-This question was submitted by a user and answered by a volunteer of our choice.
Cash is commonly received by the business under the following situations:
1. Receipt of payment by a debtor in cash.
2. Sale of goods by the business on a cash basis.
3. Withdrawal of cash from the bank.
4. Cash received from other income.
5. Additional capital introduced by the partner, etc.
It is important to note that the receipt of cash in any of the above-mentioned scenarios is always debited in the books of accounts because it is an asset for the business.
1. Journal entry for cash received by the debtor
| Cash a/c | Debit | Debit the increase in asset |
| To Debtor a/c | Credit | Credit the decrease in asset |
(being cash received from the debtor)
2. Journal entry for cash received from the sale of goods
| Cash a/c | Debit | Debit the increase in asset |
| To Sales a/c | Credit | Credit the increase in revenue |
(being goods sold)
3. Journal entry for cash received from withdrawal
| Cash a/c | Debit | Debit the increase in asset |
| To Bank a/c | Credit | Credit the decrease in asset |
(being cash received from withdrawal)
4. Journal entry for cash received from other income
| Cash a/c | Debit | Debit the increase in asset |
| To Other income a/c | Credit | Credit the increase in revenue |
(being cash received from other incomes such as commission, rent, interests, etc)
5. Journal entry for additional capital introduced by the partner
| Cash a/c | Debit | Debit the increase in asset |
| To Capital a/c | Credit | Credit the increase in revenue |
(being additional capital introduced)
Hope this helps.
