Goods taken for personal use is also known as goods taken for private use, goods taken for domestic use, cash withdrawn for private use.
Amount or money’s worth goods withdrawn by the proprietor for his personal, private or domestic use is known drawings.
The uses of business assets for domestic purposes are also considered as drawings.
For accounting purposes, drawings and withdrawals are different.
Drawings are made out of business income and withdrawals are made out of proprietor’s capital contribution.
Drawings account |
Dr |
Total of cash or goods taken |
Decrease in capital |
To Cash account |
|
Cash taken for personal or private use |
Decrease in assets |
To Bank account |
|
Cash withdrawn from bank for private use |
Decrease in assets |
To Purchase account |
|
Goods taken for personal use |
Decrease in assets |
(Being- cash/goods taken for personal, private, domestic use) |
|
|
|
|
Journal Entry
In the book of …………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Drawings account |
Dr |
|
xxxxx |
|
|
To Cash account |
|
|
|
xxxxx |
|
To Bank account |
|
|
|
xxxxx |
|
To Purchase account |
|
|
|
xxxxx |
|
(Being- cash and goods taken for personal use) |
|
|
|
|
31 Dec |
Capital account |
Dr |
|
xxxxx |
|
|
To Drawings account |
|
|
|
xxxxx |
|
(Being: drawings transferred to capital account) |
|
|
|
|
|
|
|
|
|
|
Keep in Mind (KIM)
When a business person or proprietor takes for personal, private or domestic use, it is known drawings. |
Cash taken from cash counter for personal, private or domestic use |
Withdraws from bank for personal, private or domestic use |
Goods taken for personal, private or domestic use |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 12
The following transaction is given by Mr Ajay, proprietor of Unique Electronics:
1 Feb: LED TV taken for domestic use Rs 63,000
10 March: Cash withdrawn for private use Rs 5,000.
15 April: Cash withdrawn from bank for domestic use Rs 35,000.
18 May: Personal insurance premium paid Rs 23,000 from cash counter.
20 June: School fees of children paid by cheque Rs 17,000.
25 Oct: Mixer-grinder worth Rs 5,000 is taken for gift to friend.
31 Dec: Transfer drawing to capital account.
Required: Journal entries
SOLUTION
Journal Entry for American Style
Date |
|
|
Debit $ |
Credit $ |
Feb, 1 |
Withdrawal account |
|
63,000 |
|
|
Merchandise account |
|
|
63,000 |
|
To record LED TVs taken for domestic use |
|
|
|
|
|
|
|
|
Journal Entry for European Style
Date |
|
|
€ |
€ |
Feb, 1 |
Withdrawal account |
Dr |
63,000 |
|
|
Merchandise account |
|
|
63,000 |
|
To record LED TVs taken for domestic use |
|
|
|
|
|
|
|
|
Journal Entries
In the book of Unique Electronics
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
1 Feb |
Drawings account |
Dr |
|
63,000 |
|
|
To Purchase account |
|
|
|
63,000 |
|
(Being- LED TV taken for domestic use) |
|
|
|
|
10 Mar |
Drawings account |
Dr |
|
5,000 |
|
|
To Cash account |
|
|
|
5,000 |
|
(Being- cash withdrawn for private use) |
|
|
|
|
15 Apr |
Drawings account |
Dr |
|
35,000 |
|
|
To Bank account |
|
|
|
35,000 |
|
(Being- cash withdrawn from bank for domestic use) |
|
|
|
|
18 May |
Drawings account |
Dr |
|
23,000 |
|
|
To Cash account |
|
|
|
23,000 |
|
(Being- personal insurance premium paid in cash) |
|
|
|
|
20 Jun |
Drawings account |
Dr |
|
17,000 |
|
|
To Bank account |
|
|
|
17,000 |
|
(Being- school fees of children paid by cheque) |
|
|
|
|
25 Oct |
Drawings account |
Dr |
|
5,000 |
|
|
To Purchase account |
|
|
|
|
|
(Being- mixer-grinder is taken for gift to friend) |
|
|
|
5,000 |
31 Dec |
Capital account |
Dr |
|
148,000 |
|
|
To Drawings account |
|
|
|
148,000 |
|
(Being- drawings transferred to capital account) |
|
|
|
|
|
|
|
|
|
|
###########
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
Basic Problem: 12 DRAWINGS
The following transaction is given by proprietor of SR Computers & Mobile House:
1 March: Cash Rs 3,000 and Laptop Rs 43,000 taken for personal use.
15 March: Cash withdrawn from bank for domestic use Rs 25,000.
18 March: Personal insurance premium paid Rs 8,000 from cash counter.
20 March: School fees of child paid by cheque Rs 10,000.
25 March: Mobile worth Rs 8,000 is taken for gift to friend.
Required: Journal entries
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