Which of the following entries records the withdrawal of cash by Sue Martin, owner of a proprietorship, for personal use?
A) debit Sue Martin, Capital; credit Cash
B) debit Sue Martin, Drawing; credit Cash
C) debit Salaries Expense; credit Cash
D) debit Salaries Expense; credit Salaries Payable

Question

Quizplus · Accepted Answer

When the owner of a proprietorship withdraws cash for personal use, it is recorded as a debit to the Drawing account (which represents withdrawals by the owner) and a credit to the Cash account. Option A is incorrect because it records the transaction as a capital account transaction, which may lead to misleading financial reporting. Option C records the transaction as a salaries expense transaction which is not correct as it is not related to any salary payment. Option D records an expense and liability transaction, which is not relevant in this case as there is no payment to employees.

Which of the Following Entries Records the Withdrawal of Cash