" ("me and my sister" as sentence subject is informal, verging on sloppy. ) The first sentence simply describes that fact that you did go. The second places the narrative at the time you were travelling, so you might use it if you were about to describe an event that happened on your journey: "Yesterday my sister and I were going to the city.
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Is it correct to say?
I went to the city with my sister yesterday.
My sister and I went to the city yesterday