Cash Receipts and Cash Payments Journal: Definition, Rules, and Format [Notes with PDF]

In this article, we will learn in-depth about cash receipts and cash payments journal, including its definition, Rules, format, and much more.

What is a Cash Receipts Journal?

A cash receipts journal is a special journal that is used to record all forms of cash receipts. The cash receipt journal keeps track of all forms of cash receipts for a company in chronological order.

Cash sales of goods and cash receipts from accounts receivable are the two most common sources of cash receipts.

There may be additional sources of cash receipts. For example, additional capital provided by the owner, taking a loan from a bank, interest received a dividend, cash sale of assets, house rent, etc.

Rules for Preparing a Cash Receipts Journal

In the Cash Receipt Journal, transactions are recorded as follows:

1.Date:

In the date column, write the date on which the cash is received in chronological order.

2. Credited Accounts:

In this column, write the name of the account from which the money is received, i.e. the account to be credited.

3. Debit Account:

The debit account has two columns.

3.1. Cash Receipts Column and

3.2. Discount Expenses Column

3.1. Cash Receipt Column:

The amount of cash collected from each transaction should be written in the Cash Receipt column.

3.2. Discount Expenses:

The amount discounted on receipt of accounts or cash from debtors is the discount expense, which must be recorded in this column.

4. Credit Account:

The credit accounts section does not have a fixed number of columns. The number of columns is determined by the number of cash transactions. Credit accounts are listed as follows:

4.1. Sales:

The cash receipts from goods sales have to be written in this column. This column does not include the entry of cash receipts from the selling of old assets.

4.2. Accounts Receivable:

Cash received from accounts receivables or debtors, as well as the total of discounts issued, should be entered in this column.

4.3. Additional Capital:

If the owner brings additional capital to the business, the additional capital has to be written in this column.

4.4. Loans:

If a company takes out a loan for commercial purposes, the loan amount must be recorded in the loan column.

4.5. Income or Dividends:

This column should include interest on investments, bank deposit interest, dividend receipts of company shares, receipts from other sources, and miscellaneous receipts.

Format of Cash Receipts Journal

Concept of Cash Receipts and Cash Payments Journal

What is a Cash Payment Journal?

The cash payment journal is a specialized journal that is used to record various transactions relating to cash payments.

The cash payment journal keeps track of all forms of cash payments made by a business in chronological order.

The purchase of goods in cash, payments to creditors, and payments in other miscellaneous sectors are all examples of cash transactions in an ongoing business.

Since cash payments are made under a variety of headings, the cash payment journal includes several money columns.

Rules for Preparing a Cash Payments Journal

The following is a discussion of how transactions are accounted for in the cash payments journal:

1.Date:

In the date column, write the date on which the cash is paid in chronological order.

2. Debit Account:

The name of the account in which cash is paid, i.e. the account to be debited, should be entered here.

3. Check No.:

Normally a large amount is to be paid by check at the time of payment. The check of the bank from which the check has been issued and the check no is recorded in this column.

4. Ref:

The page on which the cash transactions are transferred to the ledger book has to be written in the Ref. Column.

5. Debit Accounts:

Cash payments are typically made in a variety of fields, including accounts payable, notes payable, purchases of goods, advance expenditures, salaries of officers and staff, and property purchases, among others.

All of the money that has been disbursed must be recorded under the relevant heading.

6. Credit Accounts:

The credit account consists of two columns, namely

6.1. Cash Payment Column and

6.2. Purchase Discount or Discount Received Column.

6.1. Cash Payment:

The cash payment column usually contains the amount to be paid in cash in the account payable or creditor’s account, as well as the amount to be paid in cash in all other fields.

6.2. Purchase Discount or Discount Received:

The purchase discount or discount received column should contain the amount of money discounted at the time of account payable payment.