What is Contra Entry?

Contra Entry

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 Cash 50,000 withdrawn for an official purpose from the bank.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

Cash A/C 50,000
 To Bank A/C 50,000

In the above example, both entries, debit, and credit, are a contra entry 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.

Related Topic – What is a Cash Book, Types and its Sample Format?

2. Cash 10,000 received from a debtor is deposited into the bank

Bank A/C 10,000
 To Cash A/C 10,000

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

A contra entry is also used in the Intercompany netting to offset receivables and payables between 2 different legal entities/subsidiaries of a company so that one final (net) amount remains.


>Read Compound Journal Entry

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