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What is the journal entry for the withdrawal of a partner's capital?
What is the journal entry for the withdrawal of a partner's capital?
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Practice Questions
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Q1
What is the journal entry for the withdrawal of a partner's capital?
Debit Capital Account, Credit Cash
Debit Cash, Credit Capital Account
Debit Drawings Account, Credit Cash
Debit Cash, Credit Drawings Account
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The correct entry is to debit the Capital Account of the partner and credit Cash for the amount withdrawn.
Questions & Step-by-step Solutions
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Q
Q: What is the journal entry for the withdrawal of a partner's capital?
Solution:
The correct entry is to debit the Capital Account of the partner and credit Cash for the amount withdrawn.
Steps: 6
Show Steps
Step 1: Identify the partner who is withdrawing their capital from the business.
Step 2: Determine the amount of capital that the partner is withdrawing.
Step 3: Open the journal entry format, which includes the date, accounts involved, and amounts.
Step 4: Debit the Capital Account of the partner for the amount they are withdrawing. This reduces their ownership in the business.
Step 5: Credit the Cash account for the same amount. This reflects the cash leaving the business due to the withdrawal.
Step 6: Review the journal entry to ensure it is accurate and complete.
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