In Section 123 we shall not keep Bank A/c in the Ledger, but by the second method mentioned in Section 70, namely, on the stub ends of cheques; or the student may keep it by the third method, by making a Bank Pass Book, as shown in Section 69, and recording therein the entries of deposits and cheques, as they would be recorded by the bank ledger-keeper ; or he may combine both methods.
When either of these methods is used, no distinction is then made between the cash in the office drawer and the cash on deposit in the bank ; both are considered as cash on hand. Payment by cheque is then treated as payment in cash, and an entry is made in the Cash Journal just as if paid from the office cash drawer. A deposit is considered merely as moving cash from one drawer to another drawer, and no 'entry is made in the Cash Journal.
The second method is illustrated on the stubs of the following cheques. Deposits are added to the last balance and each cheque is subtracted, thus showing the balance in the bank. The balance in the Cash Journal includes this balance and the balance in the office drawer.
Transactions for following stubs : Aug. 3—Deposited cash, $750 ; Aug. 5—Paid D. Taylor balance of a/c with cheque, $100.50 ; Aug. 6—Deposited cheques $60, $30, and currency $40 ; Aug. 8—Paid H. Pearson for Invoice of Aug. 6 with cheque, $75.
Example of Bank Account on Stubs of Cheque Book.