Cash Short And Over Account Journal Entry
Let’s Explain The Cash Short And Over Situation With The Help Of An Example:
Suppose, a shoe company’s cashier received $490 from customer for shoes (sale price = $500) sold but the cashier mistakenly used the accounting software to record the entry in the books of accounts as $500 as it is the actual price stored in the accounting software. Now there is a difference between the actual amount received ($490) and the expected amount recorded in the ledger ($500). So, there is a difference of $10 which is charged to cash over and short account as an expense account. The journal entry to record is shown below:
(a). In Case Of Cash Shortage
Cash a/c $490
Cash Over And Short a/c $10
Sales a/c $500
(Cash Sales Recorded With Cash Over And Short Account)
On the other hand, if the cashier received $510 from customer and mistakenly he thought it was $500, but the accounting system recorded it as $500. Now there is difference of $10 between actual cash received from customer ($510) and amount of sales recorded in the ledger is $500. So, there is cash over situation and it is recorded as an income. The entry to record is shown below:
(b). In Case Of Cash Overage
Cash a/c $510
Sales a/c $500
Cash Over And Short a/c $10
(Cash Sales Recorded With Cash Over And Short Account)
Cash Over And Short Is What Type Of Account
Cash Short And Over Account is a Temporary Account and it is closed to Income Summary Account at the end of the accounting period. It is recorded as an expense account in Income Statement Under “Other Expenses” if actual cash on hand is less than the expected cash on hand in the general ledger, otherwise (if actual cash on hand is more than the expected cash on hand in the general ledger), it is recorded as an Income Under “Other Income” in Income Statement which is very rare case.
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