Proprietorship

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).

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.

Journal Entries:-

1. Mr. X A/c Dr            Rs 12,500

    To Bank A/c                     Rs 12500

(Being rent paid for residential house, debited to capital A/c)

2. HDD A/c Dr.          Rs 4700

    To Creditor A/c              Rs 4700

  (Being HDD purcased capitalised)

3. Mr X A/c Dr             Rs 30000

   To Bank A/c           Rs 30000

(Being personal expense, debited to capital A/c)

4. Membership Fees A/c dr    Rs 50000

    To BAnk                Rs 500000

(Being membership fees paid)

5. Legal & Consultancy   Rs 5500

  To Bank                   Rs 5500

(Being surveying & mapping chages paid)

Expenses of HDD & Surveying debited into P&L a/c & other personal expeses transfer in Capital A/c.