Contra entry is the entry in which the same account can be debited and credited on the contrary situation. Ex: we debit bank account when depositing cash. At the same time, we credit bank account when withdrawing money from the bank. In manual accounting contra entries are recorded in the journal by making in the particulars column after ledger name. Or in other words, It is a Bookkeeping entry that is entered on the opposite side of an earlier entry to cancel its effect on the account balance.
When Contra Entry Occurs?
- When cash is deposited into the bank
- When cash withdraw from the bank
- When money is transferred from one bank to another bank.
- When cash is transferred from one cash account to another account.
1. Cash 5000 withdrawn for an official purpose from the bank. Journal entry for this transaction will be
|To Bank A/C||5000|
In the above example, both entries, debit, and credit, are contra entries of each other, they both offset each other. The narration is not required for such an entry and only a ‘C’ is written in the left column which depicts that it is a contra entry.