Drawings - Please help!!

The MagicianThe Magician Feels At HomeRegistered Posts: 96
Hi there!

I am really hoping some one can help me here, please!

If you were to look at say a sole trader and the business owner was to take stock out of the business for their own personal use, what would be the double-entry?

If you were to ignore VAT to simplify such a question?

I am really confused here. The Kaplan book says to Dr Drawings and Cr Sales. The Frank Wood Business Accounting book says to Dr Drawings and Cr Purchases?

could someone please shed some light here?

Thanks!

Comments

  • janwaljanwal Experienced Mentor Registered Posts: 1,189
    Hi

    I would have said Kaplan is right, Dr Drawings Cr Sales, as you are selling it too yourself, you have already bought it in from your supplier.

    Jan
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    janwal wrote: »
    Hi

    I would have said Kaplan is right, Dr Drawings Cr Sales, as you are selling it too yourself, you have already bought it in from your supplier.

    Jan

    I'd have said Frank Woods.

    Because you've used the company to buy on your behalf, so removing it out of the purchase ledger.

    But really, either way would work.
  • MarkTMarkT Trusted Regular Registered Posts: 302
    PGM wrote: »
    I'd have said Frank Woods.

    Because you've used the company to buy on your behalf, so removing it out of the purchase ledger.

    But really, either way would work.

    I was waiting for the oracle to speak on this one... I sat here and came to the same conclusion, but I see how it can create confusion...
  • lakshlaksh New Member Registered Posts: 20
    Hi The Magician

    If the goods are taken by the owner for his/her own use then the account to credit will be the purchases account as they are no longer intended for resale. The double entry would then be:
    Debit--Drawings
    Credit--Purchases

    Frank woods accounting books answer is right one.
  • JodieRJodieR Experienced Mentor Registered Posts: 1,002
    I think that the confusion is arising because of the difference between a VAT registered and a non-VAT registered business.

    If you're not registered for VAT then posting to the purchases account is logical and makes sense as there's not been a sale.

    If you are VAT registered then have a read here... http://www.hmrc.gov.uk/vat/managing/special-situations/private-use.htm and you'll see that sales VAT needs to be accounted for when goods are taken for private use from a VAT registered business, and therefore your double-entry will be to Dr Drawings and Cr Sales & Sales VAT Account.
  • The MagicianThe Magician Feels At Home Registered Posts: 96
    Thanks for the replies.

    I see, so if turnover exceeds £67,000 or whatever it is now that would affect the double-entry.

    You know, this really should be stated in both text books. The volume of content in the Frank Wood books & they neglect to mention this. Bad form I say.

    I have an entrance paper to do with a different body & a question like this will probably have been worth a thousand marks or something.

    Thanks.
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