Contra Entries — Cash and Bank Transfers
Contra vouchers for cash deposits, withdrawals, and petty cash in Sunrise Retail
Prerequisites: Module 5 — Ledger Creation
Learning Objectives
- Understand when to use a Contra voucher vs Payment/Receipt
- Record cash deposits to bank and bank withdrawals in Tally
- Maintain petty cash using contra entries
- Enter all Sunrise Retail April 2025 contra transactions
What Is a Contra Entry?
A Contra voucher (F4) records fund transfers between two cash/bank accounts owned by the same business. "Contra" means opposite — both sides of the entry are within the same balance sheet category.
Rule: Use Contra ONLY when both accounts are cash or bank accounts owned by your business. If money goes to a third party, use Payment. If it comes from a third party, use Receipt.
| Transaction | Voucher |
|---|---|
| Cash deposited into bank | Contra (F4) |
| Cash withdrawn from bank (ATM/cheque) | Contra (F4) |
| Transfer from SBI to HDFC (both business accounts) | Contra (F4) |
| Payment to supplier from bank | Payment (F5) |
| Cash received from customer | Receipt (F6) |
Opening Contra Voucher
Sunrise Retail — April 2025 Contra Entries
Sunrise Retail Pvt Ltd — Sneha enters all April contra transactions
Transaction 1 — Apr 1: Petty Cash Withdrawal
Sneha withdraws ₹10,000 from SBI bank account to fund petty cash for office expenses.
ASCII Screen: Contra Voucher — Apr 1 Petty Cash Withdrawal
Result: Petty Cash balance → ₹10,000. SBI balance decreases by ₹10,000.
Transaction 2 — Apr 20: Petty Cash Replenishment
By April 20, petty cash is down to ₹2,000 (₹8,000 spent on courier, stationery, etc.). Sneha withdraws ₹8,000 more from SBI to restore petty cash.
Transaction 3 — Apr 25: Cash Sales Deposited to Bank
Sunrise Retail makes ₹45,000 in cash sales at their showroom. Cash collected is deposited to SBI same day.
Note: The sales receipt is first recorded via F6 (Receipt) or F8 (Sales). The bank deposit is a separate Contra entry.
ASCII Screen: Contra Voucher — Apr 25 Cash Deposit
Result: SBI balance increases by ₹45,000. Cash-in-Hand decreases by ₹45,000.
Transaction 4 — Apr 30: Surplus Petty Cash Returned to Bank
At April 30, petty cash balance is ₹10,500. Surplus ₹500 goes back to bank.
Result: Petty Cash = ₹10,000. SBI increases by ₹500.
Petty Cash Register — Sunrise Retail April 2025
| Date | Narration | Receipt (Dr) | Payment (Cr) | Balance |
|---|---|---|---|---|
| Apr 1 | Withdrawal from SBI (Contra) | ₹10,000 | ₹10,000 | |
| Apr 3 | Courier charges | ₹500 | ₹9,500 | |
| Apr 7 | Stationery | ₹800 | ₹8,700 | |
| Apr 12 | Cleaning supplies | ₹600 | ₹8,100 | |
| Apr 15 | Drinking water subscription | ₹400 | ₹7,700 | |
| Apr 18 | Miscellaneous printing | ₹1,700 | ₹6,000 | |
| Apr 20 | Replenishment from SBI (Contra) | ₹8,000 | ₹14,000 | |
| Apr 22 | Packaging materials | ₹2,000 | ₹12,000 | |
| Apr 28 | Electricity advance | ₹1,500 | ₹10,500 | |
| Apr 30 | Surplus returned to SBI (Contra) | ₹500 | ₹10,000 |
The Apr 3–28 payment entries are Payment vouchers (F5), not Contra. Only the Apr 1, Apr 20, and Apr 30 entries are Contra vouchers.
Common Contra Entry Mistakes
| Mistake | Correct Approach |
|---|---|
| Using Contra to pay rent (expense) | Use Payment (F5) — rent goes to a third party |
| Using Contra to receive payment from customer | Use Receipt (F6) — customer is a third party |
| No narration entered | Always enter narration — essential for audit trail |
| Debiting wrong account (SBI instead of Petty Cash on withdrawal) | Petty Cash Dr, SBI Cr — petty cash receives the money |
A first-month trainee at a Hyderabad trading firm was given a stack of pay-in slips (bank deposit slips) to enter into Tally. He saw "Pay-in slip" written at the top and reasoned, "Pay = Payment voucher, F5." So he debited "Bank Charges" (because deposits sometimes have charges?) and credited Cash for each one — ₹2.4 lakh worth of cash deposits turned into ₹2.4 lakh of phantom expenses in April's P&L. The partner reviewing month-end reports asked "Why are bank charges suddenly 80× higher than usual?" — that's when the mistake surfaced. Pay-in slips are bank deposits — Contra (F4), not Payment (F5). "Pay-in" means money is being paid INTO the bank, not OUT of the business. The trainee re-entered every voucher correctly. Lesson the firm adopted: a one-line rule taped to every trainee's monitor — "Two own accounts = Contra. One own + one third party = Payment or Receipt."
Practice Exercise
Exercise 1: Sunrise Retail opens a second bank account at HDFC Madhapur (A/c: 12345678901). On April 28, ₹2,00,000 is transferred from SBI to HDFC. Record the Contra entry.
Show Solution
First create the HDFC ledger:
Then the Contra entry:
Exercise 2: Kiran withdraws ₹25,000 from ATM for personal use. Is this a Contra entry?
Show Solution
No — this is NOT a Contra entry.
Money leaves the business account (SBI) and goes to an individual (Kiran personally). This reduces the Capital Account (Owner's Drawings).
Contra is only for transfers between the business's own cash/bank accounts.
Key Terms
| Term | Meaning |
|---|---|
| Contra Voucher (F4) | For transfers between cash/bank accounts within the same business |
| Cash-in-Hand | Group for cash accounts — main cash and petty cash ledgers |
| Bank Accounts | Group for bank current/savings accounts |
| Petty Cash | Small cash fund for day-to-day expenses |
| Imprest System | Fixed petty cash amount — replenish when low, always restore to same level |
| Narration | Description field in every Tally voucher — creates audit trail |
Checklist — you're ready to proceed when you can:
- Press
F4to open a Contra voucher and enter a petty cash withdrawal - Correctly identify which account is Debited and which is Credited in a cash-to-bank deposit
- Record the Sunrise Retail Apr 1 petty cash withdrawal (SBI Cr ₹10,000, Petty Cash Dr ₹10,000)
- Record the Apr 25 cash sales deposit (Cash Cr ₹45,000, SBI Dr ₹45,000)
- Explain why paying rent by cheque is a Payment (F5), not a Contra (F4)
- Run the petty cash ledger report and confirm the April closing balance is ₹10,000
Sunrise Retail deposits ₹45,000 cash sales into SBI bank. The voucher type is:
Which account is Debited when petty cash is withdrawn from SBI?
Contra entries affect:
Next up → Module 7: Payment and Receipt Vouchers — F5 Payment for rent and salaries, F6 Receipt for customer collections.