Video Transcipt 7

Cash Account Dr
 to Bank Account

To Bank Account

BY Cash Account

Lets take a transaction Cash Withdrawn from bank of Rs.1000

How we are going to enter this Journal

We have already made a video on entering journal entries if you haven't watched it watch it

So coming back here we are going to enter this transaction in journal in the following manner

That is Cash Account Dr to bank account

Now we are going to enter this transaction in the ledger in the following way

Under cash account we record it on dr side by writing to bank account, what does this mean this means cash account is dr to bank account for an amount of Rs.1000

Similar way we write this transaction in bank account on cr side by cash account, it means bank account is cr By cash acoount for an amount of Rs.1000

Now we will take triple column cash book, here the important thing to observe is we have bank column added to cash book that means we record bank related transactions also in Cash book

Here we take the first part of transaction recorded in Cash book and write it in triple column cash book on debit side To Bank account and putting the 1000 rupees under amount column, please make a note that we are writing the 1000 in amount column

Now we take second part of transaction and put it under Cr side of triple column cash book by writing by Cash account and if you see we are writing the 1000 rupees in bank column
so all transactions recorded under bank account for those transactions we record the amount in Bank column, this is important, if you are bringing transaction from bank account put the amount under either bank column on debit side or bank column on credit side

Now as we finished entering the transaction in triple column cash book this is called contra entry, why is it called Contra entry?

As per defination

If both the credit and debit aspects of a transaction has entered in a single accounting book then it is called contra entry

So if you see here in cash book we only recorded the debit aspect and if you see here in Bank A/C we only recorded the credit aspect of the transaction

But here we recorded both the debit aspect and credit aspect of the transaction in triple column cash book that is why it is called Contra entry


We could take another transaction for better understanding, this time we take transaction where cash is deposited in bank for an amount of Rs.1000

So in Journal we record it as Bank account dr to cash account of rs.1000

Now we enter this transaction on credit side of cash account as By Bank account Rs.1000

And we enter this transaction on debit side of Bank account as To Cash account Rs.1000

Now if we enter this transaction in triple column cash book it will become a contra entry as we record both credit and debit aspects of this transaction in the triple column cash book.

We enter the first part of this transaction on credit side of triple column cash book By bank a/c as this transaction is related to cash book we write the amount of Rs.1000 in Amount column

We enter the second part of this transaction on debit side of triple column cash book as To cash a/c as this transaction related to bank A/c we write the amount of Rs.1000 in Bank column

As you can see we entered both credit and debit aspects this is also nothing but contra entry

So that's all about contra entry if you enjoyed this Video, don't forget to like this video