Paid Cash On Account & For Cash Journal Entry

Paid cash on account or for Cash arises when we make payments to or receive cash payments from either customers, suppliers or company to whom we receive services such as rent facilities, transportation services, etc.

When Cash Paid On Account

In that case, we create either Current Assets or Fixed Assets. For example, if we paid advances to customers or Paid Rent In Advance within a period of one year, then it creates current assets and if we paid for a period of more than one year then it creates fixed assets. The Journal Entry to record is as follows:

                                          Prepaid Expenses a/c  XXX

                                                                            Cash a/c  XXX

                                                           (Paid Expenses In Advance)

When Paid Cash For Cash

(i) When we paid cash to suppliers for goods purchased for cash. The accounting journal entry is as:

                                                     Purchases a/c  XXX

                                                                            Cash a/c   XXX

                                                              (Purchased Goods For Cash)

 

(ii) Paid Expenses for cash, then the entry is as follows:

                                                         Expenses a/c  XXX

                                                                              Cash a/c  XXX

                                                                  (Expenses Paid For Cash)