Record the following transactions in a bank column cash book for December 2016:

01. Started business with cash 80,000  

04. Deposited in bank 50,000 Rationalized 2023-24  

10. Received cash from Rahul 1,000  

15. Bought goods for cash 8,000  

22. Bought goods by cheque 10,000  

25. Paid to Shyam by cash 20,000  

30. Drew from Bank for office use 2,000  

31. Rent paid by cheque 1,000 

Solution:  

Cash Book 

 

Date	Particulars	JF	Cash	Bank	Date	Particulars	JF	Cash	Bank
2010					2010
Dec 1	Capital		80,000		Dec 4	Bank	C	50,000
Dec 4	cash	C		50,000	Dec 15	Purchase		8,000
Dec 10	Rahul		1,000		Dec 22	Purchase			10,000
Dec 30	Bank	C	2,000		Dec 25	Shyam		20,000
					Dec 30	Cash	C		2,000
					Dec 31	Rent			1,000
					Dec 31	Balance C/d		5,000	37,000
			83,000	50,000				83,000	50,000
2011	Balance b/d		5,000	37,000

 
Explanation:  

1. December 4, 2016: Deposited in bank 

Particulars: Deposited cash into the bank. 

Contra Entry Explanation: 

Credit (C): Decrease in the cash account (₹50,000 is credited to the cash account). 

Debit (D): Increase in the bank account (₹50,000 is debited to the bank account). 

Purpose: Reflects the movement of cash from the cash account to the bank account. 

 

2. December 22, 2016: Bought goods by cheque 

Particulars: Paid for goods by writing a cheque. 

Contra Entry Explanation: 

Credit (C): No impact on the cash account (since the payment is made by cheque). 

Debit (D): Decrease in the bank account (₹10,000 is debited to the bank account). 

Purpose: Illustrates the payment for goods using a banking transaction. 

These two transactions are examples of contra entries because they involve both the cash and bank accounts in a single transaction. Contra entries are crucial for maintaining accurate records of cash movements between the cash-in-hand and bank accounts.