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Could you please tell me, what’s the JE for Drawings in the PL?
So in BS it should be Dr Drawings Cr Cash
But in PL? is there any effect on the PL?2) In F3 ACCA question:
There was a balance in Equity and Liabilities: Profit for the year 53,600
Upon investigation you discover the following errors:
(7) Drawings amounting to $10,000 had been debited to profit or loss.
Required:
Prepare XYZ’s corrected statement of financial position at 30 September 2016. A working showing how the suspense account is cleared should be included.
So in Answers:
Balance per draft statement of financial position 53,600
Add: (7) drawings incorrectly debited 10,000
…..
I don’t understand why is this amount added? If it was previously debited, so it was +, then why do we again add “+” this amount?In future you must ask in the Ask the Tutor Forum if you want me to answer. This forum is for students to help each other.
There is no journal entry for drawings in the SOPL or in the SOFP!! (I assume that by BS you mean Balance Sheet, but it has not been called Balance Sheet for years – it is called the Statement of Financial Position).
Drawings should never appear in the SOPL and therefore is it has been charged in the SOPL there is a mistake. It should not have been charged and therefore the correct profit is higher.
Debiting the SOPL means that is has been treated as an expense and has therefore reduced the profit.I do suggest that you watch my free lectures. They are a complete free course for Paper FA (it is. no longer called F3) and cover everything needed to be able to pass the exam well.
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