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Contra Entries

 

Contra entries are recorded when the same amount appears on both the debit and credit sides of the cash book. Contra entries are necessary to complete the double entry so that no posting to the ledger is needed. In the folio column, the letter ‘C’ is entered for contra entries. Contra entries happen for these two reasons:

Cash deposited into bank
Debit bank account
Credit cash account

Cash withdrawn from bank
Debit cash account
Credit bank account

Cash Book
Date
Particulars
Folio
Cash Bank

Date
Particulars
Folio
Cash Bank



$ $




$ $
20XX





20XX




Nov 13
Sales
GL25

450

Nov 04
Rent
GL22

550
"    15 B Bigman SL12
220
"    16
Bank C 100
"    16
Cash C
100
"    25 Telephone
GL29

110
"    21 Sales GL25 120 "    30
Cash C 300
"    30
Bank C 300

On 16 Nov $100 was deposited into the bank
On 30 Nov $300 was withdrawn from the bank

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Sometimes, a supplier is also a customer. For example:
You sold B Bullyman goods worth $400.
B Bullyman supplied you with goods worth $920.

Because of the above transactions, Bullyman has two accounts in your books.

 

Sales Ledger

B Bullyman Account



Sales


$
400








 

Purchases Ledger

B Bullyman Account







Purchases


$
920


 

Using contra entries to set off the $400 against the $920 owing to Bullyman.

Sales Ledger

B Bullyman Account

$ Folio $
Sales 400 Purchases ledger C 400

 

Purchases Ledger

B Bullyman Account


Folio $
$
Sales ledger
C 400 Purchases
920
Balance c/d 520
920 920

Last Updated (Friday, 10 September 2010 20:10)