Question

The owner of bobcats r us paid his personal mastercard bill using a company check. the correct entry to record the transaction is __________.
a. credit cash; debit capital
b. credit cash; debit supplies expense
c. credit cash; debit withdrawals
d. credit cash; debit accounts receivable

Answer 1

The correct answer is C.

Answer 2

Answer:

The correct answer is: C

Explanation:

A business owned by one person is known as a sole proprietorship. In such a business, the owner's investment is represented by the value of their capital/equity accounts. Any expenses paid by the business on behalf of the owner, or the owner using cash from the business, are represented in the drawings account. This is not an expense account, rather a contra account for the owner's capital/equity account. It effectively reduces the value of the owner's capital account (at the end of the financial period, this account is closed off /debited against the owner's capital account). To record the drawings from the business, the following journal entry is implemented:

Debit           Drawings/Withdrawals    

         Credit            Cash