How to Record a Deposit As a Journal Entry

We can easily record deposits in bank through journal entry. But before this, you should understand what is deposit. Deposit means any money which will add in your bank account. Either you or your customers may add money in your bank account.

So, when there will be deposit any money in your bank account, it will show the message on your mobile that your bank account has credited with specific account. Because we are customer of bank but bank has deal us as the creditor. So, for showing their liability, they credited our account with specific amount. Same deposit account should be debited in our books for showing it as asset.

With following few examples, you can understand the steps to record a deposit as a journal entry.

1st Example : You have sold $ 10,000 product to your Z customer and customer has paid your money in your bank account. So, this is deposit and you have to enter with following journal entry.

Bank Account (Deposits )Debit $ 10,000

Z Customer Account Credit $ 10,000

You have earned this money. So, this deposit will be your asset.

2nd Example : Sometime You deposit your own cash. At that time, your bank account will increase. For example, you have deposited $ 20,000. Its journal entry will be

Bank Account (Deposit) Debit $ 20,000

Cash Account Credit $ 20,000

3rd Example : Sometime, bank will deduct your bank ATM Card charges. At that time, your total deposited money will decrease. So, you have to credit your bank account. For example Bank has deducted annual ATM Charges $ 10.

Bank charges Account Dr. $ 10

Bank account (Deposit ) Cr. $ 10

4th Example : Sometime, you withdraw the money. At that time, your deposited money will decrease. You need to record this. Recently, you have withdrawn $ 5000

Cash Account Dr. $ 5000

Bank Account (deposit ) Cr. $ 5000

5th Example : Some company cheques from customers and deposit in the banks and sometime, company enter as deposit in bank. So, its bank account will increase. But if bank still did not receive the money from customer and process will take time. On this bank statement, company need to enter rectification journal entry. For example, amount may be $ 4600 This is called deposit in transit. Following entry will pass.

Customer account Dr. 4600

Bank account (Deposit) Cr. 4600

Only after receiving by bank, deposit entry will pass.

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Accounting Education: How to Record a Deposit As a Journal Entry
How to Record a Deposit As a Journal Entry
Accounting Education
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