Quick Reference Guide - Cash Drawings from Business by the Proprietor

Let's come to discuss on the topic Journal Entry, Ledger Posting and Related Reports/Statements when the Proprietor of a Business withdraw Cash from his/her business towards personal expenses.

Affected Ledger Accounts :

• Drawings A/c - Debit
  

• Cash A/c - Credit

Journal Entry :

Ledger Posting :

• Cash A/c - Credit Column

• Drawings A/c - Debit Column.

Trial Balance :

• Cash A/c - Debit column of Trial Balance.

  Debit column of Trial Balance(Cash A/c) will be decreased by the transaction amount.
  

• Drawings A/c - Debit column of Trial Balance.

  Debit column of Trial Balance(Drawings A/c) will be increased by the transaction amount.

Profit & Loss Account :

• No effect on Profit & Loss Account.

Balance Sheet :

• Cash A/c - under Current Assets in Assets side of Balance Sheet. 

  Cash A/c under Current Assets will be decreased by the transaction amount.
  

• Drawings A/c - under Capital Account in Liabilities side of Balance Sheet.

  Drawings A/c under Capital Account is shown by transferring the drawings amount to Capital Account i.e Capital Account is shown by deducting the drawings amount from Capital A/c Balance.

 << Previous | Next >>

Table of Contents