Cheque Received but Not Deposited: Cash Book Entries

A customer hands you a cheque on Monday. You put it safely in a drawer and deposit it on Wednesday. The amount has not changed, but the cash book needs to show two different events.

That little gap between receiving and depositing is the whole point of this question. Once you follow the dates, the entries become much easier.

In the usual school cash book treatment, a cheque received but not deposited on the same day goes into the debit-side cash column. Its later deposit requires a contra entry: debit the bank column and credit the cash column.

Let’s work through the entries, add a discount, and then prepare a complete three-column cash book that you can check for yourself.

The rule, and the convention behind it

NCERT’s Recording of Transactions II, printed page 106 distinguishes a cheque deposited immediately from one deposited on a later day. It uses the cash column for the initial receipt in the second case, followed by a transfer to bank when deposited.

This is a bookkeeping convention for these cash book questions. It does not mean a cheque is a currency note or that the bank has already collected its value.

For the wider format, revisit our three-column cash book guide.

Example 1: one cheque, two dates

On 4 April, Asha Traders receives a cheque for Rs. 8,400 from Meera, an existing debtor. The cheque is deposited on 7 April.

On 4 April: record the receipt from Meera

Write Meera in the particulars column on the receipts side. Enter Rs. 8,400 in the cash column. Leave the bank and discount columns blank.

The accounting effect is:

• Cash Account debited: Rs. 8,400.
• Meera’s Account credited: Rs. 8,400.

Meera’s debt has been reduced by this receipt. The business has not yet made its bank deposit.

On 7 April: record the transfer to bank

There are two parts on the same date:

• Receipts side: write Cash, mark C in L.F., and enter Rs. 8,400 in the bank column.
• Payments side: write Bank, mark C in L.F., and enter Rs. 8,400 in the cash column.

These two parts make one contra entry. The underlying effect is Bank Account Dr. Rs. 8,400; To Cash Account Rs. 8,400.

Do not write Meera again as though she has made another payment. She gave you one cheque, not two.

The journal-style descriptions above explain the double entry. When maintaining the cash book, do not duplicate these same transactions in the journal.

Why are the particulars Cash and Bank?

It can feel backwards to write Cash beside an amount in the bank column. Remember that the column already tells you which account is being affected. The particulars identify the other account.

For the 7 April deposit:

• The bank column increases, and the amount comes from Cash. Therefore, write Cash on the debit side.
• The cash column decreases, and the amount goes to Bank. Therefore, write Bank on the credit side.

The C in the ledger folio column identifies the contra entry. Its double entry is complete within the cash book, so it does not need another posting to separate cash and bank ledger accounts.

What changes if the cheque is deposited immediately?

Suppose Meera’s Rs. 8,400 cheque is received and deposited on 4 April itself.

Record Meera on the receipts side and put Rs. 8,400 directly in the bank column. Under this treatment, there is no initial cash-column receipt and no later cash-to-bank transfer.

Here is the useful comparison:

Event	Receipts-side entry	Payments-side entry
Receive Meera’s cheque and hold it	Meera: cash Rs. 8,400	None
Deposit that previously held cheque	Cash: bank Rs. 8,400, C	Bank: cash Rs. 8,400, C
Receive and deposit Meera’s cheque immediately	Meera: bank Rs. 8,400	None

These are alternative situations. Do not enter all three rows for the same cheque.

The NIOS Cash Book lesson, printed pages 131-132 also separates immediate deposit from later deposit and explains transfers between the cash and bank columns.

Example 2: cheque received with discount allowed

On 10 April, Rohan owes Asha Traders Rs. 12,000. He gives a cheque for Rs. 11,700 in full settlement. It is deposited on 12 April.

First calculate the discount:

Discount allowed = Rs. 12,000 - Rs. 11,700 = Rs. 300.

On 10 April, write Rohan on the debit side of the cash book:

• Discount allowed column: Rs. 300.
• Cash column: Rs. 11,700.
• Bank column: blank.

Rohan’s ledger account receives total credit of Rs. 12,000, comprising the cheque and the discount.

On 12 April, make the contra entry for Rs. 11,700 only:

• Debit-side bank column: Rs. 11,700, particulars Cash, L.F. C.
• Credit-side cash column: Rs. 11,700, particulars Bank, L.F. C.

There is no second discount on 12 April. The bank receives the cheque amount, not the original debt.

INFLIBNET’s Cash Book chapter explains the discount columns: discount allowed belongs on the debit side, while discount received belongs on the credit side. These columns are totalled separately rather than balanced against each other.

Example 3: a complete three-column cash book

Prepare Asha Traders’ cash book for these independent May transactions. All amounts are in rupees. Cheques held before deposit are included in the cash column.

