PRC-1 · Chapter 8 · Question 53 of 100
Rs. 20,000 paid for the purchase of a motor-cycle for personal use of Mr. Jott (a partner) had been charged to the Miscellaneous Expense Account. What journal entry must be recorded to correct this error?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) DEBIT: Drawings Rs. 20,000 and CREDIT: Misc. expenses Rs. 20,000
Explanation
Personal use items must be charged to Drawings. The correction removes the false expense (Credit Misc. Expenses 20,000) and charges it to Drawings (Debit Drawings 20,000).
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