22 September 2010
Dear Experts, A sole proprietor says that whenever he wants money in the business he will withdraw that much amount from SB a/c and will put into the business. Since the business is carried in the status of sole proprietor while filing the return also the SB A/c is included in the Balance Sheet. For instance the proprietor has to travel expenses, for that Rs.10000 is required means we have to pass the entry also in the SB A/c and in the books of the business. Please tell me whether the following journal entries are correct. In his personal books: Cash A/c Dr. 10000 To SB A/c 10000 (being the amount withdrawn for business purpose - travelling)
Investment - (business) A/c Dr. 10000 To cash A/c 10000 (being the amount put into the business)
In the books of the business:
Cash A/c Dr. 10000 To Current A/c 10000 (being the amount brought into the business to meet out the traveling exp.)
Bank (Current A/c) A/c Dr. 10000 To Cash A/c 10000 (being the amount deposited in the Current A/c) - This entry will come if all the exp. are incurred through bank only. Else directly exp. can be met thru cash itself.
Traveling Exp. A/c Dr. 9584 To Bank (Current A/c) A/c 9584 (being the exp. incurred as per the bill)
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