Question

Taken for personal use goods worth 10,000. Give journal entry​

Answer 1

Answer:

When goods are withdrawn by the proprietor, goods are going out of the business i.e., purchases account has to credited. The journal entry for this is -

Drawings A/c          Dr 10000

     To Purchases A/c              10000

Instead of this entry, the incorrect entry passed was -

Drawings A/c         Dr 10000

       To Sales A/c                    10000

Here, instead of purchase account sales account has been credited whereas drawings account has been rightly debited , so to cancel this entry and rectify it, sales account which was credited is to be debited to cancel the entry, and purchases account will be credited fro the original entry. Since drawings account is rightly debited, no change will be made regarding drawings account.  The rectified journal entry thus becomes -

Sales A/c          Dr 10000

       To Purchases A/c      10000

Explanation: