Withdrew Of Cash From Bank For Office Use Journal Entry

Withdraw Cash From Bank For Business Use / Office Use Accounting Equation

When the cash is withdrawn from bank for office use or business use, then it creates a Contra Entry as cash is withdrawn from the bank account of the business and store into the custody of cashier i.e., cash is coming into the business, so if drawings made from bank for office use or business use is related with the business matters.

For Example, Mr. X, as a Sole Proprietor, withdrew Rs. 7000 from bank for office use, then the following contra entry is recorded as shown below:

                                                                         Cash a/c  7000

 

                                                                                               Bank a/c  7000

 

                                                                        (Cash Withdrawn From Bank)

 

Cash account is debited as it is increasing i.e., coming into the business while bank account is decreasing as the cash is withdrew from the bank account of the business i.e., cash is going out of the bank account, so we credit bank account.

It is a contra entry as in which cash account and bank account cancel each other effect and are posted to the cash column and bank column of Cash Book.

The Effect of Cash Withdrawn From Bank For Office Use On The Accounting Equation

                                          Assets        = Liabilities + Owner’s Equity

                                   +Cash  -Bank    =       0          +           0

                                   +7000  -7000    =       0          +           0

                                             0               =        0          +           0

 

As the cash account is increased by Rs. 7000, so we added it to the asset side of the accounting equation but at the same time bank account is decreased by Rs. 7000, so deducted it to the asset side or left side of the accounting equation and hence the accounting equation remains in balance.