Cash Entry: if cash deposited at bank by a customer

Dear Varsha

Bank

To Cash

Pass it in contra voucher in Tally

Shivani

bank paid amount for insurance premium of the party

what is answer

hi DVD 

1st entry is correct. 

Lets not go with what others are using, As per my opinion considering basics of accounting second is more appropriate for the below mentioned reasons:

1. Bank statement will show 'Cash Deposited', which is reflectling that we have deposited cash not the customer name who have deposited cash. This is purely a contra entry. Entry for that sholud be Bank A/c debited considering cash A/c credited. 

2. In Customer's books of accounts no bank has been credited, It will reflect in customers Bank A/c, thus it is reflecting that he has given us Cash. So in Customers Books of Accoutnts entry must be WE A/c Debited considering cash A/c credited. In the same way in our books of accounts entry must be Cash A/c Debited considering Customer A/c Credited.

3. As per RBI guidelines & Prevention of Money Laundering Act banks have to send Cash Transactions Report of account holders to higher authorities, and in turn to Government departments. In that also cash deposited by customers in our bank accounts, we are solely accountable to source of cash deposited in bank accounts. So accounting entry must also be with same line. Entry must be Bank A/c debited considering Cash A/c credited.

To cut the line in short second treatment is correct in my opinion.

Experts opinion is also appreciated.