Entry of bank transaction

how to show bank entries of a proprietor ship which is not related to business I. e other payment and other receipts
Replies (7)
Quick Summary
This discussion clarifies how to handle bank transactions for a sole proprietorship that are not directly related to the business. It explains that personal withdrawals should be debited to the Drawings account and credited to the Bank account. Non-business income received into the bank can be recorded as 'Other Income' in the P&L account, or directly credited to the proprietor's capital account. The key is to maintain clear documentation and accurate entries to distinguish business and personal finances.

Is the director using the company bank account- use withdrawals accounting or petty cash accounts if the check is drawn for transport or entertainment etc. What are other receipts & payments mentioned above? txs

You may credit or debit such transactions to the drawings account.

Can i show cash withdrawal or deposit
I didn't get you. What I meant is debit drawing account with withdrawals and credit drawing account with deposits.

In the bank account, you have to show everything and where the money is transferred to like withdrawals or miscellaneous/petty expenses account. 

You can show expense which were withdrawn by the proprietor as a drawing , but you can't credit to drawings account because drawing means withdrawal from business by the proprietor .
So Income which were received other than business can be shown as Other Income in P&L account under indirect Income subject to documentary evidence , but you can't credit to Drawings account .

So for Drawings you can pass entry as follows
Drawing A/c Dr
To Bank A/c Cr
( Being expense from business for personal use)
Transfer to capital account
Capital A/c Dr
To Drawings A/C Cr
( Drawing transfer to capital account)

For Income you can pass entry
Bank A/c Dr
To Other Income A/c Cr
( Being other income credited to Bank)
Transfer entry
Other income A/c Dr
To Profit and Loss A/c Cr
( Other income transfer)
You May also credit all other Bank receipt to proprietor capital account not belong to business .

Bank. A/c Dr
To proprietor capital account A/c Cr
( Being amount received in Bank not belong to business .)

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register