Cash Clearing Account Journal Entries
A cash clearing account is used to temporarily hold transactions involving cash until they are fully processed and can be cleared. This helps in managing and reconciling cash transactions that have not yet been posted to the main cash account.
Scenario: Using a Cash Clearing Account
- Receipt of Cash: Cash is received but not yet deposited into the bank.
- Deposit of Cash: Cash is deposited into the bank and cleared from the cash clearing account.
Example 1: Receipt of Cash
Assume a company receives ₹50,000 in cash from a customer but hasn't deposited it into the bank yet.
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Cash Clearing Account | 50,000 | |
| To Accounts Receivable A/c | | 50,000 |
| (Being cash received from a customer) | | |
Example 2: Deposit of Cash
Assume the cash received earlier (₹50,000) is now deposited into the bank.
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Bank Account | 50,000 | |
| To Cash Clearing Account | | 50,000 |
| (Being cash deposited into the bank) | | |
Detailed Examples
Example 1: Receipt of Cash
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Cash Clearing Account | 50,000 | |
| To Accounts Receivable A/c | | 50,000 |
| (Being cash received from a customer) | | |
Example 2: Deposit of Cash
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Bank Account | 50,000 | |
| To Cash Clearing Account | | 50,000 |
| (Being cash deposited into the bank) | | |
Additional Examples:
Example 3: Payment Made but Not Yet Cleared
Assume a company makes a payment of ₹30,000, which hasn't cleared the bank yet.
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Expense Account (e.g., Supplies) | 30,000 | |
| To Cash Clearing Account | | 30,000 |
| (Being payment made for supplies, not yet cleared) | | |
Example 4: Payment Cleared from the Bank
Assume the payment of ₹30,000 has now cleared the bank.
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Cash Clearing Account | 30,000 | |
| To Bank Account | | 30,000 |
| (Being payment cleared from the bank) | | |
Detailed Examples:
Example 3: Payment Made but Not Yet Cleared
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Expense Account (e.g., Supplies) | 30,000 | |
| To Cash Clearing Account | | 30,000 |
| (Being payment made for supplies, not yet cleared) | | |
Example 4: Payment Cleared from the Bank
| Particulars | Debit (₹) | Credit (₹) |
|---|
| Cash Clearing Account | 30,000 | |
| To Bank Account | | 30,000 |
| (Being payment cleared from the bank) | | |
