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Posting Owners Draw in General Ledger

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  • Posting Owners Draw in General Ledger

    I am having trouble generating a General Ledger entry to record an Owners Draw transaction. Cash from the store's register was paid out to satisfy a non-business related service, contracted for by the Owner. When I used a General Ledger entry to credit "Register Cash"(a cash account)and then debited Owners Draw (an equity account) for the same amount, the result was a balanced transaction, but it shows that the Owners Draw account has been reduced. This in spite of the fact that I expected it to increase, to reflect the amount dispersed that should be seen as money going to the Owner.

    Can anyone tell me how to correct this problem? I need to know how to make an entry that will reflect when monies are taken out of the firm, either by direct cash payment, or by check, that become part of the Owner's compensation.


  • #2
    Credit Equity

    You have just discovered Double Entry Accounting.

    When you credited CASH you reduced the cash, this Reduction coincides with a reduction of the value of the Business. Therefore a reduction in the EQUITY.
    Fenway Frank