Dear reader if you want to know how to correctly pass a journal entry for cheque deposit in bank, you have come to the right place. In this article, we will explain the journal entry process for cheque deposits in a bank in simple terms, without the need to reference multiple sources.

 

JOURNAL ENTRY FOR CHEQUE DEPOSIT IN BANK

 

 Bank Account Debit

 Debtor Account Credit

 

Lets break it down in a straightforward manner. When a business receives money in the form of a cheque from a party (Debtor), you need to record it in your books. The Debtor is the person who owes money to the business.

 

In this case, the Bank Account is a personal account, so the debit rule applies because the bank is the receiver of funds. The Debtor is also a personal account, so the credit rule applies because they are the giver of funds.

 

In simpler terms, when a company deposits a cheque in the bank, it increases the bank balance. To record this transaction, follow these steps:

 

Step 1: Determine which bank account you are depositing the cheque into. Businesses may have multiple bank accounts.

 

Step 2: Debit the specific bank account and credit the Debtor’s account.

 

Step 3: The effect of this entry is that it increases the bank account balance and decreases the debtor’s balance.

EXAMPLE: CHEQUE DEPOSIT IN BANK

Let’s illustrate this with an example. ABC Company deposits a cheque of ₹5,00,000/ into XYZ Bank. Here’s the journal entry for this transaction:

 

 XYZ Bank Account Debit for ₹5,00,000

 Debtor Account Credit for ₹5,00,000

(Explanation: This entry reflects the deposit of the cheque into XYZ Bank)

RELATED ARTICLE

JOURNAL ENTRIES WITH EXAMPLES

CONCLUSION JOURNAL ENTRY FOR CHEQUE DEPOSIT IN BANK

In this blog post you got information related to Journal entry for Cheque Deposit in Bank. If you have quarries kindly comment below.