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Equity

Owner Draws Journal Entry (Sole Proprietor)

Record owner withdrawals correctly without misclassifying as expense.

Scenario

Owner withdraws $2,200 cash for personal use.

Journal Entries

Record draw against owner’s equity.

AccountDebitCredit
Owner Draw$2,200
Cash$2,200

Explanation

Draws reduce owner equity and are not business expenses.

Variations

Year-end close transfers draws into owner capital.

Common Mistakes to Avoid

  • ✗Recording draws as salary expense.

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FAQs

Common questions about this journal entry

No, it’s an equity movement.

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