*The Commerce Journal>>>Small Business

What's the journal entry for partners capital account?

partners capital account is a current liability or current assets?What's the accounting treatment?Give examples.

Partners' capital accounts are not assets or liabilities; they are capital, or owners' equity. They represent the partners' interests in the business. The credit balances in these accounts show how much of the assets each partner contributed to the business. The rest of the assets are provided by creditors, represented by liabilities.

When a partner invest in the business the entry is

dr Cash or other assets
....cr Partners' capital

When a partner withdraws assets from the business

dr. Drawings (a temporary partner's account)
...cr Cash or other asset

The drawing account is later closed:

dr. Partners capital
....cr Drawings

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