Cash Payments Journal: Definition & Example

Lesson Transcript
Instructor: Brianna Whiting

Brianna has a masters of education in educational leadership, a DBA business management, and a BS in animal science.

The definition of a cash payment journal is quite literal; it is a journal used to record all payments made using cash. Learn what columns go into a cash payment journal and an example of a cash payment journal of a quilting business. Updated: 10/14/2021

A Beginning Look at Cash Payments Journal

Take a moment to imagine you are the owner of a business that sells handmade quilts. It all began when you would make quilts for family and friends. After people started to realize how wonderful your quilts were, you began getting requests for more. It was at that time that you decided to start your own business.

You began making baby blankets as well as quilts for wedding and graduation gifts. After several years in the business, there was not a quilt you could not make. While you were able to perfect your craft, the financial side of your business was in dire need of improvement.

You see, instead of actually keeping financial records, you just used estimates in your head. This proved to be difficult as the orders kept coming in and the amount of money that your business received grew substantially. You decided that there had to be a better way to record the movement of money through your business. This was when you realized the need for a cash payment journal.

A cash payment journal is a special journal that allows you to record all cash payments - that is, all transactions during which you spend funds. For example, if you paid cash to any of your creditors, you would record it in your cash payment journal. Other sources used to fill out these journals include purchase receipts and check stubs.

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  • 0:02 A Beginning Look at…
  • 1:16 Columns of a Cash…
  • 2:01 Quilting Business Example
  • 2:42 Lesson Summary
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Columns of a Cash Payment Journal

Let's work through the process of filling out a cash payment journal. This is a simple cash payment journal before any information has been filled in. You will notice that there are various columns that help a company organize its cash transactions.

DATE ACCOUNT DEBITED FOLIO CASH DISCOUNT PURCHASES DEBTOR SUNDRY

Let's break down what goes in each column:

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