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Singh Arjun

What is the Journal Entry for Cash Deposit in Bank?

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1 Answer

  1. 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/cDebitPersonal accountDebit the receiver
     To Cash A/cCreditReal accountCredit what goes out

    (Being cash deposited in the bank)

    2. According to the “Modern rules” of accounting

    Bank A/cDebitAssetDebit the increase in asset
     To Cash A/cCreditAssetCredit 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/cDebit500,000Debit the increase in asset
     To Cash A/cCredit 500,000Credit the decrease in asset

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

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