💼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.
| Account | Debit | Credit |
|---|---|---|
| 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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Common questions about this journal entry
No, it’s an equity movement.
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