What is a Reclass Entry

The Accounting Journal Entry which is recorded when we transfer the amount of a Ledger Account to another due to a mistake, an error or some other reasons is called Reclass Entry and the whole process in which we record reclass entry is called Reclassification in accounting.

For Example, Instead of Rent Expense Account, the company wrongly debit Salary Expense Account of Rs. 50000 when recording the rent expense journal entry.

Wrong Entry is shown below

                                            Salary Expense a/c  50000

                                                                           Cash a/c  50000

In this case, the company recorded the following reclass entry as shown below:

                                             Rent Expense a/c  50000

                                                                        Salary Expense a/c  5000

(Rent Account Now Debit And Salary Account Credit In Order To Reclassify These Accounts)

Reclass Entry is one of the types of Adjusting Entries and it is often recorded and there are very few possible reasons to record it.