Contra Entry

In dual entry accounting system, a Contra Entry is an entry which is recorded to reverse or offset an entry on the other side of an account. If a debit entry is recorded in an account, contra entry will be recorded on the credit side and vice-versa.

Debit and credit aspects of a single transaction are entered in the same account, but in different columns. Each entry in this case is viewed as a contra entry of the other. Remember the word contra as “Against” or “Opposite”.

Examples of Contra Entry

1. Cash 50,000 withdrawn for official purpose from the bank. Journal entry for this transaction will be

In the above example, both entries, debit and credit, are a contra entry of each other, they both offset each other.

2. Received a check from a debtor for 10,000 and deposited into bank the same day.

The above amount is recorded in the bank column (debit) side of the double column cash book.

The meaning of word "Contra" is "against" or "opposite". In dual entry accounting system contra enrtries are made for reverse or offset an enrty on the other side of the account. The word contra enrty generally used for Cash to  Bank Transfer and vise-a-versa or Bank to Bank transfer enrty with in the  intra company where third party was not involved. Examples of types transactions passed through Contra Enrty are -

1. Cash of Rs.1,00,000/- withdrawn from Bank for office use.

2.  Rs.10,00,000/- transfered from ICICI Bank to Canara Bank, where beneficary of the accounts are same.

S Bhattacharya