BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Journal Entry for Cash Withdrawn by Owner is?
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Drawing A/c Dr. To Cash A/c
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Capital A/c Dr To Cash A/c
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Cash A/c Dr. To Drawing A/c
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Drawing A/c Dr. to Capital A/c
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Explanation:
Detailed explanation-1: -The company can make the owner withdrawal journal entry by debiting the withdrawals account and crediting the cash account. The withdrawals account is a contra account to the capital in the equity section of the balance sheet. Likewise, the normal balance of the withdrawals account is on the debit side.
Detailed explanation-2: -A journal entry to the drawing account consists of a debit to the drawing account and a credit to the cash account. A journal entry closing the drawing account of a sole proprietorship includes a debit to the owner’s capital account and a credit to the drawing account.
Detailed explanation-3: -Cash is withdrawn for personal use, therefore drawings account should be debited.
There is 1 question to complete.