cash disbursements journal

Need a way to keep track of your expenses?  Using a Cash Disbursements Journal is a great way to record and track each check written, as well as ACH bank transactions for your small business.  You can set up your journal in Microsoft Excel or on a sheet of paper, if that's easier for you.  I'll give you the bookkeeping help here to set up your cash disbursements journal to summarize expenses by account, so at the end of the year it'll be easy to prepare your business tax return.  You'll have all your deduction amounts ready to go.

In this accounting tutorial, I'll explain what it is and how to use it.

Here's a sample that I prepared using Excel.

However, this could also be prepared using 13 column accounting paper, like this:

This Journal is simply a listing of all your cash payments for a specified period of time.  Usually you'll want to prepare one each month, then add them all together at year end.

If you've heard of the Accounting Cycle,

it is a part of the "JOURNALS" stage, to capture details of your business transactions ("financial event").  This would be part of a manual accounting system.  In a computer accounting software package, like QuickBooks, the software would prepare the journals in the background.  You would enter the checks and automatic withdrawals into the system, and the system would enter them into a journal.

But for many small business owners, a computer system is a little more than they need.  So I'm going to show you how to use a simple Cash Disbursements Journal.

Cash disbursements journal example

Let's take a look at the example I prepared.

First, let's talk about the structure of the journal.  You would mark each of the column headings similar to how I have them here.  You want to enter a check number, the date of the check, who the check was written to, and what the check was for.  Then you need to enter the amount of the check.  That's the first section.  The second section is where you can customize the journal to reflect your business and it's common expenses.  This is where you will be summarizing like transactions together, like Rent, Utilities, etc.  Here in the example I've got Supplies, Rent, Utilities, Phone, Repairs, and Other.

The 'Other' column is where you will put expenses that don't have their own column.  Use 2 columns for this, and enter the amount in the 1st column, and a description or the account number in the 2nd column.  Use this for expenses you don't have that often, like annual insurance premiums, or real estate tax payments.

List each check or automatic bank withdrawal in it's own line.

If your business requires you to purchase materials for different jobs, you can customize your journal to track materials by job.  This would be a combination Cash Disbursements - Purchases Journal.  See my example below.

In this example, you would enter each check as before, but you would add a couple columns for the materials and job number.  If you buy materials for multiple jobs at once, you would enter the materials for each job on a separate line.

For a more detailed example of using a Cash Disbursements Journal, check out my ebook on using a Manual Accounting System here.

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