Cash expenses and Overdrawn Capital Account

Good morning to anyone who can help..

I am currently working on a sole trader and there are cash expenses that have not been paid for through the business current account. I have made the following double entry but doesn't seem right as the capital account is overdrawn:

DR - Expenses
CR - Capital

There has been no capital injection to cover these expenses but if I post to the current account the balances will not agree, can anyone advise.

Many thanks.


  • Dinky
    Dinky Registered Posts: 26
    The capital account is showing as being in credit and that is correct - the sole trader is owed the money as he has used his own funds to pay expenses. He has put money into the business and will either leave it there or take it back through drawings in some form or another. I think you might be confusing the capital account with a bank account.
  • AWSL1980
    AWSL1980 Registered Posts: 2

    Good afternoon, many thanks for the confirmation, much appreciated.

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