Cash Withdrawal from Bank Journal Entry

Cash withdrawal from the bank is the transaction that company takes money from its bank account. Most of the time, the company withdraws the cash from the bank and keeps the cash on hand for future usage.

Many companies choose to keep their cash at the bank for a variety of reasons. It can be safer than keeping in a safe box, and it can also help to ensure that the money is readily available when it is needed.

In addition, One of the advantages of having cash at the bank is that it makes it easy to make payments to suppliers. When you have the cash, you can simply transfer the funds to the supplier’s account and they will receive the payment quickly.

For these reasons, many companies find that it is advantageous to keep their cash at the bank. However, it is important to remember that there are also some risks associated with this strategy. If the bank becomes insolvent, the company’s assets may be at risk. In addition, banks may charge fees for holding and managing the company’s cash. As a result, companies must weigh the advantages and disadvantages of keeping cash at the bank before making a decision.

However, even the company keeps the cash in the bank account, it may need to withdraw the cash at some point. The company requires to use the cash on hand to settle some purchases or expenses. So they require to withdraw cash from bank and keep it in a safe box for any purchase.

Journal Entry for Cash Withdrawal from a Bank

The company withdraws the cash from the bank account and it will stay as the cash on hand for some time. The cash on hand may be used for other purposes, but it will be another transaction. For the time being, it is the transfer of cash at the bank to the cash on hand.

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

The withdrawal of cash at bank is the transfer of cash at bank to the cash on hand. It is just the movement of cash on the balance sheet.

Example

ABC is a trading company that purchases goods from oversea and resells them to the local market. Most purchases will be made from oversea suppliers which require using bank accounts to transfer the money. The company sends the cash to settle the payment with the supplier.

However, the company withdraws the cash at the bank $ 10,000 for some local purchases which the supplier prefers the cash paid. Please prepare a journal entry for withdrawal of cash at bank.

The company withdraws cash $ 10,000 from the bank to purchase the goods from a local suppliers. The cash will be held on hand until the purchase is completed.

The journal entry is debiting cash on hand $ 10,000 and credit cash at bank $ 10,000.