Journal Entry for Depositing Cash in Bank

Journal entry for depositing cash in bank happens when the company takes money from cash on hand and put it into the bank accounts.

Most companies will carry cash in form of petty cash, cash on hand, and cash at bank. Petty cash refers to a small amount of cash that is kept on hand for minor expenses. The term is typically used in businesses, where it is kept in a small lockbox or safe. Petty cash can be used for a variety of purposes, including paying for office supplies, small repairs, or employee lunches. As the name suggests, petty cash should only be used for relatively small transactions.

Once the fund runs low, it can be replenished by removing money from the main cash drawer or bank account. Petty cash can be a convenient way to handle minor expenses, but it also carries some risks. If not properly monitored, petty cash can be misused or stolen. As a result, businesses should have clear policies and procedures in place for managing petty cash.

For small businesses, this might mean keeping a few thousand dollars in a safe at the office as petty cash. For larger businesses, the accountant may keep more balance for some purchases which reflects with business operation.

Even if the company keeps cash on hand, it cannot avoid the cash at bank. There are several reasons why companies choose to deposit cash into the bank. First, it helps to safeguard the money in case of fire or theft. Second, it allows businesses to earn interest on their deposits. One reason is that keeping cash is a form of risk management. If a company experiences an unexpected financial hardship, having cash at bank can help them go through the difficulties.

Finally, banks offer a variety of services that can help businesses manage their finances more effectively. It can help a company take advantage of opportunities when they arise. For example, if a company needs to quickly make an important purchase, having cash readily available can help them do so without having to first secure financing.

As a result, depositing cash into the bank is an essential part of running a business operation. The process of depositing cash into the bank is the way that company increases the cash at bank. The cash balance will move from cash on hand to the cash at bank.

Journal Entry for Depositing Cash in Bank

The company makes cash deposits into the bank to transfer to other entities or make payments to suppliers. It will increase the cash at bank balance on the balance sheet. It also reduces the cash from cash on hand account.

The journal entry is debiting cash at bank and credit cash on hand.

Account Debit Credit
Cash at bank 000
Cash on hand 000

The transaction will increase the cash at bank which represents the cash balance in the bank. It will reduce the cash on hand that company deposit into the bank.


ABC is a manufacturing company which produces cloth and shoes for the international market. During the month, the company purchased the raw material from overseas which require a bank transfer. So accountants need to deposit $ 30,000 into the bank. Please prepare the journal entry for depositing cash into the bank.

Company deposits cash $ 30,000 into the bank account, so the cash at bank will increase by the same amount. The cash on hand will be reduced.

The journal entry is debiting cash at bank $ 30,000 and credit cash on hand $ 30,000.

Account Debit Credit
Cash at bank 30,000
Cash on hand 30,000