How to account for Cash in Hand
Cash in hand are monetary resources at hand either in the cash box or cash till of the business
How to account Cash in hand;
When cash in hand increases
Due to capital introduced in the business
DR Cashbook
CR Capital a/c
Due to cash sales
DR Cashbook
CR Sales a/c
Due to loan borrowed
DR Cashbook
CR Ban loan a/c
Due to repayment of debt by a debtor
DR Cashbook
CR Trade debtor
When cash in hand decreases
Due to purchase of inventory
DR Purchases
CR Cashbook
Due to purchase of non-current asset
DR Non-current asset
CR Cashbook
Due to payment to creditors
DR Creditors a/c
CR Cashbook
Contra Entry transactions; There is neither an increase nor decrease in cash in the business for it is as good as transferring cash from your shirt pocket to the trouser pocket. No actual cash outflow from the business. That is,
If cash is deposited in to the bank account of the business from the cash box
DR Bank a/c
CR Cashbook
If cash is withdrawn from the bank account to the cash box
DR Cashbook
CR Bank a/c
About the Author - Dr Geoffrey Mbuva(PhD-Finance) is a lecturer of Finance and Accountancy at Kenyatta University, Kenya. He is an enthusiast of teaching and making accounting & research tutorials for his readers.