Drawings are of two types one is when owner withdraws cash from the business and another type of drawing is when owner withdraws goods from the business. I have done a journal entry to distribute the profits for 2014. The partners shared profit and losses as A one half, B one-third and C one sixth respectively. 60,000 and partners drawings had been A Rs, 10.000; B Rs.7, 500 and C Rs.4, 500. Our business structure is a partnership 50/50 husband & wife. In the operations of the business, following drawing happen from the business: Adam withdrew furniture costing $70,000 and cash $50,000. Example Question. Drawing account Dr. To cash account The journal entry to show this with-drawal is as follows: At the end of the accounting period, the drawing accounts of each partner are closed to their individual capital accounts. Journal entries for Interest on Drawings: Interest on Drawings is interest charged from partners' capital accounts and it is an increase in the profit of the firm, hence P & L Appropriation A/c will be credited and Partners' capital A/cs will be debited or it can be done through the Interest on Drawings A/c as shown below: You are required to give the necessary journal entry to rectify the above omissions: Just like the sole proprietors accounting, the drawing account is maintained for each partner in the accounting system. Meaning of “Drawings” & “Interest on Drawings” Partnership and partners are considered separate from each other. Required: a. calculate the capital of each partner. To see the full debit and credit entry for this example, click through to our advanced lesson Journal Entry for Drawings , where we'll cover this in detail. Please note: In the explanation below we'll cover the accounts that are affected and what happens with the accounting equation - but not the journal entry. As per their partnership deed, the capital of each partner would be equal to the capital of Mr Alan. during the year. Drawings are posted to a single acct. (ii) Pass journal entries for all the transactions relating to death of the partner, D’s admission into partnership, and at the end of the year relating to transfer of drawings … b. record entries in the general journal of the partnership firm for the above mentioned transactions. This journal entry records your new investment in the partnership. Let’s look at the journal entry which are passed in both the cases – Journal entry when drawings are made in the form of cash. Even though you paid $1,000 for a 25% interest in the partnership, the business did not receive this cash. 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