Points to Remember
Some Special entries Contra entries :
If both cash and bank columns are affected by any transaction, it is called a contra entry. To indicate contra entry "C" is mentioned in the L.F. column.
July 5 Cash deposited into bank Rs. 5,000
Dr.
Cash Book (Extract)
Cr.
Date
Particulars
V.N. L.F.
Cash Bank Date
Particulars
V.N.L.F Cash Bank
July 5
To Cash
C
5,000 July 5 By Bank
C 5,000
As bank balance is increasing bank column is debited and cash balance is decreasing, cash column is credited in the above entry.
July 7 Withdrawn from Bank for office use Rs. 2,000
Dr.
Cash Book (Extract)
Cr.
Date
Particulars V.N. L.F
Cash
Bank Date Particulars V.N. L.F
Cash Bank
July 7
To Bank
C
2,000
July 7 By Cash
C
2,000
As cash balance is increasing so it is debited because of withdrawal of money bank balance is decreasing hence credited.
Treatment of cheques received from customers under different situations
1. If there is no information about the disposal of received cheque.
July 1 Received a cheque from Anu Rs. 2,500
Dr.
Cash Book (Extract)
Cr.
Date
Particulars
V.N. L.F.
Cash Bank Date
Particular
V.N. L.F Cash Bank
July 1
To Anu
2,500
When there is no information given in question, it is considered that the cheque has been deposited into bank the same day it is received.
2. When received cheque is deposited into bank later.
July 1 Received a cheque from Anu Rs. 2500
July 3 Anu's cheque deposited into bank.
Dr.
Cash Book (Extract)
Cr.
Date
Particulars
V.N. L.F.
Cash Bank Date
Particular V.N. L.F Cash Bank
July 1
To Anu
2,500
July 3 By Bank
C
2,500
July 3
To Cash
C
2,500
When cheque is not deposited into Bank same day, it is considered as Cash. When the received cheque is deposited at later date, it will be considered as cash being deposited into bank hence contra entry has been passed.
3. If cheque is endorsed in favour of creditor of business.
July 1 Received a cheque from Anu Rs. 2,500
July 3 Anu's cheque endorsed in favour of Ram
Cash Book (Extract) Dr.
Cr.
Date
Particulars
V.N. L.F. Cash Bank
Date Particular V.N. L.F Cash Bank
July 1
To Anu
2,500
July 3 By Ram
2,500
Anu's cheque is being treated as Cash hence it is considered that Cash given to Ram.
4. When cheque is dishonoured due to any reason.
July 1 Received a cheque from Anu Rs. 2,500
July 3 Anu's cheque dishonouredCash Book (Extract)
Dr. Cr.
Date Particulars V.N. L.F. Cash Bank Date Particular V.N.L.F Cash Bank
July 1 To Anu 2,500 July 3 By Anu 2,500
The effect of dishonour : Anu is again considered as Debtor and bank balance
decreases hence bank balance is credited.
CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari )
Email Id : [email protected]
