Transactions that decrease cash are recorded in the cash disbursements journal. The cash disbursements journal to the right has one debit column for accounts payable and another debit column for all other types of cash payment transactions. It has credit columns for purchases discounts and for cash. Since each entry debits a control account or an account listed in the column named Other, the specific account being debited must be identified on every line. Companies that frequently make credit purchases of items other than merchandise use a multi‐column purchases journal.

The cash disbursements journal itemizes allbusiness expensesmade with cash. Typical information included in the disbursement journal is the check number, the payee, disbursement amount, and the transaction cash disbursement journal type. A cash receipts journal is a special journal that records the receipt of cash by a business from any source during an accounting period. The journal records the cash flowing into the business.

Step 6. Sales discount

Compute the general ledger cash account to arrive at your ending cash balance. If your company is a typical business, you deal with a variety of cash transactions. Lumping all these transactions into one record may be tempting, but it’s almost always a bad idea. Ideally, total cash inflow should be greater than total cash outflow but that isn’t always the case in reality. This is especially true for businesses that are greatly affected by seasonal factors.

The cash receipts journal is used to record all receipts of cash for any reason. Anytime money comes into the company, the cash receipts journal should be used. Management can use this journal to not only see how much cash has been disbursed, it can also track what cash is being used for. In other words, management can look through the cash disbursements journal and see what ratio of cash is being spend on inventory compared to the amount of cash being spent on paying other bills. Your cash disbursement journal should stay updated as you receive new merchandise, make business loan payments, or any other cash disbursing transactions.

How do you record a disbursement journal?

Although companies create special journals for other types of repetitive transactions, almost all merchandising companies use special journals for sales, purchases, cash receipts, and cash disbursements. You should keep an accounts payable ledger account for each supplier. Expenses from the cash disbursements journal are, at the end of each day, posted to the appropriate accounts payable ledger.

Compare this amount to the sum of the individual accounts payable ledgers. This will help you discover any errors you made in recording your payables. A reconciliation might also help you catch any errors on vendor bills.

The fastest way to redact Cash disbursement journal template online

Accounting software allows you to add supplemental information such as expense categories and job numbers. Traditional bookkeepers use special 13-column paper to record this data. A cash receipt is money received by the firm, where a cash disbursement is money paid by the firm.