# Cash Deposit Bank Journal Entry

A business normally maintains a separate account in its general ledger for a specific named bank account. The bank account is usually a checking account or current account with a financial institution and is used in day to day trading to make withdrawals and deposits. A cash deposit bank journal entry is required when a business takes cash and deposits it into the bank account using a paying in slip.

The bank account is a current asset and is included under the heading of cash and cash equivalents in the balance sheet of the business.

## Bank Deposit Journal Entry Example

Suppose for example a retail business has made cash sales to customers amounting to 900. At the end of the trading day the business completes a paying in slip and deposits the amount at the local branch of its bank.

The accounting records will show the following bookkeeping entries to reflect the cash deposit bank journal entry.

Cash Deposit Bank Journal Entry
AccountDebitCredit
Bank900
Cash900
Total900900

## Cash Deposit Bank Journal Entry Explained

Debit: The cash is deposited at the bank increasing the balance in the bank account.

Credit: Physical cash held by the business reduces when deposited at the bank.

It should be noted that the cash deposit bank journal entry simply transfers cash from one location to another, the asset the business has is always cash. After depositing the cash instead of being held by the business in the form of physical cash, it is now held by the bank on behalf of the business.

## The Accounting Equation

The accounting equation, Assets = Liabilities + Equity means that the total assets of the business are always equal to the total liabilities plus the equity of the business. This is true at any time and applies to each transaction.

For this transaction the accounting equation is shown in the following table.

In this case an asset (the bank account balance) increases; this increase is balanced by a corresponding decrease in another asset (physical cash held by the business).

## Popular Double Entry Bookkeeping Examples

This cash deposit in bank journal entry is one of many bookkeeping entries used in accounting, discover another at the links below.

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.