In an ideal world, all cash receipts from customers would be handled with cold, hard cash and there would be enough to go around for everyone. Unfortunately, things are not that simple, but the recording of the journal entry for sale of goods with cash is relatively straightforward and easy.

Remember the basic accounting equation for a balance sheet when recording cash receipts from customers: assets = liabilities + equity.

At all times, the total of all debit entries must match the total of all credit entries. If the totals do not agree, the transaction is said to be “out of balance." You will not be able to use the resulting information to create financial statements until the transaction has been corrected.

Recording a Cash Transaction

At its simplest, cash receipts from customers are transactions with a customer in which an item from inventory or a service is supplied and the business receives payment in the form of cash or check.

Using the double entry form of accounting, recording a cash sales journal entry is one of the easiest things to do.

The key is to make sure that for each credit entered, there is a corresponding debit entered to ensure that the journal “balances.”

In this case, let’s assume you sold a customer $1,000 in office supplies. In the general ledger, the transaction would immediately be recorded as a cash sales journal entry reflecting a debit in the “cash” account, while a corresponding credit would be made to “sales revenue” to reflect the money brought into the company on the transaction.

Recording a Credit Card Transaction

In a perfect world, all sales would be cash transactions, but in today’s world many purchases are made on credit cards. While you may have to wait a little while longer to see the cash for the purchase affect your bottom line, the accounting for a credit card transaction is still quite simple.

Assuming the same sale of office supplies worth $1,000, let's say a customer hands you a credit card. Once the transaction is completed, the general ledger journal entry would be debiting the asset account “accounts receivable” while entering a credit to the “sales revenue” account.

Receiving the Cash

Eventually the cash from the credit card sale of the office supplies will come in from the credit card company and you will want to make sure the receipt of the cash is properly entered in the general ledger.

Simply record a cash sales journal entry debiting the “cash” account, and a corresponding credit to the “accounts receivable” account in the ledger.

Recording a Bank Deposit

Eventually, the $1,000 that your business received for the sale of the office supplies will need to get deposited into the bank. On its surface, the journal entry for sale of goods should be just a simple debit to cash, but most businesses use two separate cash accounts.

One cash account represents cash on hand and the other represents the balance in the bank account.

In the case of the $1,000, once the cash is deposited in the bank, a debit would be made to the “physical cash” account to represent the cash essentially leaving the building.

Correspondingly, a journal entry for sale of goods would be credited to the “bank account” cash account in the journal to represent the money being transferred to the bank.

It should be noted that both of these accounts are “cash” accounts, and both represent assets that the business holds. Using an entry for the bank account is good accounting practice and simply makes note of the transfer of the money to the bank, which is now holding the money on behalf of the business.