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CSEET · Fundamentals of Accounting · Accounting Process

Sunita, the proprietor of a firm, took goods costing Rs 6,000 from the business for personal use. The journal entry is:

Drawings A/c is debited and Purchases A/c is credited by Rs 6,000. Goods withdrawn by the proprietor reduce her capital through drawings, and the stock leaving the business is taken out of purchases at cost, not treated as a sale.

  1. ADrawings A/c Dr 6,000 to Purchases A/c 6,000Correct
  2. BPurchases A/c Dr 6,000 to Drawings A/c 6,000
  3. CSunita's Capital A/c Dr 6,000 to Sales A/c 6,000
  4. DDrawings A/c Dr 6,000 to Sales A/c 6,000

Explanation

Goods taken by the owner are drawings, which are debited. Goods leave the business, so Purchases is credited at cost. Crediting Sales would wrongly record revenue at a price on a non-sale transaction.

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