Which Special Journal Is Used To Record Money Received

A Special Journal (Cash Receipts Journal) Used To Record Money Received

Cash Receipts Journal is used to record all those transactions which involve cash receipts. Cash receipts transactions include Cash Sales, cash collected from customers, revenue Received, etc.

Example, Mr. A is a sole proprietor received cash of Rs. 4000 from customer, Mr. B for merchandise / goods sold on account.

In this transaction, cash receipts of Rs. 4000 from customer, Mr. B is to be recorded in cash receipts journal. The journal is to record is shown below:

Cash Collected From Customers Journal Entry / Cash Received From Customers Journal Entry

                                                                          Cash a/c  4000

 

                                                                                                    Mr. B  4000

 

                                                                            (Cash Received From Customer)

Cash account is debited as it is receiving by the business while Mr. B’s Account, representing a customer or an accounts receivable or a debtor account is also decreasing as the business is receiving money from customer, Mr. B against merchandise / goods sold.

The Effect Of Money Received By The Business From Customer On The Accounting Equation / The Effect Of Cash Received From Customer On Accounting Equation / Cash Received From Customers Accounting Equation

                                                            Assets               =       Liabilities     +       Owner’s Equity

                                                       +Cash   -Mr. B        =              0              +                 0

                                                       +4000   -4000        =               0             +                  0

As cash account is coming into the business, so we added it to the assets side of the accounting equation. Mr. B as an accounts receivable or a debtor account is decreasing as the business is receiving the money from Mr. B against the merchandise / goods sold on account or on credit, so it is deducted from assets side or left side of the accounting equation. No change will be made on the right side of the accounting equation and hence the accounting equation remains in balance.