Cash Receipts JournalDefined with Examples

Lisa Borga

Date Published: November 19, 2021

The cash receipts journal is a specialized accounting journal and is an important part of the general journal.

This journal is used particularly to record receipt of cash from all sources.

A business can receive cash from many sources, and the most important include:

  • Capital Investment
  • Cash Sales
  • Collection on Customer Accounts
  • Collection from Long-Term Investments
  • Loans of Capital from Banks or Individuals

Cash Receipts Journal

How a Cash Receipts Journal Works

A cash receipts journal is used by companies to record all cash received from any source.

This includes cash sales, receipt of funds from a bank loan, payments from customer accounts, and the sale of assets.

Below you can see an example of a typical cash receipts journal.

As you can see, a cash receipts journal will generally include a number of columns, and this is due to the many types of transactions that can result in cash returns.

In the debit column of a cash receipts journal, there will always be a cash column and, in most cases, a column for sales discounts.

More columns will often be included if a business regularly performs a specific type of transaction.

In the example, you will see that there is only one other debit column, and this is the other accounts column. In this column, there are three sub-columns including:

  • A column for account names
  • A column for posting reference
  • A column for the amount

This is only an example, and these columns can easily be customized for the particular business’s needs.

One change that may improve the other accounts column for businesses with a number of accounts would be to switch out the account names sub-column with an account number column.

For the credit columns, most businesses will include columns for accounts receivable and sales; however, often, more or different columns can be used depending on the particular transactions that a business regularly uses.

For our example, the credit column includes one additional column, which is for other accounts.

It is essentially the same as the other column on the debit side, with the exception that instead of an account name sub-column, it has a Ref. column for account numbers.

Example of Cash Receipts Journal

Example of cash receipts journal

It may help to consider an example of how a cash receipt journal is used.

Let’s assume that in the month of January, the BigSale Retail Company performed the following transactions and recorded them in their cash receipts Journal.

  • 1: The company made cash sales of $409.
  • 2: The company collected $206 from a sale to Jeremy Gram (Account #5) made in December. No sales discount applies.
  • 2: The company sold $5,000 worth of marketable securities, which it originally purchased for $4,500.
  • 11: The company collected $1,552 from William Penn (Account #7) with a sales discount of $48 applied.
  • 14: The company made cash sales of $1,300.
  • The company collected $1,649 from Justin Thompson (Account #37), with a sales discount of $51 applied.
  • The company received repayment of a $300 employee advance.
  • The company collected $4,392 from Franklin Berkley (Account #65), which includes multiple sales, including an overdue balance from Jan. 5 and another sale made on Jan. 9. No sales discount applies.

In order to record the previous transactions into the cash receipts journal, they were recorded in the journal sequentially using the appropriate columns.

To record the cash sale, BigSale Retail Company made on Jan. 1; we start by entering the date in the date column.

Then we enter “Cash Sales” into the column for explanation and subsequently enter the amount of $409 into the cash debit and sales credit columns.

Because it is clear that this is a cash sale from other columns, there is no need to make a separate entry into the accounts credited column.

Formatting the Cash Receipts Journal

You’ll find there are different possible formats you can use for your cash receipts journal, and the one you should use really depends on the needs of your business.

But, to give you an idea of the format, here is a sample cash receipts journal.

Cash Receipts Journal

Formatting the Cash Receipts Journal

Here is a description of each of the columns.

  • Date Column: This is where the date the business received the cash is recorded.
  • Accounts Credited Column: The name of the account for which the cash is received is entered here.
  • Post Reference Column: This is where the number of the ledger account is written when the entry is posted.
  • Cash Column: The amount of cash that has been received is recorded in this column.
  • Discount Column: The amount of the cash discount is recorded here when the cash is received.
  • Sales Column: Merchandise sold for cash is recorded here.
  • Accounts Receivable Column: This column is where cash is recorded when received from customers.
  • Sundry Accounts Column: Credits to accounts are recorded in this column if they belong in no other specific column.

Example

Record these transactions from 2020 in the cash receipts journal.

  • May 03: Received $750 from Ben’s Ltd. to settle the $800 remaining on the account
  • May 07: Received $3,900 from Lucy’s Linens, giving a discount of $30
  • May 10: Received $225 for interest from an investment
  • May 15: Cash sales of $2,300 For now, employers should still be prepared to implement the requirements in the ETS as the Sixth Circuit could choose to lift the stay put in place by the Fifth Circuit. for May 1 through May 15
  • May 22: Received an $850 payment from Ben’s Ltd. for items sold on credit with a $50 discount
  • May 24: Sold $50 of cleaning supplies for cash
  • May 27: Received cash payment of $1,300 from Carla’s Preschool and gave a discount of $175
  • May 31: Cash sales for May 15 through May 31 $3,100

Solution

Cash Receipts Journal

How to Post the Cash Receipts Journal to Relevant Ledger Accounts

This is how to post to the cash receipts journal.

First, you will post the total of the cash column to the general ledger in the cash account as a debit.

Next, you’ll take the total of the sales column and post it to the general ledger in the cash account as a debit.

The payments received from customers are listed in the column for accounts receivable.

These payments are also recorded in the subsidiary ledger for accounts receivable in the individual customer’s account.

You will post the total for the accounts receivable column to the general ledger in the accounts receivable account as a credit.

After this, every transaction in the sundries column needs to be posted to the appropriate account in the general ledger as a credit.

However, you will not need to post the total for the sundry account.

You will also not be posing any of the individual amounts listed in the cash and sales column.

With the cash receipts journal, you will post in two stages, which is like the procedure for many other journals.

Any transactions that you have posted in the accounts receivable column will need to be posted every day to the subsidiary accounts receivable ledger.

Doing this will help to keep your customer’s accounts current and accurate.

While posting to these accounts, you should enter the account number in the column labeled post reference.

When entering from the cash receipts journal, the post reference would be CR for cash receipts and then the page number, for example, CR-5. So, this entry would have been from the cash receipts journal on page 5.

When the end of a month comes, you will need to total the columns in the cash receipts journal.

Then, you will post these totals to the correct accounts in the general ledger.

Remember to mark the post reference, which for the cash receipts journal will be CR-(page number from the cash receipts journal).

The rest of the amounts in the other accounts column also need to be posted.

However, this is typically done at the end of each month. Although, this may be done more often.

While you are posting, you should put the account numbers in the post reference column.

Once you post the total, put a checkmark under the column.

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  1. Mercer County Community College "Cash Receipts, Cash Payments, and Banking Procedures" Page 5-10. November 19, 2021

  2. Alamo Colleges District "Accounting Notes Special Journals" Page 1. November 19, 2021

  3. Texas Tech University "General Ledger Entries" Page 2 - 5. November 19, 2021