Its a contra settlement. for sales ledger control a/c ...we put contra settlement in the Cr side and in purchases ledger control a/c ..we put contra settlement in the Dr side
A contra account balance is a debit balance account. It is a general ledger account that has a balance that is an exact opposite of a normal balance. Contra accounts are generally used to report the gross and the net amount of an organization.
A contra purchase account
True
It is a contra asset account; thus, an ASSET
If the inventory has some value then it must be entered in a new general ledger expense account and have a new contra asset account for the items. Enter the estimated value as a debit to the inventory obsolescence account and then credit it to the inventory reserve account.
Purchase return is a contra account because it reduces the balance in the Purchase account in an attempt to determine cost of goods sold. This is like sales returns and allowances being used to determine net sales on an entity's income statement.
a debit and credit
a debit and credit
a debit and credit
A contra entry occurs when one business both buys goods from, and sells goods to, one other business. Rather than making a payment for the full amount owed, and receiving a payment for the full amount due, only the difference between the two amounts actually exchanges hands; this is known as contra accounting. The contra entry is shown as follows: The first business has a debit entry in the sales ledger and a credit entry in the purchases ledger to the second business. The smaller of the two accounts (the debtor account and the creditor account of the same trader) is taken and posted to the opposite side of each respective amount, so that there is a credit entry in the sales ledger and a debit entry in the purchases ledger. (The amount posted to both accounts is actually the contra.) This will effectively close the account with the smaller amount leaving the trader either a debtor or a creditor to the other business. The amount that the trader either still owes or is owed is the larger of the accounts minus the smaller transferred amount. It can happen, in very rare cases, that a contra closes both the credit and the debit account if both the amount owed and the amount owing are exactly the same size.
Indicates monies owed to suppliers.