Cash Deposit Journal Entry

Overview

In business, a daily cash deposit to the bank is a sample of good internal control for cash management. Likewise, the company will make a journal entry for the cash deposit in order to move the deposited balance from the cash account to the bank account.

In the cash deposit, there is a zero impact on the total assets in the balance sheet as the transaction only increases one asset which is the bank account while decreasing another asset which is the cash account. And both cash and bank are considered liquidity assets as the company can easily convert the bank account into cash.

Cash deposit journal entry

The company can make the cash deposit journal entry by debiting the bank account and crediting the cash account.

Account	Debit	Credit
Bank	$$$
Cash		$$$

This journal entry simply moves the balance in the cash account to the bank account. There is no impact on the income statement as it is not a revenue or expense transaction.

Cash deposit example

For example, on Jan 31, 2021, the company ABC deposit $2,000 into its bank account.

In this case, the company ABC can make the journal entry for bank deposit on Jan 31, 2021, as below:

Account	Debit	Credit
Bank	2,000
Cash		2,000

After this journal entry, the balance of cash on hand in the company ABC will reduce by $2,000 while its bank account will increase by $2,000.

Deposit of check

Usually, when the company receives the check from its customers, it will make the journal entry by debiting the cash account and crediting the sales revenue account. This is due to the check is considered the cash and cash equivalent in the accounting.

Hence, the journal entry for the check deposit is usually the same as the cash deposit with the debit of bank account and the credit of cash account.

Account	Debit	Credit
Bank	$$$
Cash		$$$