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Amara Sani

What is received cash journal entry?

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1 Answer

  1. This answer was edited.

    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.

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