Loans & drawings · Level: Basics
Journal entry: Drawings by bank transfer
Private payments from the business account, such as the owner's own rent, are drawings, not business expenses.
Worked example
The rent of £2,300.00 for the owner's private flat is paid from the business bank account.
Correct journal entry
Drawings £2,300.00 / Bank £2,300.00
Debit
Drawings£2,300.00
Credit
Bank£2,300.00
Why?
- Drawings: drawings reduce capital → debit
- Bank: asset decreases → credit
Typical mistake
Booking private rent as business rent.
Your turn
Three problems on exactly this case, with different numbers. Amounts work with or without separators, e.g. 2,400.00 or 2400.
Transaction
The rent of £900.00 for the owner's private flat is paid from the business bank account.
Debit
Assets up · expenses · liabilities down
Total debit£0.00
Credit
Liabilities up · income · assets down
Total credit£0.00
Frequently asked questions
What is the journal entry for drawings by bank transfer?
Example: Drawings £2,300.00 / Bank £2,300.00.
How do I recognise this case?
Private payments from the business account, such as the owner's own rent, are drawings, not business expenses.
What is the typical mistake?
Booking private rent as business rent.