1. May 1: opening cash Rs. 5,000; opening favourable bank balance Rs. 20,000.
2. May 2: received Neha’s cheque for Rs. 9,800 in settlement of Rs. 10,000; held for later deposit.
3. May 3: paid wages in cash, Rs. 1,200.
4. May 4: deposited Neha’s cheque.
5. May 5: received Arjun’s cheque for Rs. 6,000 and deposited it immediately.
6. May 6: paid supplier Kavya by cheque, Rs. 7,600, in settlement of Rs. 8,000.
7. May 8: received Dev’s cheque for Rs. 4,500; it remained undeposited on May 31.

We will show the two sides separately so each amount is easy to follow. In a handwritten answer, use the full prescribed cash book layout. A hyphen below means no entry; C is the contra mark.

Receipts side: Dr.

Date	Particulars	L.F.	Discount allowed	Cash	Bank
May 1	Balance b/d	-	-	5,000	20,000
May 2	Neha	-	200	9,800	-
May 4	Cash	C	-	-	9,800
May 5	Arjun	-	-	-	6,000
May 8	Dev	-	-	4,500	-
May 31	Totals	-	200	19,300	35,800

Payments side: Cr.

Date	Particulars	L.F.	Discount received	Cash	Bank
May 3	Wages	-	-	1,200	-
May 4	Bank	C	-	9,800	-
May 6	Kavya	-	400	-	7,600
May 31	Balance c/d	-	-	8,300	28,200
May 31	Totals	-	400	19,300	35,800

On June 1, bring down Rs. 8,300 in the debit-side cash column and Rs. 28,200 in the debit-side bank column.

The discount totals remain Rs. 200 allowed and Rs. 400 received. Do not insert a Rs. 200 balancing figure to make these columns equal.

Check the cash figure in two ways

Cash-column balance = Rs. 5,000 + Rs. 9,800 + Rs. 4,500 - Rs. 1,200 - Rs. 9,800 = Rs. 8,300.

Now consider what the business actually holds:

• Currency remaining: Rs. 5,000 - Rs. 1,200 = Rs. 3,800.
• Dev’s undeposited cheque: Rs. 4,500.
• Total included in the cash column: Rs. 8,300.

The physical notes and coins are only Rs. 3,800. The difference is not missing cash; it is the cheque included under the stated convention.

Check the bank figure

Bank balance = Rs. 20,000 + Rs. 9,800 + Rs. 6,000 - Rs. 7,600 = Rs. 28,200.

Dev’s Rs. 4,500 has not entered this calculation. Adding it would put the same cheque in both closing balances.

Check the personal accounts

Neha receives credit of Rs. 10,000: Rs. 9,800 received plus Rs. 200 discount allowed.

Kavya receives debit of Rs. 8,000: Rs. 7,600 paid plus Rs. 400 discount received.

Arjun receives credit of Rs. 6,000, while Dev receives credit of Rs. 4,500. The May 4 contra entry produces no second credit to Neha.

Example 4: deposit in the next month

Continue with Dev’s cheque from the May example. It is deposited on June 2.

The June cash book begins with cash Rs. 8,300 and bank Rs. 28,200. On June 2:

• Debit bank Rs. 4,500, particulars Cash, contra mark C.
• Credit cash Rs. 4,500, particulars Bank, contra mark C.

With no other transactions, the resulting balances are cash Rs. 3,800 and bank Rs. 32,700.

Total cash plus bank is Rs. 36,500 both before and after the deposit. That is a useful check: a transfer changes the location of the amount, not the combined total.

Received, deposited and cleared are different stages

Receiving a cheque means the customer has handed it over. Depositing it means it has been submitted to the bank. Clearing concerns the bank’s collection process.

Do not delay the ordinary cash book deposit entry until the clearing date simply because the statement has not yet shown the credit.

For example, assume a favourable bank balance of Rs. 15,000 before depositing a Rs. 3,200 cheque on 30 June. The cash book bank balance becomes Rs. 18,200. If the bank has not credited the cheque by June 30 and there are no other differences, the statement still shows Rs. 15,000.

Starting from the cash book balance, subtract Rs. 3,200 to reconcile to the statement. NCERT’s Bank Reconciliation Statement chapter covers this deposit-and-collection timing difference.

An undeposited cheque still included only in the cash column does not create that particular bank-column difference. However, if a reconciliation question explicitly says a cheque was already debited to the bank column but not sent for collection, use that stated recording position. Read what was actually entered before choosing the adjustment.

Our bank reconciliation timing guide offers more practice with these stages.

Example 5: what if the deposited cheque is dishonoured?

Keep this example separate from the May cash book.

Suppose Sana’s Rs. 5,000 cheque was received, later deposited, and then returned unpaid. There was no discount and no bank charge.

