What is a Cash Receipts Journal?

Cash Receipts Journal

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Cash Receipts Journal

A cash receipts journal is a specialized accounting journal used to record and track all cash inflows received by a business. This journal helps businesses organize and maintain a detailed record of cash transactions, providing an overview of the sources of cash and the amounts received during a specific period.

The cash receipts journal typically includes several columns to record various details of each transaction, such as:

  • Date: The date when the cash was received.
  • Description: A brief description of the transaction or the source of cash.
  • Invoice number or reference number: A unique identifier for the transaction, if applicable.
  • Cash account: The amount of cash received in the transaction.
  • Sales, fees, or other revenue accounts: Columns for specific revenue categories to allocate the cash receipt to the appropriate account (e.g., sales, services, rental income, etc.).
  • Accounts receivable: The amount applied against the customer’s outstanding balance if the cash receipt relates to a customer payment for an earlier invoice.
  • Other columns: Depending on the nature of the business, there may be additional columns to record specific types of cash receipts, such as discounts, taxes, or other relevant information.

The cash receipts journal is typically totaled and summarized periodically (e.g., monthly) to update the general ledger accounts. The journal provides a convenient way to monitor and analyze cash inflows, helping businesses maintain accurate financial records, identify trends, and assess their cash management practices.

Example of Cash Receipts Journal

Let’s consider a small business that uses a cash receipts journal to record its cash inflows. Here’s an example of a cash receipts journal for the month of June:

DateDescriptionInvoice No.Cash AccountSalesService FeesAccounts Receivable
June 1Customer A Payment1001$500$500
June 3Cash Sale1002$200$200
June 5Customer B Payment1003$300$300
June 6Service Fee from C1004$150$150
June 10Cash Sale1005$350$350
June 12Customer D Payment1006$400$400

In this example, the cash receipts journal records the cash inflows received by the business during June. Each transaction is documented with its date, description, invoice number (if applicable), and the amount received in the cash account column. The cash receipt is then allocated to the appropriate revenue account, such as sales or service fees, or applied against a customer’s accounts receivable balance if it’s a payment for an earlier invoice.

At the end of June, the business totals each column to update its general ledger accounts. The cash receipts journal helps the business track its cash inflows, identify the sources of cash, and maintain accurate financial records.

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