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Cash Paid into a Bank
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The journal entry for cash paid into a bank depends on the source or reason for the cash payment. If the cash represents an increase in the company’s own funds, such as cash from sales or cash received from investors, the journal entry would be as follows:
Debit: Bank (Balance Sheet) Credit: Cash (Balance Sheet)
The “Debit” entry increases the bank account, which is an asset recorded on the balance sheet, representing the company’s cash held in the bank. The “Credit” entry reduces the cash account, reflecting the cash inflow into the company.
For example, let’s say a company deposits $10,000 cash into its bank account. The journal entry would be:
Debit: Bank $10,000 Credit: Cash $10,000
Alternatively, if the cash payment represents a repayment of a loan or an expense payment, the journal entry would be slightly different. Let’s consider an example where a company pays $5,000 in cash for an expense:
Debit: Expense Account (Income Statement) Credit: Cash (Balance Sheet)
The “Debit” entry increases the appropriate expense account, such as rent expense or utility expense, which is recorded on the income statement. The “Credit” entry reduces the cash account, reflecting the cash outflow for the expense payment.
For instance, if the company pays $5,000 cash for rent, the journal entry would be:
Debit: Rent Expense $5,000 Credit: Cash $5,000
It is worth noting that specific circumstances and accounting policies may result in variations in the journal entry for cash paid into a bank. Therefore, it is advisable to consult with an accountant or refer to the company’s accounting guidelines for accurate journal entries based on the specific transaction.
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To visit: https://www.mca.gov.in/
