Learn how to record bank deposit and bank withdrawal contra entries in TallyPrime with step-by-step instructions, practical examples, debit and credit rules, and accounting entries. Understand how to use the Contra Voucher (F4) for cash deposits, bank withdrawals, and bank-to-bank transfers.
How to Record Bank Deposit and Bank Withdrawal Contra Entries in Tally
Managing cash and bank transactions is an essential part of everyday accounting. Businesses regularly deposit cash into their bank accounts and withdraw money from the bank for office expenses or other cash requirements. Although these transactions are simple, recording them correctly in accounting software is important for maintaining accurate financial records.
In Tally, both bank deposits and bank withdrawals are recorded using a Contra Voucher (F4). This voucher is designed for transactions involving cash and bank accounts, as well as transfers between different bank accounts.
In this guide, you will learn how to record bank deposit and bank withdrawal contra entries in TallyPrime, understand the debit and credit treatment, and explore practical examples to avoid common accounting mistakes.
What Is a Contra Entry in Tally?
A contra entry is an accounting transaction in which money moves between cash and bank accounts or between two bank accounts belonging to the same business.
Unlike sales, purchases, or expense transactions, a contra entry does not directly increase or decrease the overall assets of the business. It simply transfers money from one account to another.
For example:
When you deposit ₹20,000 cash into your business bank account, cash decreases and the bank balance increases.
When you withdraw ₹10,000 from your bank account for office use, the bank balance decreases and cash increases.
When you transfer ₹50,000 from one business bank account to another, one bank balance decreases while the other increases.
All these transactions can be recorded using the Contra Voucher in Tally.
Which Voucher Is Used for Bank Deposit and Withdrawal?
Tally uses the Contra Voucher to record bank deposits, bank withdrawals, and fund transfers between bank accounts.
| Transaction | Voucher Type | Debit Account | Credit Account |
|---|---|---|---|
| Cash deposited into bank | Contra (F4) | Bank A/c | Cash A/c |
| Cash withdrawn from bank | Contra (F4) | Cash A/c | Bank A/c |
| Bank-to-bank transfer | Contra (F4) | Receiving Bank A/c | Sending Bank A/c |
Shortcut Key: F4 – Contra Voucher
This voucher helps maintain accurate cash and bank balances without recording the transaction as income or an expense.
How to Record a Bank Deposit Entry in Tally
A bank deposit entry is required when you transfer physical cash from your business cash balance into your bank account.
For example, suppose your business has ₹50,000 in cash, and you deposit ₹20,000 into your bank account.
After the transaction:
Cash balance decreases by ₹20,000.
Bank balance increases by ₹20,000.
Accounting Entry for Cash Deposit into Bank
The journal entry will be:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Bank A/c Dr. | 20,000 | |
| To Cash A/c | 20,000 | |
| Total | 20,000 | 20,000 |
The bank account is debited because money is increasing in the bank, while the cash account is credited because physical cash is decreasing.
Steps to Enter Bank Deposit in TallyPrime
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Follow these steps to record a cash deposit transaction:
Open TallyPrime and select your company.
From the Gateway of Tally, open Vouchers.
Press F4 to select the Contra Voucher.
Enter the transaction date.
Select your bank ledger in the Debit field.
Enter the deposit amount, such as ₹20,000.
Select the Cash ledger in the Credit field.
Add a narration, such as "Cash deposited into bank account."
Check the transaction details.
Press Ctrl + A to accept and save the voucher.
Your bank deposit contra entry is now recorded.
Practical Tip: If you have multiple bank accounts, carefully select the correct bank ledger before saving the transaction. Selecting the wrong bank can create differences in your bank balance and reconciliation records.
How to Record a Bank Withdrawal Entry in Tally
A bank withdrawal entry is recorded when you withdraw cash from your bank account and bring it into your business cash balance.
For example, suppose you withdraw ₹15,000 from your business bank account to meet daily office expenses.
After the transaction:
Cash balance increases by ₹15,000.
Bank balance decreases by ₹15,000.
Accounting Entry for Bank Withdrawal
The accounting entry will be:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Cash A/c Dr. | 15,000 | |
| To Bank A/c | 15,000 | |
| Total | 15,000 | 15,000 |
Here, the Cash Account is debited because cash increases, while the Bank Account is credited because the bank balance decreases.
Steps to Enter Bank Withdrawal in TallyPrime
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Follow these steps:
Open your company in TallyPrime.
Go to the Gateway of Tally.
Select Vouchers.
Press F4 to open the Contra Voucher.
Enter the date of withdrawal.
Select the Cash ledger in the Debit field.
Enter the withdrawal amount, such as ₹15,000.
Select the Bank ledger in the Credit field.
Enter a suitable narration, such as "Cash withdrawn from bank for office use."
