Withdrawl by proprietor

This query is : Resolved 
Quick Summary
When a proprietor withdraws more money than they've invested, it impacts their capital account. The standard accounting entry debits the proprietor's capital account and credits cash or bank. While this might initially show a negative capital balance, it's often recommended to first add profits to the capital account to offset the withdrawal, or alternatively, debit a 'drawings' account.

Profile Image

Profile Image

(Querist)
10 July 2021 Suppose owner invest capital in business Rs 60000 .with this he has made huge profit of Rs 120000. In the same year we withdraw the amount of Rs 70000 which is more than the capital amount .what is accounting entry to be pass .
Profile Image

CA R SEETHARAMAN

Profile Image

CA R SEETHARAMAN (Expert)
10 July 2021 Capital account dr 70000
To bank/cash cr 70000
Profile Image

RAKESH

Profile Image

RAKESH (Querist)
10 July 2021 There is any problem if the negative capital will show in balance sheet .if has withdrawn more than his capital investment
Profile Image

CA R SEETHARAMAN

Profile Image

CA R SEETHARAMAN (Expert)
10 July 2021 Add profit to his capital account, it will not be negative.
Profile Image

CMA Poornima Madhava

Profile Image

CMA Poornima Madhava (Expert)
12 July 2021 Alternatively, withdrawals can be debited to drawings account I think.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now



Similar Resolved Queries


loading


Unanswered Queries


Trending Online Classes

view all classess

CCI Pro
Meet our CAclubindia PRO Members
Pro Member Sanjay SharmaSanjay SharmaPro Member Vinay doshiVinay doshiPro Member sachidanandamsachidanandamPro Member tpksathyan narayanantpksathyan narayananPro Member CA Sunny SharmaCA Sunny Sharma
Subscribe to Pro
Join an elite circle of professionals



Answer Query



Quick Links



Browse by Category