Contra entry is the entry which same account can be debited and credited in contrary situation. Ex: we debit bank account when depositing cash. At the same time we credit bank account when withdrawing money from 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 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 bank
- When money transferred from one bank to another bank.
- When cash is transferred to one cash account to another account.