M/s X was a proprietary concern doing the business of Architectural consultation. How to treat the following transaction
Dear Rajesh,
1) Treat infusion of funds by Proprietor as Capital introduced and withdrawal as Drawings.
Its better to maintain Fixed Capital A/c and Current Capital A/c in books of accounts. And to pass irregular infusion and drawings entries in Current Capital A/c.
2)Business Tour Exp if paid by proprietor from own pocket, then treat it as funds infused. Entry would be
Tour Exp Dr.........
TO Current Capital A/c
3) In case where business debtor has made payment to Proprietors Personal Creditor,
Treat it as Withdrawal of Capital. Entry would be
Current Capital Account Dr.........
To Sundry Debtor.................
In case you need any further clarification, plz feel free.
Thanks & Regards,
CA Mohit Salvankar
CAclubindia