Verify the debit and credit amounts.
Press Ctrl + A to save the voucher.
Your bank withdrawal entry is successfully recorded.
Practical Tip: Do not record a bank withdrawal as an office expense simply because the money will be used for business purposes. The withdrawal itself is a transfer from bank to cash. Record the actual expense separately when the money is spent.
Difference Between Bank Deposit and Bank Withdrawal Contra Entries
Both transactions use the same Contra Voucher, but their debit and credit treatments are opposite.
| Basis | Bank Deposit | Bank Withdrawal |
|---|---|---|
| Meaning | Cash transferred to bank | Cash received from bank |
| Voucher | Contra (F4) | Contra (F4) |
| Debit Account | Bank A/c | Cash A/c |
| Credit Account | Cash A/c | Bank A/c |
| Cash Balance | Decreases | Increases |
| Bank Balance | Increases | Decreases |
| Example | ₹20,000 deposited | ₹15,000 withdrawn |
Remember this simple rule:
Cash deposited into bank: Debit Bank, Credit Cash.
Cash withdrawn from bank: Debit Cash, Credit Bank.
How to Record Bank-to-Bank Transfer in Tally
Businesses sometimes maintain multiple bank accounts for different purposes. For example, a company may use one account for daily operations and another for savings or business payments.
Suppose you transfer ₹50,000 from HDFC Bank to SBI Bank.
The accounting entry will be:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| SBI Bank A/c Dr. | 50,000 | |
| To HDFC Bank A/c | 50,000 | |
| Total | 50,000 | 50,000 |
To record this transaction:
Open the Contra Voucher using F4.
Select SBI Bank in the Debit field.
Enter ₹50,000.
Select HDFC Bank in the Credit field.
Add narration mentioning the bank transfer.
Verify the details and save the voucher.
This records the transfer without affecting the total bank balance of the business, apart from any separate bank charges.
How to Check Bank Deposit and Withdrawal Entries in Tally
After recording contra entries, it is good practice to verify the transactions. This helps identify incorrect ledger selections, duplicate entries, and differences in account balances.
You can check your entries through the following reports:
Day Book: Displays all vouchers recorded for a selected date or period. You can filter or locate Contra Vouchers to review bank deposits and withdrawals.
Cash Book: Shows cash receipts and payments, including cash deposited into and withdrawn from the bank.
Bank Book: Displays bank-related transactions and helps you verify deposits, withdrawals, and transfers.
Bank Reconciliation: Helps compare the transactions recorded in Tally with the entries appearing in your bank statement.
Regularly checking these reports can help you maintain accurate financial records and identify errors before they become bigger problems.
Common Mistakes to Avoid While Recording Contra Entries
Even simple cash and bank transactions can create accounting errors if the wrong ledger or voucher is selected.
Here are some common mistakes to watch out for:
Using the wrong voucher: Always use the Contra Voucher (F4) for cash-to-bank, bank-to-cash, and bank-to-bank transfers.
Reversing debit and credit: Remember that bank deposits debit the bank account, while withdrawals debit the cash account.
Selecting the wrong bank account: Verify the bank ledger before saving the voucher.
Recording withdrawals as expenses: A withdrawal is not an expense. Record the actual expense separately.
Entering incorrect dates: Use the actual transaction date shown on the deposit slip or bank statement.
Ignoring narration: Add a clear description to make future verification easier.
Not checking bank statements: Reconcile your Tally records with the actual bank statement regularly.
One important point: If the bank deducts charges or fees during a transfer, record those charges separately using an appropriate payment or journal entry, depending on the transaction and your accounting setup.
Conclusion
Recording bank deposits and withdrawals in TallyPrime is straightforward once you understand the Contra Voucher. Use F4 to open the Contra Voucher, debit the account receiving money, and credit the account from which money is transferred.
For a bank deposit, debit Bank and credit Cash. For a bank withdrawal, debit Cash and credit Bank. Following these basic accounting rules will help you maintain accurate cash and bank balances, avoid common mistakes, and keep your business accounts organised.
Frequently Asked Questions (FAQs)
Q1. Which voucher is used for bank deposit in Tally?
The Contra Voucher (F4) is used to record cash deposited into a bank account.
Q2. What is the journal entry for cash deposited into a bank?
Debit Bank Account and Credit Cash Account.
Q3. What is the journal entry for cash withdrawn from a bank?
Debit Cash Account and Credit Bank Account.
Q4. Can I record bank-to-bank transfers using a Contra Voucher?
Yes. Use the Contra Voucher (F4) to record transfers between two bank accounts.
Q5. Is a bank withdrawal considered an expense in Tally?
No. A bank withdrawal is a transfer of money from the bank account to the cash account. Record the actual expense separately when the money is spent.
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