What Happens When The Owner Withdraws Cash Or Goods For Personal Use
When the owner of the business withdraws Cash for his personal use, then we debit Drawing account and credit Cash account. The reason is that Drawings is a Contra Equity Account or a Contra Capital Account in case of sole proprietorship and Partnership forms of business and when the owners created it for personal use and not for business, then it increases, so we debit it as a reversal from Owner’s Equity or Capital Account . Owner Withdraws Cash For Personal Use Journal Entry For Example, if Mr. A, as a Sole Owner, withdrew Cash For 50000 from his business for personal use, then we pass the following Entry in the Journal of business as shown below: Drawings a/c 50000 ...