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Every entity deposits its idle cash in its bank account. Depositing cash in the bank account will fetch interest to the entity and also ensure the safety of the money. Cash deposit in the bank is one of the most recurring transactions in every entity’s day-to-day business activity. So, it is important to know the journal entry for the same.
Journal Entry for Cash Deposit in Bank
I will present the journal entry using both the golden rule and the modern rule of accounting.
1. According to the “Golden rules” of accounting
| Bank A/c | Debit | Personal account | Debit the receiver |
| To Cash A/c | Credit | Real account | Credit what goes out |
(Being cash deposited in the bank)
2. According to the “Modern rules” of accounting
| Bank A/c | Debit | Asset | Debit the increase in asset |
| To Cash A/c | Credit | Asset | Credit the decrease in asset |
(Being cash deposited in the bank)
Example
Sugar Ltd has idle cash of 500,000. The finance manager deposited the idle amount in the company’s Bank of America A/c.
Journal entry in the books of Sugar Ltd will be as follows;
| Bank of America A/c | Debit | 500,000 | Debit the increase in asset |
| To Cash A/c | Credit | 500,000 | Credit the decrease in asset |
(Being Cash deposited in Bank of America A/c)