cash disbursement journal

When you purchase on credit, you eventually have to make cash disbursements, but often not all at once. For example, if you buy a company vehicle, you might only pay ​$300​ per month. You have a ​$30,000​ asset on your books and a ​$30,000​ purchase expense, but you might have to make monthly cash disbursements of ​$300​ that you record and track. If you use the accrual method of accounting, you record expenses when you incur them, such as signing a contract with a vendor for supplies. You record income when you book the sale, not when you receive the payment. Keeping track of cash disbursements helps you better manage your cash flow.

cash disbursement journal

Total of cash column is posted as a credit to the cash account in the general ledger. The total of all the subsidiary ledger balances should be equal to the balance on the subsidiary ledger control account in the general ledger. Because of this, it’s critical for businesses to keep track of these financial transactions.

Other Kinds of Disbursements

The most common accounts found in this journal depend on the company. Here are some examples of disbursements and their entries for better understanding. For example, a company wrote a check to pay Company A for inventory purchased on May 16. The amount of payment is $20,000 with no discount allowed by Company A. Thus, a $20,000 credit to cash and debit to other accounts are recorded.

  • Given that the basic posting procedures are the same as those for the other journals, the actual postings are not shown in the exhibit.
  • Some businesses keep a cash disbursement journal to record these types of transactions before posting them to the company’s general ledger, according to BooksTime.
  • The petty cash register is used for recording petty cash disbursements; therefore, it is considered to be a journal or a book of original entry.
  • Adjusting entries are required in cash-basis accounting only.
  • If the business’s cash payments are to suppliers for credit purchases, then the subsidiary ledger updated is the accounts payable book.
  • The cash disbursement journal includes the columns of date, check number, and name of the payee.

When a company receives a check from a customer for work performed, Accounts Receivable rather than Cash should be debited. The cash received from issuing common stock would not be reported on the statement of cash flows. Bank service charges should be recorded in the checkbook to keep the checkbook balance up to date.


When you automate cash disbursements, you free up valuable time for your accounting team. An automated accounting system like Accounting Seed makes it easy to put cash disbursement journal your cash disbursements on autopilot. A positive disbursement happens when you create a credit in an account. Negative disbursement occurs when there’s a debit.

Where do I record cash disbursement?

The amount of disbursement is recorded in the cash column, and the title is recorded in the corresponding account debited column. Each account has a reference number shown in the posting reference (PR) column. The inventory column records the discount of inventory purchases allowed by suppliers.