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Proprietorship

Rajesh Raman ( ) (292 Points)

22 March 2016

My client (Mr.X) is doing a proprietorship business (Architectural concern). how to treat the following transaction/how to pass journal entry

Mr. x’s residential flat rent paid through proprietorship concern bank a/c (M/s A) – Rs 12500
External HDD for office use -4700/- = is it treated as a revenue item or capital item
Proprietor attend a party in a hotel, amount paid by his proprietorship concern – 30000/-
Amount paid to Club annual membership – Rs.50000
Surveying and mapping charges - 5500

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4 Replies

Saliq Ansari (CA_Final Student) (885 Points)
Replied 22 March 2016

Expenses Those Directly or Indirectly relate to the Business of the Propritorship Firm is to be Charged to P&L of firm, Expenses which are of purely personal nature are to be treated as Drawings (Reduction in Capital).

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CA.Vivek Solanki (Executive-Risk Advisory & Management Assurance) (236 Points)
Replied 23 March 2016

Dear Rajesh Ji,

If the expenses related to personal nature than u have to deduct ti from Capital A/c, and expenses related to business need to be transferred to Profit & Loss A/c.If expenses like HDD Rs.4700 not material for properietor need to be w/off in the Profit & Loss A/c.

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