Cash Receipts Journal Accounting Demystified Book


Other (Cr.) – the amount of the cash received for reasons other than direct sales or A/R. For example, cash receipts from capital investments, bank loans, and interest revenues are generally recorded in this column.

What does a cash receipts journal do?

A cash receipts journal is a record of financial transactions that includes bank deposits and withdrawals as well as all cash payments and receipts. The general ledger account is then updated with the cash receipts journal entries. A cash receipts journal is also known as a specialised accounting journal.

They are a very efficient way of keeping track of all the cash received during an accounting period. They aid in the preparation of the cash flow statement and the cash receipt ledger.


After this, every Cash receipts journal in the sundries column needs to be posted to the appropriate account in the general ledger as a credit. Then we enter “Cash Sales” into the column for explanation and subsequently enter the amount of $409 into the cash debit and sales credit columns. This journal is used particularly to record receipt of cash from all sources. Helps in preparation of cash account ledger and cash flow statement for the period.

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A cash receipt in accounting serves as backup documentation for cash transactions recorded in cash receipt and payment journals. As an accounting entry that records the receipt of money from a customer, a cash sales receipt is a debit. The cash receipts journal is used to track transactions where a shop or wholesaler sells products to a customer and receives payment in cash. In order to record the previous transactions into the cash receipts journal, they were recorded in the journal sequentially using the appropriate columns. As you can see, a cash receipts journal will generally include a number of columns, and this is due to the many types of transactions that can result in cash returns. If you debit sales discounts, then you increase the account. You should not have many other accounts on your receipts journal unless you have some specialized accounts specific to how you operate your business.

How to Calculate Sales Returns in a General Ledger

Carter McBride started writing in 2007 with CMBA’s IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard’s Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut. A positive amount denotes a debit, whereas a negative amount denotes a credit.


July 16 Returned $2,500 of merchandise damaged in shipment from July 12 purchase. You can stuff your receipts into one of our Magic Envelopes . Use our receipt tracker + receipt scanner app to snap a picture while on the go. Or forward a receipt to your designated Shoeboxed email address.

How to Journalize Inventory Return

Most independent contractors and small adhere to the method. Regularly, an overall sum of the journal balance is calculated and sent to the general ledger.

  • In the debit column of a cash receipts journal, there will always be a cash column and, in most cases, a column for sales discounts.
  • Whereas the cash disbursement record would include items like payments made to vendors to lower accounts payable.
  • He received a CALI Award for The Actual Impact of MasterCard’s Initial Public Offering in 2008.
  • As with other journals, the cash receipts journal is posted in two stages.
  • Alphanumeric – Discount amount for the invoice which is being paid for a line of distribution.

Use the “Cash Management” journal source to identify the automated transactions on an Account Analysis report. The cash receipts journal is used to record all receipts of cash for any reason. Anytime money comes into the company, the cash receipts journal should be used. A journal is where financial transactions are first recorded and are recorded chronologically with a brief explanation. The ledger sorts and groups accounts from the journal’s business transactions showing the summaries and totals of each individual income and expense account in the receipt ledger.

When a business gets a loan from a bank, the transaction to record the loan is made in the cash collections journal. When entering from the cash receipts journal, the post reference would be CR for cash receipts and then the page number, for example, CR-5. So, this entry would have been from the cash receipts journal on page 5. This includes cash sales, receipt of funds from a bank loan, payments from customer accounts, and the sale of assets. A cash receipts journal is used by companies to record all cash received from any source.

After processing the transactions, proceed with the Cash Receipts Journal update. The last four digits of the customer’s credit card or ACH payment account, the payment type, and the authorization number are included on the report.


The cash disbursement diary and the cash receipts journal are typically divided. In contrast to a cash account, which is an account within a general ledger, a cash receipts journal is a separate ledger. When a retailer sells merchandise to a customer and it collects cash, this transaction is recorded in the cash receipts journal. In the debit column of a cash receipts journal, there will always be a cash column and, in most cases, a column for sales discounts.

  • Balancing the equation means you keep your debits equal to your credits.
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  • Chronological entries are made in the cash receipts journal and the balance is continuously updated and confirmed.
  • The cash receipts journal monitors cash flow and is essential to a successful business.
  • It is set up in the same way that the other column on the debit side is, except that the account title area is replaced by a « Ref. » column.
  • The balance in the journal is regularly summarized into an aggregate amount and posted to the general ledger.

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