Paid Household Expenses Journal Entry

Journal Entry For Household Expenses Of The Owners Of The Business

Paid household expenses are related with the personal expenses or private expenses of the owners of the business. Actually, it is a Drawings and it is not concerned with business matters according to Business Entity Concept.

For example, a sole proprietor, Mr. A, withdrew cash of Rs. 30000 from business for his own private expenses, then following journal entry is recorded:

                                                                 Drawings a/c  30000

 

                                                                                          Cash a/c  30000

 

                                    (Cash Withdrawn From Business For Household Expenses)

As drawings account is created, so we debit it and credit cash account as it is decreasing.

Drawings account is a Contra Capital Account, so it is deducted from capital account on Balance Sheet.

If the cash withdrew from business for business use and not for household expenses or private purposes, then we debit relevant expense account such as General Expenses Account and credit cash account.