Скачать или смотреть Contra Entry-Definition, Example, Effects & Accounting | Contra Entry

Hello Everyone!
Welcome to our YouTube Chanel “Everything about Accounting.”
In this video, we will learn:
1. What is Contra entry?
2. What is the Example of Contra Entry?
3. What is the Effect of Contra Entry? and
4. How to Record Contra Entry in Cash Book?
So let’s get started.

What is Contra entry?
If a transaction affects both the cash account and the bank account at the same time, it is called contra entry.

Example of Contra Entry:
1. Deposit $3,000 into a bank account:
Here Bank account will be debited by $3000 and at the same time Cash account will be credited by $3,000.
2. Withdraw $500 from a bank account for business Purpose:
Here Bank account will be credited by $500 and at the same time Cash account will be debited by $500.

What is the Effect of Contra Entry?
Contra entry increases cash and decreases bank deposits, or decreases cash and increases bank deposits.
These types of transactions are recorded on both the debit and credit sides of the cash book.

How to Record Contra Entry in Cash Book?
The cash book usually requires a contra entry for the following two transactions.
1. If the cash and check are included in the cash account and deposited into the bank.
2. If the cash is withdrawn from the bank for business purposes.
1. Cash deposited into the bank:
Cash deposited in the bank, In this case, the word “Cash account” should be written in the description column on the debit side of the cash book and the amount of money should be placed in the Bank column. Similarly, on the credit side, write the word “Bank account” in the Description column and put the amount of money in the cash column.
For example, on July 21, 2021, $20,000 was deposited in the bank.

2. Withdrawn cash from the bank for the business purpose:
In this case, the word “Bank account” should be written in the description column on the debit side of the cash book and the amount of money should be placed in the cash column. Similarly, on the credit side, write the word “Cash account” in the Description column and put the amount of money in the bank column.

For example, on July 21, 2021, $3000 was withdrawn from the bank.

I hope at the end of the video, you are clear about contra entry. If you want to know more don’t forget to comment with us.
Thanks for watching!

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