Question

On january 15, the owner of a sole proprietorship withdrew $2,000 cash for personal use from the business. how would this entry be posted to the ledger?

Answer 1

On January 15, the owner of a sole proprietorship withdrew $2,000 cash for personal use from the business. This entry will be posted to the ledger as explained below.

A ledger is an accounts book or collection that records accounting transactions.

• Each account has an opening or carry-forward balance.
• Each transaction would be recorded as a debit or credit in separate columns, as well as the ending or closing balance.

The ledger is a permanent summary of all amounts recorded in supporting journals, which record individual transactions by date.

Every transaction always passes through a journal and into one or more ledgers.

The company's financial statements are developed from ledgers' summary totals.

Since the proprietor withdrew cash in the given case, it will lead to a decrease in cash and his equity.

Since we will assume he is withdrawing to invest elsewhere.

Therefore, a decrease in cash will be shown by posting $2000 on its credit side, and subsequently, a decrease in capital/equity will be shown by posting $2000 on its credit side.

Hence, this entry is posted to the ledger by decreasing both cash and equity/capital accounts with the same amount which is $2,000.

Learn more about ledger:

brainly.com/question/18367078

#SPJ4