Question

goods withdrawn worth 5000 and cash 10000 by owner personal use

Answer 1

hey

There are 2 ways you can do this. One is by creating a drawings account or by directly debiting the capital account. The cost is important, the potential sale value is not important here from an accounting perspective.

Method 1 (Using a Drawings A/c)

Drawings A/c Dr …..Rs.8,000

To Purchases A/c ….. Rs.8,000

(Being goods worth Rs.8,000 withdrawn by owner for personal use.)

Later in the year, the following entry is also passed:

Capital A/c Dr…. Rs.8,000

To Drawings A/c …… Rs.8,000

(Being drawings for the year debited to capital account.)

Method 2 (Using the Capital A/c)

Capital A/c Dr…… Rs.8,000

To Purchases A/c …….. Rs.8,000

(Being goods worth Rs.8,000 withdrawn by owner for personal use.)

As you can see, in effect both the methods lead to the same treatment.