Cash Over Journal Entry

A cash over normally occurs in a retail accounting environment when the sales are reconciled to the cash receipts in the register at the end of the business day. If the cash in the register is more than the sales there is said to be a cash over. Likewise, if the cash is less than the sales the cash is said to be short.

Cash overages are normally recorded in a separate income statement expense account often referred to as the cash over/short account.

Cash Over Journal Entry Example

Suppose a retail business starts each day with a cash balance of 200 in the cash register. During the day sales of 1,400 are entered into the register, and a cash count at the end of the day shows cash of 1,614 as summarized below.

Cash register reconciliation
Cash count 1,614
Less opening fund 200
Amount banked 1,414
Sales on cash register tape 1,400
Cash over 14

The reconciliation shows that there is a cash over of 14.

To record the cash register overage the business needs to enter the cash over of 14 as part of the journal entry used to record the sales as follows.

Cash over journal entry
Account Debit Credit
Cash 1,414
Cash over/short 14
Sales revenue 1,400
Total 1,414 1,414

The cash overage/shortage account is an expense account in the income statement of the business.

The Accounting Equation

The accounting equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus the owners 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.

Rent Deposit – Accounting Equation
Assets = Liabilities + Owners Equity
Cash = None + Sales + overage
1,414 = 0 + 1,400 + 14

In this case one balance sheet asset (cash), has been increased by 1,414 when the cash is banked. On the other side of the accounting equation the sales of 1,400 plus the cash register overage of 14 increase the net income, retained earnings, and therefore owners equity in the business by the same amount of 1,414.

Popular Examples

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

Cash Over Journal Entry May 2nd, 2017Team

You May Also Like

Related pages

periodic inventory system cost of goods soldbookkeeping accounts payable and receivablemarkup calculatorpremium bond examplebook keeping journalmarkup margin calculatorgross profit ratio formulawhat are adjusting journal entrieswhat is a contra asset in accounting termsaccumulated depreciation journal entryassets liability and equitydiscount factor excelcos bookkeepingformula for calculating future value of annuitypv of annuity factorcompute cost of goods manufacturedchart of accounts pakistanexample payroll journal entryaccounts reconciliation templateprofit and markupdepreciation journal entrieshow to calculate stock value in excelsingle column cash book exampledouble declining depreciation equationdebt equity calculatorreversing entries accountingcost variance examplehow to record adjusting entriesunearned revenue debit or creditbank reconciliation statement easy methoddividend payout definitiontotal variable costs formulacalculate unit contribution margindebt equity ratio calculation formulaprovision for bad debts accounting entryledger templatescalculate the degree of operating leveragepresent value annuity factor tablewhat is nbv in accountinginventory turnover calculatorstraight line depreciation equationgeneral ledger sheetestablishing a petty cash fundaccount receivable normal balancepresent value table annuity dueaccounting petty cash bookdouble entry bookkeeping tutorial pdfpartnership appropriation accountsale of asset accountinghow to calculate weighted average contribution marginmulti step income statement definitiondefine daybooklc margin moneywarranty expense journal entrydebit credit balance sheet excelhorizontal analysis of financial statementuneven cash flowbills payable and bills receivable meaningunearned revenue a liabilityquick ratio calculation formulathe allowance for doubtful accountsannuity factor excelfreight collect fobmargin & markupaccrued expenses entryhorizontal analysis in accountingaccrued payable journal entrynotes payable calculatorreconciling accounts payableaccountant quizcalculate variable expenseswhat are gearing ratiosexample of petty cash spreadsheethow to find dividends paid on balance sheetcreditor control accountdouble declining amortizationhow to calculate notes payable