Lesson 6 of 20

Contra voucher (F4)

Contra is the voucher for money that never leaves the business: it only moves from one of your own pockets to another.

When to use it

Use a Contra voucher when both sides of the entry are cash or bank ledgers of the business:

• Cash deposited into the bank.
• Cash withdrawn from the bank for office use.
• Money transferred from one bank account of the business to another.
• Money moved between the main cash and a petty cash ledger.

If either side is anything else, such as an expense, a party or the owner's drawings, it is not a contra. Cash withdrawn from the bank for the owner's personal use is a Payment voucher (Dr Drawings, Cr Bank).

Steps

1. Gateway of Tally > Vouchers, then press F4.
2. Press F2 and set the date.
3. Enter the account that receives the money on the debit side and the account that gives it on the credit side. In single entry mode, Tally asks for the "Account" first and then the particulars; in double entry mode you enter Dr and Cr lines. Use Ctrl+H to change the mode.
4. For a bank ledger, Tally may open a bank allocation screen asking for the transaction type (cash, cheque, transfer) and instrument number. Fill it in; it helps bank reconciliation later.
5. Type a narration and save with Ctrl+A.

Examples

1. On 2 April, Shanti Traders deposits ₹2,00,000 of cash into Canara Bank.

Narration: Cash deposited into bank.

2. On 15 April, ₹20,000 is withdrawn from the bank for office expenses.

3. On 20 April, ₹50,000 is transferred from Canara Bank to the firm's account in State Bank of India.

4. On 22 April, ₹5,000 is handed to the office assistant as petty cash.

Petty Cash is a ledger you create under Cash-in-Hand.

The rule to remember

Cash and bank are assets. When an asset increases, debit it; when it decreases, credit it. So the account receiving the money is debited and the account giving it is credited. If you find the Dr and Cr of a contra confusing, say it aloud: "Bank receives, Cash gives."

Why not use a Payment or Receipt voucher?

The accounts would still balance, but there are good reasons to keep contras separate. Reports of receipts and payments stay clean, showing only money that came from or went to outsiders. And anyone reviewing the books can list all contras at once to check movements between cash and bank, which is where cash shortages are often found.

Checking your work

• After a deposit, open the bank ledger (Alt+G > Ledger Vouchers > Canara Bank) and see that the balance rose.
• The cash balance must never go negative. If Tally shows cash in red or with a credit balance, a cash receipt is missing or a contra is entered the wrong way round.
• Deposit slips and withdrawal slips are the supporting papers. File them in date order and note the voucher number on each.

Common mistakes

• Reversing the sides: crediting the bank on a deposit.
• Using Contra for the owner's withdrawal or a payment to a party.
• Leaving the date at yesterday's. Press F2 every time.
• Entering a cheque deposit of a customer's cheque as a contra. That is a Receipt: Dr Bank, Cr customer.

Next: Payment voucher.

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