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  1. Vaishnavi

    Every entity deposits its idle cash in its bank account. Depositing cash in the bank account will fetch interest to the entity and also ensure safety of the money. Cash deposit in the bank is one of the most recurring transactions in every entity’s day-to-day business activity. So, it is important tRead more

    Every entity deposits its idle cash in its bank account. Depositing cash in the bank account will fetch interest to the entity and also ensure safety of the money. Cash deposit in the bank is one of the most recurring transactions in every entity’s day-to-day business activity. So, it is important to know the journal entry for the same.

    Journal Entry for Cash Deposit in Bank

    I will present the journal entry using both the golden rule and the modern rule of accounting.

    1. According to the “Golden rules” of accounting

    Bank A/c Debit Personal account Debit the receiver
     To Cash A/c Credit Real account Credit what goes out

    (Being cash deposited in the bank)

    2. According to the “Modern rules” of accounting

    Bank A/c Debit Asset Debit the increase in asset
     To Cash A/c Credit Asset Credit the decrease in asset

    (Being cash deposited in the bank)

    Example

    Sugar Ltd has idle cash 500,000. The finance manager deposited the idle amount in the company’s Bank of America A/c.

    Journal entry in the books of Sugar Ltd will be as follows-

    Bank of America A/c Debit 500,000 Debit the increase in asset
     To Cash A/c Credit  500,000 Credit the decrease in asset

    (Being Cash deposited in Bank of America A/c)

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