Contra Account How It Works By Example (Discount Bonds Payable)

How a contra account is used (works opposite) demonstrated by (Discount to Bonds Payable), used as a balancing account between the asset account (cash received when issuing a bond) and liability account (Bonds Payable, face value), less cash received when issuing the bond than liability recorded, the contra account is used to balance the equation (assets = liabilities), also the contra account is used to amortize the bond interest expense over the life of the bond, demonstrated thru balance sheet (T Account) and income statement journal entries, also included is a listing of common contra accounts, (1) asset types as allowance for bad debt, valuation allowance, accummulated depreciation, discount notes receivable, discount bonds receivable, accummulated depletion,accummulated amortization, (2) liability types, discount notes payable, discount bonds payable, (3) revenue types, sales discounts, sales returns and allowances, (4) expense types, purchase discounts, purchase returns and allowances, explaination by Allen Mursau

• #education
• #contra_account
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• #accummulated_depreciation
• #accummulated_depletion
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• #purchase_discount
• #valuation_allowance
• #salesreturns_and_allowance
• #allowance_for_bad_debt
• #allowance_doubtful_accounts
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