Cash Deposit Bank Journal Entry

A business normally maintains a separate account in its general ledger for a specific named bank account. The bank account is usually a checking account or current account with a financial institution and is used in day to day trading to make withdrawals and deposits. A cash deposit bank journal entry is required when a business takes cash and deposits it into the bank account using a paying in slip.

The bank account is a current asset and is included under the heading of cash and cash equivalents in the balance sheet of the business.

Bank Deposit Journal Entry Example

Suppose for example a retail business has made cash sales to customers amounting to 900. At the end of the trading day the business completes a paying in slip and deposits the amount at the local branch of its bank.

The accounting records will show the following bookkeeping entries to reflect the cash deposit bank journal entry

Cash Deposit Bank Journal Entry
Account Debit Credit
Bank 900
Cash 900
Total 900 900

Cash Deposit Bank Journal Entry Explained

Debit: The cash is deposited at the bank increasing the balance in the bank account.

Credit: Physical cash held by the business reduces when deposited at the bank.

It should be noted that the cash deposit bank journal entry simply transfers cash from one location to another, the asset the business has is always cash. After depositing the cash instead of being held by the business in the form of physical cash, it is now held by the bank on behalf of the business.

The Accounting Equation

The accounting equation, Assets = Liabilities + Equity means that the total assets of the business are always equal to the total liabilities plus the equity of the business. This is true at any time and applies to each transaction.

For this transaction the accounting equation is shown in the following table.

Cash Deposit in Bank Journal Entry Accounting Equation
Assets = Liabilities + Equity
Bank – Cash = None + None
900 – 900 = 0 + 0

In this case an asset (physical cash held by the business) decreases representing money deposited at the bank; this decrease is balanced by a corresponding increase in another asset (the bank account balance).

Popular Examples

This cash deposit in bank journal entry is one of many bookkeeping entries used in accounting, discover another at the links below.

Cash Deposit Bank Journal Entry November 17th, 2017Team

You May Also Like

Related pages

bank reconciliation template xlsjournal entry for bad debthow to calculate cash flow in exceltimes interest ratio formulajournal entry for accrued payrollpaid rent in advance journal entrydirect materials usage variance formulakenexa prove it tutorialsdupont return on assetsjob costing formatsundry creditors accountnet relizable valuelabour efficiency variance formulaexamples of prepaymentsmanual ledger formatcapital lease templatecalculate ytm in excelaccounting for accrued expenseseconomic entity assumption definitionexcel worksheet templatesinventory ledger templatefob factory definitionhow to work out markuphow to calculate depreciation rate formuladirect labor cost variance formuladebtor days calculationrules of double entry bookkeepingliquidity ratios formulaproveit practice testhow to calculate cogs from income statementaccounting ledgers exampleschart of accounts for merchandising businessnominal annual rate of return formulacalculate the payback periodjournal entry for reimbursement of expenseweighted average cost of inventory formuladirect write off method for uncollectible accountsmonetary unit assumption definitionbookkeeping worksheetpetty cash accounting journal entrypension accounting basicsexcel calculate marginaccounts payable a credit or debithow to calculate payback period in yearswhat does eom mean in accountingpv of an annuity dueinventory turnover ratio in days formulaprudence in accountingaccounts ledger templatesample chart of accounts for small businessbookkeeping workbookallowance for doubtful accounts credit or debitpmt function formulaaccounting accruals and prepaymentsdiscount allowed journal entrycash disbursement formathow to calculate debtors turnover ratiopmt function excelgrant amortisationwhat is a retained earningdeferred taxation exampleaccrued expense examplesdebtors control account exampleexpanded accounting equationbookkeeping entries examplescarriage inwards definitionretained earnings formula on balance sheetperpetual inventory journal entriesannuity due present valuefactoring of trade receivablesgross margin excel formulaformula for acid test ratiothe adjusting entry to record an accrued revenue isdifference between accounts payable and notes payablereturn on capital employed analysishow to book accrued expenses