A Cheque Received From Mr. A, A Debtor, For Rs. 4000 Was Directly Received By The Proprietor Who Deposited It Into His Personal Bank Account. Pass Journal Entry

Here, we record either two journal entries or one single combined entry but the result will be the same in both cases.

When the cheque / check received by proprietor / sole owner from Mr. A (Accounts Receivable / Sundry Debtor) of Rs. 4000, then from the business points of view, we record the following entry as shown below:

(i)

            Cash a/c  4000

                         Mr. A a/c  4000

                                                                (Cash Received From Mr. A)

But, when the proprietor withdrew the cash from the business and deposited into his personal account, then from the point view of business, it is Drawings, so we record the following entry as shown below:

(ii)

                                               Drawings a/c 4000

                                                                    Cash a/c 4000

                           (Cash Withdrawal By Sole Owner From The Business For His Own Use)

If we combine (i) and (ii) journal entries, then the following entry is recorded with the remaining accounts:

                                               Drawings a/c  4000

                                                                     Mr. A a/c  4000

(Cash Received From Mr. A By Sole Proprietor Who Deposited It Into His Personal Bank Account For His Personal Use)

So, we can say that, the entry to record is to debit a drawings account, as the cash is going out of the business and go to the personal bank account of owner for his own use, and a credit to Mr. A (accounts receivable / debtor account) as the business received cash from its customer, Mr. A, so debtor account is decreasing and as a result, we credit it.