Cash receipt journal

Cash receipt journal is a special journal that is used for the purpose of recording cash received by a business from any source. The major sources of cash receipt in a business are as follows:

  • Investment of capital by the proprietor/owner
  • Cash sales
  • Sale of an asset for cash
  • Collection from customers
  • Collection of interest, dividend or rent etc.
  • Loan from an individual, bank or any other financial institution

Format of cash receipt journal

Depending on the requirement of the business, different formats of cash receipt journal are used. To understand the recording procedure, a simple format is given below:

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The purpose of various columns in the above cash receipt journal is explained below:

(1). Date column is used to record the date at which the cash is received by the business.

(2). Accounts credited column is used to enter the title of the respective account on which the cash is being received.

(3). Posting reference column is used to write the number of ledger account at the time of posting.

(4). Cash column is used to record the total amount of cash received.

(5). Discount column is used to record the amount of cash discount allowed at the time of receiving cash from a customer.

(6). Sales column is used to record the sale of merchandise for cash.

(7). Accounts receivable column is used to to record cash received from customers.

(8). Sundry accounts column is used to record the credits to any account for which there is no special column, for example, the receipt of interest, receipt of cash for the return of merchandise purchased on cash etc.

Example

Record the following transactions in a cash receipt journal:

Year: 2016
Dec. 01: Received $500 from A & Co. in full settlement of his account of $525.
Dec. 04: Received $4,600 from Sam & Co. and allowed discount $50.
Dec. 08: Received $150 as interest on investment.
Dec. 15: Cash sales for the first half of the month $1,800.
Dec. 23: Received payment of $700 from A & Co. for goods sold on account. Discount allowed $30.
Dec. 24: Sold office supplies for cash $70.
Dec. 25: Received $1600 cash from Beauty Supply Corporation and allowed a cash discount of $100.
Dec. 31: Cash sales for the second half of the month $2,200.

Solution

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Posting cash receipt journal to ledger accounts

The procedure of posting the cash receipt journal is described below:

  1. The total of cash column is posted as a debit to the cash account in general ledger.
  2. The total of sales column is posted as a credit to the sales account in general ledger.
  3. The amounts in the accounts receivable (A/C R.A) column represent cash received from debtors. These amounts are posted to the individual customer’s accounts in the accounts receivable subsidiary ledger.
  4. The total of accounts receivable column is posted as a credit to the accounts receivable account in the general ledger.
  5. Each amount in the sundries column is posted as a credit to the appropriate account in the general ledger. The total of the sundry accounts is not posted.
  6. Non of the individual amounts in the cash and sales columns are posted.
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