How to Journalize Cash Withdrawals for Personal Use
- 1). List the date of the cash withdrawal on the first clear line after the last entry in your journal, under the column titled “Date.”
- 2). Write the name of the person making the withdrawal, and then list the transaction as “Drawing” in the space next to the date in the “Description” column.
- 3). Post the check number for the check used to extend the withdrawal amount in the “Reference” column to the right of the description column. If the money is taken in actual cash form, no check number is necessary.
- 4). List the withdrawal amount in the “Debit” column of the journal to show that it’s a rise in the drawing account of the cash withdrawal individual. For example, the person making the withdrawal is the owner named Lou Peters. The personal withdrawals are tracked easily by creating an account called "Lou Peters - Drawing." By withdrawing $1,000 for personal use, the drawing account rises $1,000 because company funds are being moved into it.
- 5). Move down to the next line of the journal. Indent slightly in the "Description" column and write “cash” to show that this is a withdrawal from the company’s cash account. All withdrawals from the company for personal use comes from the company's cash account regardless of the method of the withdrawal taken. Even if a check is issued for the withdrawal amount you'd still account for the funds from the cash account.
- 6). Write the withdrawal amount on the cash line in the “Credit” column,” showing a lowering of the cash account in that amount. The $1,000 Peters took comes directly from the cash reserves held by the company, thus the $1,000 lowers the actual cash available.
