In this modern business world, Banks performs various functions to an organization such as it accepts various deposits from the debtors, making payment to the creditors on the standing instructions of the company. Banks provide various agency and miscellaneous services to an organization.
The Journal entry for cash withdrawn from the bank is a contra entry. Cash can be taken from the bank for two uses either for personal use (or) business use. I am assuming that cash is withdrawn from the bank for business use.
Journal Entry for Cash Withdrawn from Bank
This journal entry can be recorded from two different accounting perspectives they are;
1. Traditional Accounting Perspective
| Particulars | L.F. | Amount | Nature of Account | Accounting Rule |
| Cash a/c | Amt | Real | Debit- What comes into the business | |
| To Bank a/c | Amt | Personal | Credit- The Giver |
(Being cash withdrawn from the bank)
2. Modern Accounting Perspective
| Particulars | L.F. | Amount | Nature of Account | Accounting Rule |
| Cash a/c | Amt | Asset | Debit- The Increase in Asset | |
| To Bank a/c | Amt | Asset | Credit- The Decrease in Asset |
(Being cash withdrawn from the bank)
Example
On 15th May, Anna Ltd withdraws 5,00,000 from their Bank account for business purposes. Journalise the following transaction.
| Date | Particulars | L.F. | Amount | Nature of Account | Accounting Rule |
| 15th May | Cash a/c | 5,00,000 | Asset | Debit- The Increase in Asset | |
| To Bank a/c | 5,00,000 | Asset | Credit– The Decrease in Asset |
(Being cash withdrawn from the bank)
Related Material
- What are Drawings and its Journal Entry (Cash, Goods)?
- What is the journal entry for salary due?
- Journal Entry for Cheque Received from Debtor
- Quiz 24 – Drawings – (Answers)
- Quiz 42 – Bank Reconciliation – (Answers)
- What is salary received journal entry?
- Why bank reconciliation statement is made?
