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 :

Cash withdrawal from business by the proprietor towards Personal Expenses - Journal Entry

Ledger Posting :

  • Cash A/c - Credit Column

Drawings by the Proprietor for personal expenses - Cash Ledger entry

  • Drawings A/c - Debit Column.

Drawings by the Proprietor for personal expenses - Drawings Ledger entry
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.

Cash Drawings by the Proprietor - effect on Trial Balance
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.

Cash Drawings by the Proprietor - effect on Balance Sheet

Location: Cuttack, Odisha, India

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