How do I record drawings?

This article covers the steps to record company drawings in Sage Accounts.

Drawings apply to sole traders and partnerships. They don't apply to limited companies.

It is equivalent of the owner, or business partner, being paid.

Drawings can take a number of forms and is any money or assets that is withdrawn from the company for personal use. For example, Money, stock or machinery.

To record drawings

Before recording drawings, ensure there is the appropriate nominal code in the accounts, for example:

N/C	Name	Management Report	Section of Report
3260	Drawings	Balance Sheet	Capital and Reserves

Note: If the company is a partnership, ensure that there is a Current (Drawings) Account for each partner, for example, for two partners create the following codes:

N/C	Name	Management report	Section of report
3260	Partner A Current Account	Balance Sheet	Capital and Reserves
3261	Partner B Current Account	Balance Sheet	Capital and Reserves

The way in which drawings are recorded depends on what is being withdrawn from the company:

• Money - post a bank payment .
• Stock or assets - post a journal entry. If stock control is being used, a further Adjustment Out should be posted to correct stock levels.

Example 1 - £50 taken from petty cash for personal use by the owner

Post a bank payment as follows:

Bank	Date	N/C	Details	Net amount	T/C	Tax
1230	Trans date	3261	Cash Drawings	50.00	T9	0.00

Example 2 - A cheque to pay owner's National Insurance contributions of £25 has been raised

Post a bank payment as follows:

Bank	Date	N/C	Details	Net Amount	T/C	Tax
1200	Date	2211	NI	25.00	T9	0.00

Example 3 - £25 stock is taken for personal use by the owner

Post journal entries as follows:

N/C	Name	Details	T/C	Debit	Credit
5000	Purchases	Stock taken	T9	0.00	25.00
3260	Drawings	Stock taken	T9	25.00	0.00

If VAT has been reclaimed on the purchase of the stock it also needs to be accounted for by the journal. Therefore, if this is the case, use the following journal entry instead:

N/C	Name	Details	T/C	Debit	Credit
5000	Purchases	Stock taken	T1	0.00	22.28
2201	Purchase Tax Control	Stock Taken	T1	0.00	3.72
3260	Drawings	Stock Taken	T9	25.00	0.00