Contra entry

Contra entry
See also
Purchase ledger Outstanding deposit Nominal ledger Balance an account Bills Payable General journal entry Book of original entry T account Closing balance

Contra entry It is the record which is entered in purpose of reversing or offsetting corresponding record placed on another side of the same account in Cash Book. Purpose of Contra Entry is to reduce the balance of an entry on the other side of account. It does not affect Net Cash Balance. Contra Entry is also known as “Against” or “Opposite” entries. For example- credit entry of $200 was made on the account (amount added), on the other side of the account (in debit) $200 entry (amount taken away) is the Contra Entry. Because of Contra Entry in the same amount as credit- account is balanced.

Letter “C” is used as a symbol of the Contra Entry in Ledger Folio Column (after ledger name). Contra Entry is essential part of both Double- Column as well as Three- Column Cash Books.

Examples of Contra Entry transactions

Fig.1. Examples of contra entries

Contra Entry is used when:

• Cash is deposited into bank:

Debit: Bank A, Credit: Cash

In this case Dt is made in Bank account, but the Ct Entry is made in Cash on the account.

• Cash is withdrawn from the bank,

Debit: Cash, Credit: Bank B

In this case Dt is made in Cash on the account, but the Ct Entry is made in Bank Account.

• Cash is transferred between two accounts,

Debit: Cash, Credit: Cash

In this case Dt is made in Cash on the account that transfer goes from, but the Ct Entry is made in Cash on the account transfer goes to.

• Fund is transferred between two banks (Bank B to Bank A):

Debit: Bank A, Credit: Bank B

In this case Dt is made in Bank account that transfer goes from, but the Ct Entry is made in Bank account transfer goes to.

Contra Entry in double column cash book

Below transactions are about to be entered into double- column cash book (balanced as at 31st Dec 2018):

Date	Particulars	Amount
Dec 1st	Bank Balance b/d	$20,000.00
Dec 1st	Balance of cash	$200.00
Dec 2nd	Paid by check for Computer	$1,000.00
Dec 10th	Withdrew from bank for office use	$300.00
Dec 11th	Paid for paper- cash	$500.00
Dec 12th	Banked cash sales	$3,000.00
Dec 20th	Paid wages by transfer	$2,000.00
Dec 22nd	Withdrew from bank for office use	$1,000.00
Dec 25th	Banked cash sales	$4,000.00
Dec 26th	Paid by check for materials	$1,000.00
Dec 28th	Paid by cash for landscaping services	$700.00
Dec 30th	Paid wages by transfer	$1,500.00

Double column cash book

Date	Particulars	L.F	Cash	Bank	Date	Particulars	L.F	Cash	Bank
Dec 1st	Balances b/d		$200.00	$20,000.00	Dec 2nd	Computer			$1,000.00
Dec 10th	Bank	C	$300.00		Dec 10th	Cash	C		$300.00
Dec 12th	Cash Sales			$3,000.00	Dec 11th	Paper		$500.00
Dec 22nd	Bank	C	$1,000.00		Dec 20th	Wages			$2,000.00
Dec 25th	Cash Sales			$4,000.00	Dec 22th	Cash	C		$1,000.00
					Dec 26th	Materials			$1,000.00
					Dec 28th	Landscaping		$700.00
					Dec 30th	Wages			$1,500.00
					Dec 31th	Balances c/d		$300.00	$20,200.00
			$1,500.00	$27,000.00				$1,500.00	$27,000.00

Contra entries are the transactions done on Dec 10th and Dec 22th (with "C" in L.F. Column).

References

• Banerjee, A. (2005). Financial Accounting a Managerial Emphasis. Second Edition.
• Erkes, H. (1921). The Teller's Brotter, "Bankers' Magazine (1896-1943); Cambridge Tom 102, No/edition 5, (May 1921): 760."
• Hoyle, K., & Whitehead, G. (1979). Business Statistics and Accounting Made Simple
• Kotas, R., & Conlan, M. (1997). Hospitality Accounting Fifth Edition
• Nhleko, Z. (2010). IFC’s contribution to the 57th ISI Session, Durban, 2009, "IFC Bulletin No 33."
• Sangster, A. (2016). The Genesis of Double Entry Bookkeeping, "The Accounting Review: January 2016, Vol. 91, No. 1, pp. 299-315"
• Tulisan, P. C. (2015). Tulisan's Quick Revision For Financial Accounting (For ICWA Intermediate: Paper 5)

Author: Patryk Wykręt