Question

Mr Ram who is the owner of the business withdraw rs 50000 from his saving acc and invest into it into the business ? What is the journal entry of it

Answer 1

3 golden rules

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

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reason for debit and credit

# No journal entry are passed for cash withdrawn by proprietor (owner) bcoz it doesnt affect the company transaction

#amount invested into business affect the business transaction . therefore journal entry passed

Cash A/c - real A/c , where money comes into the business therefore its debited  

Capital A/c- Personal A/c , where proprietor gives money to the business therefore its credited

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Journal entry

Cash A/c   Dr        50000

       To capital A/c                  50000

(Being cash invested into the company )

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Answer 2

Cash A/C. Dr. Rs.50,000

To Capital A/C. Rs.50,000

(Being capital brought in by withdrawing cash from savings A/C )