On receiving the bank’s intimation, enter Sana on the payments side and put Rs. 5,000 in the bank column. The accounting effect is Sana’s Account Dr. Rs. 5,000; To Bank Account Rs. 5,000.

Sana owes the amount again. Do not credit the cash column: the cheque had already been transferred out of it when deposited.

If the problem also specifies charges or cancellation of an earlier discount, those need additional treatment. The Rs. 5,000 reversal alone does not account for those separate facts.

Five mistakes worth catching before you submit

1. Recording a held cheque directly in bank. In the later-deposit convention used here, that skips the holding stage. Underline the receipt date and deposit date first.

2. Crediting the customer again on deposit. A deposit is not a second collection from the debtor. Use Cash and Bank as the contra particulars.

3. Transferring the debt instead of the cheque. For Rohan, the transfer is Rs. 11,700, not Rs. 12,000. The Rs. 300 discount never reaches the bank.

4. Forgetting one half of the contra entry. If you debit bank but omit the credit to cash, the combined balance is overstated by the cheque amount.

5. Treating the entire cash-column balance as currency. In the May example, Rs. 8,300 includes Dev’s Rs. 4,500 cheque. State that breakdown when asked to explain cash in hand.

Try these before looking at the answers

Use the later-deposit convention throughout. Each question is independent.

1. Receive a cheque from Tara for Rs. 7,200 on July 3; deposit it on July 6. Give both dates’ entries.
2. Receive Rs. 9,500 by cheque from Amit against Rs. 10,000 due. Hold the cheque. Which columns receive amounts?
3. Deposit Amit’s cheque two days later. What amount appears in the contra entry?
4. Currency is Rs. 2,700 and a cheque for Rs. 6,300 remains undeposited. What is the cash-column balance?
5. Receive and immediately deposit a customer’s Rs. 4,800 cheque. Is there a contra entry?
6. Cash-column balance is Rs. 13,000, including a Rs. 5,000 cheque. Bank balance is Rs. 22,000. Deposit that cheque. Find both new balances.
7. A deposited Rs. 2,600 cheque from Isha is dishonoured. No discount or charges apply. State the entry.
8. A student records the receipt of a Rs. 3,900 held cheque correctly, then debits bank on deposit without crediting cash. By how much is the combined cash and bank balance wrong?

Answers and quick checks

1. July 3: debit cash Rs. 7,200, particulars Tara. July 6: debit bank and credit cash Rs. 7,200, using Cash and Bank respectively and marking both C.
2. Debit-side discount allowed Rs. 500 and cash Rs. 9,500, particulars Amit. His account receives total credit of Rs. 10,000.
3. Rs. 9,500 in each half. Do not repeat the Rs. 500 discount.
4. Rs. 9,000. Only Rs. 2,700 is currency.
5. No. Debit the bank column Rs. 4,800 against the customer’s name.
6. Cash Rs. 8,000; bank Rs. 27,000. Their combined balance remains Rs. 35,000.
7. Credit the bank column Rs. 2,600, particulars Isha. Debit Isha’s ledger account.
8. Overstated by Rs. 3,900. The same value remains in cash and has also been added to bank.

Frequently asked questions

Where is a cheque received but not deposited recorded?

Under the school cash book convention used here, record it on the debit side in the cash column, against the payer’s name. Follow any explicit instruction to use a separate Cheques in Hand Account instead.

Is receiving an undeposited cheque itself a contra entry?

No. The initial receipt involves the customer and cash. The later transfer from cash to bank is the contra entry.

What should I write in particulars when depositing it later?

Write Cash on the debit side against the bank-column amount, and Bank on the credit side against the cash-column amount. Mark both entries C in the ledger folio column.

Does a cheque deposited on the day of receipt go through cash?

In the treatment explained here, it goes directly into the debit-side bank column against the payer’s name. There is no separate cash-to-bank contra entry.

Where does discount allowed appear?

On the receipts side in the discount allowed column. Enter the net cheque amount in cash if held, or bank if deposited immediately. The customer’s total credit includes both amounts.

Should discount be entered again on the deposit date?

No. Deposit transfers the cheque value only. Repeating the discount would record the same concession twice.

Can the closing cash-column balance include cheques?

Yes, when the question uses this convention and some cheques remain undeposited. Distinguish that balance from the physical currency held.

Do I wait for bank clearance before recording the deposit?

No, not in the ordinary treatment illustrated here. Record the deposit on its date. A subsequent collection delay may explain a difference between the bank column and the bank statement.

Does an undeposited cheque always require a bank reconciliation adjustment?

No. A cheque recorded only in cash has not increased the cash book’s bank balance. A question that says it has already been entered in the bank column presents a different situation, so follow the stated facts.

What is the easiest final check?

A later deposit should increase bank and decrease cash by equal amounts. It should neither change the combined balance nor reduce the customer’s debt a second time.