Withdrew Cash For Private Use And Office Use Journal Entry

Journal Entry For Cash Withdrawn By Owners From Business For Personal Use As Well As For Office Use

Here, we record Journal Entries related to two aspects which are explained below:

(i) Cash Withdrew From Business For Private Expenses / Personal Uses

When the sole owners withdraws cash from business for their own personal use or private use, then Drawings Account is created for such transaction in order to treat this separately from business as it is related with the owners own personal use.

Suppose, Mr. A withdrew Cash Rs. 50000 from his business for his own private expenses, then the entry to record is given below:

                                                                    Drawings a/c  50000

 

                                                                                           Cash a/c  50000

 

                                                              (Cash Withdrawn For Personal Use)

 

This transaction has no concern with business matter, so it is deducted from capital account and in order to treat it separately from business dealings i.e., Separate Legal Entity Concept is following. Cash account is credited as it had been decreased by Rs. 50000.

(ii) Cash Withdrew From Business For Office Use / Business Use

When owners withdrew cash from business for business use or office use, then such transaction is treated as a business matter and recorded with the name of business.

Suppose, Mr. A withdrew cash of Rs. 2000000 from business for buying car to be used in business, then such purchase of car for office use is considered as a business transaction and recorded with the business name.

The following journal entry is recorded for Purchasing a Car as shown below:

                                                                       Car a/c  2000000

 

                                                                                         Cash a/c  2000000

 

                                                                           (Bought Car For Cash)

 

The result of this transaction is that the total of Fixed Assets in the business is Increased by Rs. 2000000 and cash as a Current Asset is decreased by Rs. 2000000. This car is owned by business and recorded on the balance sheet of business as it is used for the business or for office use of the business.