The Cash Receipts journal is the first place you record incoming cash for your business. The majority of cash received each day comes from daily sales. Other possible sources of cash income include deposits of capital from the company’s owner, customer bill payments, new loan proceeds, and interest from saving accounts.
Each entry in the Cash Receipts journal must indicate how the cash was received but it must also show the account into which the cash will be deposited.
In double-entry bookkeeping, every transaction is entered twice. It will be entered once as a debit and once as a credit.
In the Cash Receipts journal, the Cash account is always the debit because it’s where you deposit your money. The credits vary depending upon the source of the income.
You record most of your incoming cash daily because it’s cash received by the cashier. Most likely it is called cash register sales or simply sales in the journal. When you record cheques received from customers, you list the customer’s check number and name as well as the amount.
The following information must be entered when the transaction is listed in the Cash Receipts Journal:
- Date: The date of the transaction.
- Account Credited: The name of the account credited.
- PR (post reference): Where the transaction will be posted at the end of the month.
- General Credit: Transactions that don’t have their own columns; these transactions are entered individually into the accounts impacted.
- Accounts Receivable Credit: Any transactions that are posted to the Accounts Receivable account.
- Account that is credited Credit: Mot likely sales.
- Cash Debit: Any entry that will be added to the Cash account.