I work in a Private limited Manufacturing company. What I am perplexed about is this that directors sometimes withdraw cash from Company for their personal use. How do I account for such transactions?
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Cash withdrawal
Replies (3)
Director Mr. X A/c Dr.
To Cash / Bank
You cannot debit personal expense of directors to company account since same is prohibited under Companies Act as well as Income Tax Act. You will have to debit this amount to director's personal account, which will amount to loan to directors and Sec.185 of CA 2013 will get attracted. You have to check compliance of the same keeping in view conditional exemption given in notification dated 5.6.2015 for private companies.
I suggest if any remuneration payable to director, after finalised the Profit and loss account and balance sheet, it will be adjusted in remuneration, but amount taken by the director should be debited to his/her personal account, later this adjustment is possible to done.
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