Which of the following entry shows withdrawal of excess capital by partner's? |
Partner's capital A/c is debited and Cash/Bank A/c is credited Cash/Bank A/c is debited and partner's capital A/c is credited Drawings A/c is debited and profit and loss A/c is credited Profit and loss A/c is debited and Drawings A/c is credited |
Partner's capital A/c is debited and Cash/Bank A/c is credited |
The correct answer is option 1- Partner's capital A/c is debited and Cash/Bank A/c is credited. The journal entry 'Partner's capital A/c is debited and Cash/Bank A/c' is credited shows withdrawal of excess capital by partner's.
When a partner withdraws excess capital, it means capital is being reduced and cash is going out of the business. So the journal entry is: Partner's Capital A/c is debited → to reduce the partner's capital. |