The owner of a sole trader business paid a personal bill of £1,000 from the business bank account, and it was debited to wages. Which journal corrects it?
Answer and explanation
Correct answer: D. Debit drawings £1,000, credit wages £1,000
- Step 1: The payment was a withdrawal by the owner, so it belongs in drawings.
- Step 2: Wages were debited by mistake, so credit wages to remove it and debit drawings.
Answer
Debit drawings £1,000, credit wages £1,000.
Why not the others: Debiting wages again would repeat the original mistake. Crediting bank would record the cash leaving a second time, as the bank was credited already. Capital is not debited for withdrawals during the year, and crediting bank would double count the payment.
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