bank Credit $1000) - 3 Dec: Sales $1800 received by cheque (Bank Debit $1800) - 4 Dec: Received $2000 cheque after $150 discount (Bank Debit $2000, Discount Allowed Credit $150) - 5 Dec: Paid utilities $600 cash (Cash Credit $600), telephone $300 cheque (Bank Credit $300) - 6 Dec: Deposited cash $5000 into bank (Cash Credit $5000, Bank Debit $5000) - 7 Dec: Paid William $3000 cheque after $300 discount (Bank Credit $3000, Discount Received Debit $300) - 12 Dec: Purchase $730 paid by cheque (Bank Credit $730) - 17 Dec: Owner withdrew $600 from bank (Bank Credit $600, Cash Debit $600) - 19 Dec: Commission received by cheque $2000 (Bank Debit $2000) - 28 Dec: Commission received by cheque $2000 (Bank Debit $2000) 4. **Calculate totals:** Summarize totals for Cash Debit and Credit, Bank Debit and Credit, Discounts Debit and Credit. Calculate closing balances: - Closing Cash = Opening Cash + Cash Debits - Cash Credits = $7000 + ($1800 not cash) + $600 from owner withdrawal + ... Calculate carefully. - Closing Bank = Opening Bank + Bank Debits - Bank Credits 5. **Bring down balances at 1 Jan 2024:** Record closing balances as opening balances for next period. **Final balances (calculated):** - Cash closing balance = $7000 - $600 (utilities) - $5000 (deposit) + $600 (owner withdrawal) = $7000 - 5600 + 600 = $2000 - Bank closing balance = $5500 + 1800 + 2000 + 5000 + 2000 + 2000 - 1000 - 300 - 3000 - 730 - 600 = $11670 - Discounts: - Discount Allowed (Credit side): $150 - Discount Received (Debit side): $300 **Hence the balances brought down are: Cash $2000, Bank $11670, Discounts net $150 credit\n\n**Summary:** - Prepare the ledger with detailed debit and credit entries of each transaction - Calculate totals and balances - Write closing balances on 31 Dec 2023 - Bring them down on 1 Jan 2024