Cash Receipts Journal

A cash receipts journal is a special journal used to record every transaction in which a business receives money. Instead of writing a full two-line journal entry for each receipt in the general journal, the bookkeeper enters each one on a single row with amounts in dedicated columns, such as Cash, Sales Discounts, Accounts Receivable and Sales. At the end of the month, column totals are posted to the general ledger in one step.

The cash receipts journal is one of the four classic special journals, alongside the sales journal, the purchases journal and the cash payments, or disbursements, journal. Each is a book of original entry, meaning transactions are recorded there first, before they reach the ledger. Modern accounting software does not show a paper journal, but its cash receipts or deposits module performs exactly the same function.

Picture a notebook kept beside the till, with a fresh line for each payment received and columns headed "cash", "paid by customers who owed us", "cash sales" and "other". At the end of the month, rather than copying every line into the main accounts, the bookkeeper adds up each column and copies just the totals.

The notebook saves a great deal of writing and makes it easy to see, at a glance, where all the money came from that month.

• Date and description, including the customer's or payer's name.
• Posting reference, showing the customer's subsidiary account or ledger account posted.
• Cash debit, the amount actually received.
• Sales Discounts debit, for early-payment discounts taken by customers.
• Accounts Receivable credit, for collections on account.
• Sales credit, for cash sales.
• Other Accounts credit, for less frequent receipts such as loan proceeds, interest or an owner's investment.

During March, a wholesaler records three receipts. On March 3, it makes a cash sale of $1,800. On March 10, customer Baker pays a $4,000 invoice less a 2% discount, sending $3,920. On March 21, it borrows $10,000 from the bank. The journal shows:

Before posting, the bookkeeper checks that total debits equal total credits: $15,720 + $80 = $15,800, and $4,000 + $1,800 + $10,000 = $15,800. This check, adding columns down and then across, is called crossfooting.

Receipts that do not fit the standard columns still go in this journal, using the Other Accounts column, because the rule is that every receipt of cash is recorded here. Non-cash sales on credit, by contrast, belong in the sales journal, and any transaction that fits none of the special journals, such as an adjusting entry, is recorded in the general journal.

Posting happens at two levels. During the month, each amount in the Accounts Receivable column is posted individually to the customer's account in the accounts receivable subsidiary ledger, so that customer balances stay current. Each Other Accounts amount is posted individually to its general ledger account, here Notes Payable. At month end, the totals of the Cash, Sales Discounts, Accounts Receivable and Sales columns are posted to their general ledger accounts. The Accounts Receivable control account then equals the total of the subsidiary ledger, which is checked with a schedule of customer balances.

Special journals save time, reduce posting errors, and allow work to be divided: one employee can keep the cash receipts journal while another keeps the sales journal. The cash receipts journal also supports internal control. Its daily totals can be compared with deposit slips and the bank statement, and the person who keeps the journal should not be the one who handles the cash or prepares the bank reconciliation. In software, these principles survive as user permissions, deposit batches and audit trails, even though the journal is now a screen rather than a ruled ledger book. Totals feed the Cash account and, ultimately, the cash receipts reported in the statement of cash flows.