What is contra entry? How can you deal this entry while preparing double column cash book?

The transaction that is entered in either sides of the double column or three column cash book, affecting both cash and the bank balances concomitantly is called contra entry. These entries result in increase in cash balances and decrease in bank balances or vice versa. In other words, a debit of bank account leads to a credit of cash account and a credit of bank account leads to a debit of cash account. For example, Rs 200 cash deposited into bank. This transaction increases the bank amount on one hand; whereas, on the other hand reduces the cash balance. In this entry, in the debit side of the cash book, ‘Cash’ will be recorded with a balance of Rs 200 in the bank column and in the credit side of the cash book, ‘Bank’ will be recorded with a balance of Rs 200 in the cash column. This entry is a contra entry as it affects both cash and bank balance together. The contra entries are denoted by ‘C’.

Some transactions that lead to contra entry are given below.

  1. Opening a bank account

  2. Depositing cash into bank

  3. Withdrawal from bank

These transactions are recorded in a double column Cash Book as done below.

Cash Book

Dr.

Cr.

Date

Particulars

L.F.

Cash

Rs

Bank

Rs

Date

Particulars

L.F.

Cash

Rs

Bank

Rs

Cash

(C)

Bank

(C)

 

 

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