What is the accounting entry to close the sole proprietorship drawing account?

 many thanks  for your invention invitation  please find the next entry to  close the draw ( withdrawals )

                                       Dr                  Cr

 Owner capital                5000

drawing account                                   5000

 

 

      

 

Owners Capital a/c         Dr.

To Drawings a/c

Dr Capital account and Credit drawings account. This will reduce the capital account to the extend of drawings.

At the end of the year the balance in the drawing account is closed by statement of owner 's equity. *The drawing account is a temporary owner equity account, requiring to be closed at end of accounting year. *The drawing account is closed directly to the capital account

Drawings reduces the owner 's investment and as such to close the accounts you need to debit the owners capital (equity) and credit the drawings account.

If your business is a sole proprietorship or partnership, close the drawing accounts (if any) by preparing a journal entry that credits the drawing account and debits the owner's equity account.

 

The journal entry to close the drawing or withdrawal account of a sole proprietorship includes a debit to the owner's capital account and a credit to the drawing account. To illustrate the closing entry, let's assume that at the end of the accounting year the account Eve Jones, Drawing has a debit balance of $24,000

Capital account Dr.

Drawing Dr.

The accounting entry for this is debit to the owner's capital account and a credit to drawing account. This is because capital will be decreased by paying the drawings and drawings are credited to close its account since previously it was debited.