Journal Entry for Drawings | Journal Entry for Withdrawal | Drawings
Arjun EP
Goods taken for personal use | Goods taken for private use | Goods taken for domestic use | Cash withdrawn for private use
Amount or money’s worth goods withdrawn by the proprietor for his personal, private or domestic use is known drawings.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
|
Drawings account To Cash account To Bank account To Purchase account (Being- cash/goods taken for personal, private, domestic use) |
Dr |
Total of cash or goods taken Cash taken for personal or private use Cash withdrawn from bank for private use Goods taken for personal use |
Decrease in capital Decrease in assets Decrease in assets Decrease in assets |
Journal Entry
In the book of …………
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Drawings account To Cash account To Bank account To Purchase account (Being- cash and goods taken for personal use) |
Dr |
|
xxxxx
|
xxxxx xxxxx xxxxx |
|
31 Dec |
Capital account To Drawings account (Being: drawings transferred to capital account) |
Dr |
|
|
|
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 |
PROBLEM: 13
The following transaction is given by Mr Ajay, proprietor of Unique Electronics:
1 Feb: LED TV taken for domestic use Rs 63,500
10 March: Cash withdrawn for private use Rs 5,300.
15 April: Cash withdrawn from bank for domestic use Rs 35,850.
18 May: Personal insurance premium paid Rs 23,200 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
Journal Entry for American Style
|
Date |
|
|
Debit $ |
Credit $ |
|
Feb, 1 |
Withdrawal account Merchandise account To record LED TVs taken for domestic use |
|
63,500
|
63,500
|
Journal Entry for European Style
|
Date |
|
|
€ |
€ |
|
Feb, 1 |
Withdrawal account Merchandise account To record LED TVs taken for domestic use |
Dr |
63,500
|
63,500
|
Journal Entries
In the book of Unique Electronics
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
1 Feb |
Drawings account To Purchase account (Being- LED TV taken for domestic use) |
Dr
|
|
63,500
|
63,500
|
|
10 Mar |
Drawings account To Cash account (Being- cash withdrawn for private use) |
Dr
|
|
5,300 |
5,300 |
|
15 Apr |
Drawings account To Bank account (Being- cash withdrawn from bank for domestic use) |
Dr |
|
35,850 |
35,850 |
|
18 May |
Drawings account To Cash account (Being- personal insurance premium paid in cash) |
Dr
|
|
23,200 |
23,200 |
|
20 Jun |
Drawings account To Bank account (Being- school fees of children paid by cheque) |
Dr
|
|
17,000 |
17,000 |
|
25 Oct |
Drawings account To Purchase account (Being- mixer-grinder is taken for gift to friend) |
Dr
|
|
5,000 |
5,000 |
|
31 Dec |
Capital account To Drawings account (Being- drawings transferred to capital account) |
Dr
|
|
149,850 |
149,850 |
###########
|
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 13 DRAWINGS
The following transaction is given by proprietor of SR Computers & Mobile House:
1 March: Cash Rs 3,000 and Laptop $43,000 taken for personal use.
15 March: Cash withdrawn from bank for domestic use $25,000.
18 March: Personal insurance premium paid $8,000 from cash counter.
20 March: School fees of child paid by cheque $10,000; memory card of $500 and cash $1,320 used for personal use.
25 March: Mobile worth $8,000 is taken for gift to friend.
Required: Journal entries
***********
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