The double entry bookkeeping cash receipts journal entry would be as follows:Ĭash receipts journal used to update the general ledger Account In the above example, the cash receipts journal column total for the month is 1,050, and in this particular case represents receipts from credit sale customers of 900 and receipts from cash sales of 150. As the business is using subsidiary ledger control accounts in the general ledger, the postings are part of the double entry bookkeeping system. Cash Receipts Journal Totals Used to Update the General LedgerĪt the end of each accounting period (usually monthly), the cash receipts journal column totals are used to update the general ledger accounts. When posting to the accounts receivable ledger, a reference to the relevant page of the cash receipts journal would be included.Īs the business maintains control accounts in the general ledger, the entries in the subsidiary ledger itself (in this case the accounts receivable ledger) are not part of the double entry bookkeeping, it is simply a record of the amounts collected from each customer. In the above example, 550 is posted to the ledger account of customer A and 350 to customer C. Normally most cash receipts are from credit sale customers, and the subsidiary ledger updated is the accounts receivable ledger. On a regular (usually daily) basis, the line items in the cash receipts journal are used to update the subsidiary ledgers. Cash Receipts Journal Used to Update the Subsidiary Ledgers In this example, it is assumed that receipts are cash collections from customers who have outstanding amounts for credit sales, and receipts from cash sales.Įach line represents the information from a cash receipt. Cash Receipts Journal is Updated from Source DocumentsĮach cash receipt is recorded as a line item in the cash receipts journal as shown in the example below. It should be noted that, if the business maintains subsidiary ledger control accounts in the general ledger, then only step 3 above is part of the double entry bookkeeping posting. The cash receipt journal column totals are used to update the general ledger.The cash receipt journal line items are used to update the subsidiary ledgers, such as the accounts receivable ledger.Information is recorded in the cash receipts journal from the appropriate source documents such as bank paying-in books, bank statements and advice slips.The use of the cash receipts journal is a three step process. It is important to understand that if any cash is received, even if it relates only to a part of a larger transaction, then the entire transaction is entered into the cash receipts journal. The cash receipts journal should always have an ‘other’ column to record amounts which do not fit into any of the main categories. Some businesses simply have one column to record the cash amount whereas others need additional columns for accounts receivable receipts, sales discounts, fixed asset sales, new capital, cash sales etc. The cash receipt type columns will depend on the nature of business. Analysis columns – an analysis of the cash receipt into types such as accounts receivable, cash sales, fixed asset sales, other etc.Amount – the total cash receipt amount.Ledger folio – a reference to the subsidiary or general ledger.Description – a description of the transaction indicating the account to be credited.Transaction reference – an internal reference for the transaction.
The journal is simply a chronological listing of all receipts including both cash and checks, and is used to save time, avoid cluttering the general ledger with too much detail, and to allow for segregation of duties. The cash receipts journal is a special journal used to record the receipt of cash by a business.