Question
What is a Contra Entry? How is it recorded? Give two examples of a Contra Entry.
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Answer
Contra Entry: Contra entries are the entries which affect both cash and bank, i.e., balance of one will decrease and the other will increase due to such transactiors. Such transactions are recorded on both sides of the Cash Book. Let us take an example to understand it better.
- Cash deposited into the Bank ₹ 20,000: In this transaction, Bank Account is to be debited and Cash Account is to be credited. Debit aspect is recorded on the debit side of the Bank Column and credit aspect is recorded on the credit side of Cash Column.
- Cash withdrawn from Bank for Office Use ₹ 10,000: In this transacts: 09, Cash Account is to be debited and Bank Account is credited. Debit aspect is recorded on the debit side of the Double Column Cash Book in the Cash Column and credit aspect is recorded on the credit side of the Double Column Cash Book in the Bank Column.
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