Owner's Personal Use of Inventory
I have been making a general journal entry each month to document owner's draw.
I understand how cash is to be entered, but not how personal use of inventory is to be entered. This is an example of the monthly entry I've been making
Dr. Owners Withdrawal
Cr. Inventory - gas
Cr. Inventory - parts
Cr. Inventory - confectionery
We count our inventory at year end and make adjustments to COGS and inventory accounts then.
My question is, am I doing this right? Or should I be including the revenue and/or expense accounts related to the inventory accounts?
Looks good to me Sharon.
There is no revenue involved because there was no sale
of these inventory items ... they were just consumed by the owner.
If your accountant wants it done differently, they will either let you know at year-end ... or you'll see an adjusting entry of some kind.
If you don't want to wait until year-end, you can call and ask your accountant if it's okay to handle these personal use items this way.