390 – Drawings

Net Worth

Synopsis

Account 390

Debits

Credits

  1. Withdrawals of cash and/or merchandise during the current year.

  2. The amount necessary to close the accounting period credit balance to Investments – Members, Partners, or Proprietor (Account 380).

  1. The monthly credit for members’, partners’ or proprietor's salaries not taken.

  2. The year-end entry to transfer the total withdrawals for the year to Investments – Members, Partners or Proprietor (Account 380).

 

Remarks:

This account should be used only by dealers operating as a limited liability company, partnership, or proprietorship.

 

The balance in this account represents the amount of withdrawals (cash and/or merchandise) to date, and credit for that portion of salary not taken.

 

A separate account should be maintained for each member or partner.

 

To permit operating expenses to reflect a proper amount charged as a salary for managing the business, a definite monthly compensation plan should be set up for each member, partner, and proprietor, and this compensation should be charged to Salaries – Owners (Account 20).  If this compensation is not withdrawn, it should be placed to the partner's or proprietor's credit in this account.

Note: