Answer / donatus mugisha r.

Drawings could be of any form. There are drawings composed
of cash amounts taken away from a business by the
proprietor for personal use; there are drawings that could
be composed of goods(amounts of inventory) that was
initially bought in (purchased) for resale - referred to as
purchases. Drawings could also taken a form of a non-
current asset taken from a business for personal use. A
business owner can take these drawings in form of things
like a computer, a chair or even a car and transform its
initial use (in the business) into a new personal use.

Generally a drawing involves a proprietor of a business
taking something belonging to a business (his or her
business) and transform it into personal property for
personal use.

Accounting entry for drawings is as shown below

A. When it is a cash drawing

Dr. Drawings A/c
Cr. Cash A/c (To recognize the reduction in cash)


B. When it is drawing of an inventory

Dr. Drawings A/c
Cr. Trading A/C (deducted from purchases figure in the
trading account)

C. When it is of an asset

When the drawings are in

Dr. Drawings A/c
Cr. Asset A/c (To recognize the reduction in the asset
value)

The drawings account will be dealt with in the statement of
financial position to reduce the size of sharecapital.

Answer / mussa mayala

drawings is divided into 2 categories;1.Drawings of goods
for personal use,2.Drawings of cash for personal or office
use.In trading account drawings will reduce the amount of
goods bought for resale that is Purchases, so drawings
should be deducted from purchases to get the real goods
available for sale.

Answer / viplav kumar jain

drawings is a personal account.
so u can,t show drawings in trading a/c.
but have a some condition that if propriter or partner
taken goods from firms than u it will show.

Answer / laxman

Drawings are reduced from the purchases or shown the credit
side of the trading account because some of the goods used
by the owner of the business for his personal so we have
reduce the drawings from purcheses to know actual profit of
the business

Answer / abdi osman

Drawings can either be in form of cash or goods(inventory).
If it's cash,drawings are debited and cash credited with the amount involved.(decrease in asset)...Whereas in case of goods,purchases are credited in place of cash...(also decrease in asset:inventory)...Drawings remain the same:debit entry)

Answer / hemant

Drawing is reduced from purchase account in trading account

Answer / satyaki_raju@yahoo.com

Dear Anil I think you dont know what is Profit and Loss a/c
and what is Balance Sheet.

Answer / anil

Drawings is personal accounts.So it is show in trading
accounts

2. You are required to prepare a Profit & Loss Account for the year ending 31st December, 2007 and the Balance Sheet on that date. The Trial Balance of XYZ Ltd. for the year ended 31st December 2007 is as follows:- Trial Balance of XYZ Ltd. as on 31st Dec. 2007 Debit Balances Rs. Credit Balances Rs. Materials used 3,50,000 Sales(including 2% Sales tax) 9,18,000 Cost of Labour 1,50,000 Sale of Scrap 100 Stock, finished and work in process on 31st December, 2006 50,000 Rent received 2,000 Wages : Factory Staff 15,000 Discounts 2,750 Directors Remuneration 50,000 Recovered against fire claim re : Stock 5,000 Salaries : Clerical Staff 75,000 Capital : Equity 25,000 Insurances : Workmen’s Compensation 1,500 Preference- 9% 8,000 General, fire etc. 2,000 Creditors 1,56,000 Directors’ Life Insurance 1,500 Provision for Taxation 1,05,000 Maintenance : Buildings 1,000 Profit & Loss Account 13,750 Plant and Machinery 12,500 Rent and Rates of premises and hire of plant 20,000 Heat, Light and Power 15,000 Experimental and Laboratory Expenses 10,000 Canteen Expenses 5,000 Staff Welfare expenses 2,500 Motor Expenses 12,500 Professional Charges 2,800 Postage and Telephone 3,500 Books, Printing and Stationery 11,000 Sundry expenses 10,000 Carriage and Packing on Sales 3,300 Discounts 5,000 Debtors 1,78,000 Freehold Property 50,000 Plant and Machinery 12,500 Fixtures and Fittings – Offices 3,500 Office machinery and Equipment 3,000 Motor Car and Van 6,500 Stock of materials on 31st Dec. 2007 1,20,000 Bank 38,000 Sales Tax Paid 15,000 12,35,600 12,35,600 Depreciation is to be provided at the following rates: Plant and Machinery 10% Fixture and Fittings 05% Office Machinery, etc. 10% Motor Vans and Cars 25% The stock of finished goods and work in progress as on 31st December, 2007 was Rs. 35,000. Provide for preference dividend and ordinary dividend at 10%. The total taxation liability is estimated at Rs.1,50,000 of which Rs. 75,000 relates to the current year. Debtors include Rs. 10,000 deposited as security against government contracts. The Works Manager is paid partly by salary and partly by a commission; he is entitled to a commission of 5% on the amount by which the surplus in the factory cost exceeds 20% of the sales for the period. Charge the commission if any in the Profit and Loss Account.

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