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    campher25's Avatar
    campher25 Posts: 1, Reputation: 1
    New Member

    Apr 22, 2012, 11:00 AM
    What is contra account
    How to record revenue of sales into a journal and how do I know which contra account to use?
    If I sold a room for $100 I will credit my sales account correct? Which account would I need to debit?
    ekuemoah's Avatar
    ekuemoah Posts: 2, Reputation: 1
    New Member

    May 16, 2012, 07:48 PM
    Quote Originally Posted by campher25 View Post
    how to record revenue of sales into a journal and how do i know which contra account to use?
    if i sold a room for $100 i will credit my sales account correct? which account would i need to debit?
    Contra account is an account whose normal balance (the side of t-account that is increasing) is opposite to the main account. In this case, the normal balance for sales is credit. When sales increase, we credit a sales revenue account. A contra-account would be an account that has a debit as a normal balance.

    Two accounts that are contra to a sales account are Cash or Accounts Receivable. You debit cash if the customer pays at he time the sale is made. You debit A. receivables if the customer pays at a time later than the date the sale is made.

    For example, if you sold the room for $100 on May 5th and the customer pays you with a check for it on May 5th, you would debit Cash and Credit Sales by $100 on May 5th. If you bill the customer for the amount and set the due date for the payment to May 31st, you would then Credit Sales and Debit A.Receivables-Customer's Account on May 5th. When the customer pays the bill, you would credit A.Receivables and Debit Cash by the amount.

    Other accounts that are contra to sales are Sales Discounts and Sales Returns and Allowances.

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