What is Contra Journal Entry - Definition - Meaning - Example
There are Different Types of Journal Entries , Contra Entry is one of these. In a Contra Entry there are two possible cases: 1. When Two Different Nature / Types of Accounts Offset Each Other In that case, it is the estimated reversal of an Account to offset or cancel its effect. For Example when Accounts Receivable is created, then the question of Uncollectible accounts arises that how much amounts due will be recovered from our customers, so Allowance for Doubtful Accounts that is a Contra Asset Account is created that is applied either on Net Sales ( I n come Stateme n t-Approach ) or Closi ng Balance of Accounts Receivable ( Balance Sheet-Approach ) in order to measure the correct estimate of Net Realizable value of Accou nts Receivable on Balance Sheet . The Contra Entry is as follows: Uncollectible Accounts Expense a/c XXX ...