Contra Entry Example: How to Record Transactions Effectively in Tally

 Welcome back to our blog today we are going to talk about the contra entry example, contra entry example bank to bank, types of contra entry, contra journal entry, and many more.

So if you are learning to use contra entry then you can read our post and try examples.

Contra entry example refers to a unique practice that plays a pivotal role in maintaining accurate financial records.

Here in this post, we dive deep into the concept of contra entries which helps you to provide a clear understanding of how contra entry works and why they are important to maintain financial records.

Benefits of Contra Entries

• Accuracy Enhancement

• Transparent Financials

• Compliance and Audit Preparedness

• Effective Financial Analysis

Contra Entry Example

This entry involves recording two opposing transactions in separate ledger accounts to accurately reflect the financial position of a business entity.

Example 1:- 

Let's consider a Company ABC has taken a loan of ₹20,000 from Bank X to expand its operations. After a few months, they decide to make a partial repayment of ₹5,000 on the loan. We'll record this transaction using a contra entry in Tally and provide a tally table to Show the accounting entries.

Step 1: Identify the Accounts  

• Loan Payable Account 
• Bank Account (Company information)

Step 2: Debit and Credit Entries

Voucher Type	Date	Particulars	Debit (₹)	Credit (₹)
Contra	DD/MM/YYYY	Loan Payable Account	5,000
		Bank Account		5,000

Step 3: Now Record the Contra Entry

In this table, you can check that  Loan Payable account is debited by ₹5,000 and the  Bank account is credited by ₹5,000.

Voucher No.	Date	Particulars	Debit (₹)	Credit (₹)
[Voucher #]	DD/MM/YYYY	Loan Payable Account	5,000
		Bank Account		5,000

Contra entry example bank to bank

Let's say Company ABC has two bank accounts: Bank Account P and Bank Account D. They need to transfer ₹10,000 from Bank Account P to Bank Account D for internal fund management. We'll record this transaction using a contra entry to illustrate the accounting entries.

Step 1: Identify the Accounts

• Bank Account P
• Bank Account D

Step 2: Now enter Debit and Credit Entries

Voucher Type	Date	Particulars	Debit (₹)	Credit (₹)
Contra	DD/MM/YYYY	Bank Account A		10,000
		Bank Account B	10,000

Step 3: Record the Contra Entry

Voucher No.	Date	Particulars	Debit (₹)	Credit (₹)
[Voucher #]	DD/MM/YYYY	Bank Account A		10,000
		Bank Account B	10,000

This entry captures the internal bank-to-bank transfer of ₹10,000. 

Solve these Emaples 

• Example 1: Petty Cash Replenishment

 Let's consider Company XYZ, which maintains a petty cash fund for small expenses. At the end of the month, they need to replenish the petty cash fund with ₹2,000 from their main bank account. This is recorded as a contra entry.

• Example 2: Bank Charges Deduction 

Company ABC's Bank Account A is charged ₹500 as bank service charges. To account for this deduction, they record a contra entry.



Follow the same method to solve these examples

Conclsuion

Here in this post, we add all related information about the contra entry example so if you are learning tally then you should read this post till the end and try our examples.