Drawings Example: Non-Cash Assets
(Office Supplies)

by Sandra

Q: If an owner withdraws $200 of office supplies for personal use is this a decrease in office supplies AND a decrease in owner's equity?

withdrawing drawings inventory supplies

Yes it is.

Anytime any assets are withdrawn from the business for personal use, this is definitely a decrease to those assets in the business and also a decrease to owner's equity.

The name for a decrease in owner's equity due to withdrawing assets is drawings.

The most common asset that is withdrawn from a business is cash, but an owner can actually withdraw any asset.

Although this represents a decrease to owner's equity, we use a separate account (not capital) to record this, called (you guessed it) drawings.

The journal entry for this transaction would be:

DR Drawings (decrease in equity) ..............$200
CR Office supplies
(asset) ..................................$200

As you can see, the debit to decrease owner's equity is made to the account drawings.

Hope this drawings example with a non-cash asset makes sense.

Feel free to add your say in the comments below.

Michael Celender
Founder of Accounting Basics for Students

Related Questions & Tutorials:
Return to the main tutorial: Journal Entry for Drawings

Click here for more Basic Accounting Questions and Answers

Click here to post comments

Return to Ask a Question About This Lesson!.

© Copyright 2009-2021 Michael Celender. All Rights Reserved. 
Click here for Privacy Policy.