What is the closing entry for drawings of $25 000?
A) Debit owner's capital account $25 000; credit drawings $25 000
B) Debit profit or loss summary account $25 000; credit drawings $25 000
C) Debit bank $25 000; credit drawings $25 000
D) None of the above

Question

Quizplus · Accepted Answer

Drawings are a reduction in owner's equity, so they should be debited to the owner's capital account and credited to the drawings account. This closing entry will ensure that the balance of the owner's capital account reflects only the owner's investment in the business and not any personal withdrawals.

What Is the Closing Entry for Drawings of $25 000