Procedure for posting a cash transaction to a journal account
what is cash transaction
If a payment is made on the day of purchase or sales (due date), it is a cash transaction
Example
- 05/12/20 goods purchased from RK traders $450
- 05/12/20 cash paid to RK traders $450
Transaction entry
05/12/20 goods purchased from RK traders $450 on cash
cash transaction is not only the cash in hand but also the cash in bank. If the transaction is done through a bank, it should be recorded in the bank account or if the transaction is done through the cash in hand, it should be recorded in the cash account
Procedure for posting a cash transaction to a journal account
# The name of the person is not required for the cash transaction (person A/C )
# If it is a cash transaction, you need to know whether the cash comes in (debit) or cash goes out(credit) ( real A/C )
# you need to know the type of the transaction and where to post for it (debit or credit) (nominal account)
The types of the transaction to be posted in the debit
- Purchased by: Goods & Services / asset.
- Expenses
- Loss: Any loss to the company
The types of the transaction to be posted in the credit
- Sales: Goods & Services /asset
- Income: Indirect sources of income
- Gain: Direct sources of income
▶ The raw material were bought on the 04/02/20 by giving €1200 to Nemiex
This is a cash transaction so follow the cash transaction steps
personal account not required for cash transaction .cash or bank A/C and nominal A/C (type of transaction) needed most importantly
▶ first step : The name of the person is not required for the cash transaction
▶ The cash goes out so credit cash A/C
▶ This is the type of the purchase and the debit posting so debit raw material A/C
| date | particular | amount | amount |
|---|---|---|---|
| 04/02/2020 | raw material A/C D | 1200 | |
| to cash A/C | 1200 | ||
| Purchased raw material on cash |
▶ The electricity bill was paid through the service of an net bank 05/01/20 $100
▶ first step : The name of the person is not required for the cash transaction
▶ The cash goes out so credit bank A/C
▶ This is the type of the expenses and the debit posting so debit electricity bill A/C
| date | particular | amount | amount |
|---|---|---|---|
| 05/01/2020 | electricity bill A/C D | 100 | |
| to bank A/C | 100 | ||
| electricity bill paid on net bank |
▶ The company suffered a loss due to the fire and was given a $5000 check to repair it 07/21/21
▶ first step : The name of the person is not required for the cash transaction
▶ The cash goes out so credit bank A/C
▶ This is the type of the loss and the debit posting so debit loss on fire A/C
| date | particular | amount | amount |
|---|---|---|---|
| 07/21/21 | loss on fire A/C D | 5000 | |
| to bank A/C | 5000 | ||
| loss due to the fire and was given a check to repair it |
▶ The goods were sold to the customer for $2300 (The cash was received through the bank) 04/28/23
▶ first step : The name of the person is not required for the cash transaction
▶ The cash comes in so debit bank A/C
▶ This is the type of the sales and the credit posting so credit sales of goods A/C
| date | particular | amount | amount |
|---|---|---|---|
| 04/28/23 | bank A/C D | 2300 | |
| to sales of goods A/C | 2300 | ||
| The goods were sold for Cash |
▶ Received $4200 for brokerage 08/08/22 (bank)
▶ first step : The name of the person is not required for the cash transaction
▶ The cash comes in so debit bank A/C
▶ This is the type of the income and the credit posting so credit brokerage Received A/C
| date | particular | amount | amount |
|---|---|---|---|
| 08/08/22 | bank A/C D | 4200 | |
| to brokerage Received A/C | 4200 | ||
| brokerage Received (bank) |
▶ Capital gain of $8000 was obtained from the sale of the machine or Profit of $8000 on sale of machine 12/13/24 (bank)
▶ first step : The name of the person is not required for the cash transaction
▶ The cash comes in so debit bank A/C
▶ This is the type of the gain and the credit posting so credit Profit on sale of machine A/C
| date | particular | amount | amount |
|---|---|---|---|
| 12/13/24 | bank A/C D | 8000 | |
| to Profit on sale of machine A/C | 8000 | ||
| Profit on sale of machine (bank) |
It is better to recorded a cash transaction as a bank account than as a cash account, because in modern times most transactions take place through the bank.
try you are self and asked any qusting ?
- ► Paid $200 for advertisement
- ► 04/22/21 :paid salary $3000
- ► 07/11/21:paid rent by cheque $5000
- ► 09/21/21 :paid electricity bill by cash 1500
- ► Purchased goods for cash $30,000 on cash
- ► Sold goods to Sohan $800 on cash
- ► Brokerage received $20000
- ► interest received $300
- ► Brokerage paid $20000
- ► interest paid on loan $300
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