CA Foundation · Accounting · Accounting Process
Mr. Kapoor, the proprietor of Kapoor Stores, took goods costing Rs 12,000 from the business for his personal use. The correct journal entry is:
Debit Drawings A/c and credit Purchases A/c by Rs 12,000. Goods taken by the proprietor for personal use are drawings, which are debited, and the stock of goods reduces, so Purchases is credited at cost.
- ADrawings A/c Dr. 12,000 to Purchases A/c 12,000Correct
- BPurchases A/c Dr. 12,000 to Drawings A/c 12,000
- CDrawings A/c Dr. 12,000 to Capital A/c 12,000
- DSales A/c Dr. 12,000 to Drawings A/c 12,000
Explanation
Goods taken by the owner are drawings, which increase Drawings (debit). Goods leave the business, so Purchases is credited, usually at cost. The reverse entry in option 2 would treat it as an introduction of goods by the owner.
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