DRAWINGS ACCOUNT

Debit for:
1. Personal withdrawal by a partner in anticipation of profits ( temporary withdrawal of capital)
2. Share in partnership loss from operations (this may be debited directly to the partner’s capital
accounts)
Credit for:
1. Share in partnership profits from operations ( this may be credited directly to the partner’s
capital account)

LOANS RECEIVABLE AND LOANS PAYABLE. Aside from the contributions, partners may also
advance money to the partnership in the form of loans when the business is in need of additional funds.
These loans, which are payable immediately by the partnership and are usually with interest, are recorded
in the account Loans Payable or Due to Partners. This account is reported in the balance sheet as a
liability. On the other hand, the partnership may advance money to partners, other than withdrawals in the
form of loans. These loans, which are payable immediately by the partners and are usually with interest,
are recorded in the account Loans Receivable or Due from Partners. This account is reported in the
balance sheet as an asset.

OPENING ENTRIES

Partners may contribute cash, property, or industry to the partnership. Assets contributed are debited to
appropriate. asset accounts and partners' capital accounts are credited for the total amount of
contribution. If the asset contributed is cash, it is recorded in the partnership books at face value; if the
assets contributed are in the form of property (noncash assets), they are recorded at agreed values, or in
the absence of an agreement, at their fair market values. When industry is contributed into the partnership,
a memorandum entry is prepared, When individual set of books are kept by each partner or by any one of
the partners, adjustments to the recorded values are made through the capital account. The capital account
is credited for increases in value and is debited for decreases in value. Alternatively, a Capital Adjustment
account is used. The balance of this account after recording all the necessary adjustments is transferred to
the capital account.