Drawing a/c Dr. 65000

To cash a/c 40000
To purchase a/c 25000

( Being goods and cash withdrawal by proprietor for personal use)

Explanation:

When a proprietor takes goods or cash from the business for personal use, it is considered as withdrawal. The amount withdrawn by the proprietor is not considered as an expense for the business.

Journal Entry:

The journal entry for proprietor's personal use of goods and cash will be as follows:

Goods Withdrawn Account    Dr.         25000

To Stock Account                25000

Cash Withdrawn Account   Dr.         40000

To Cash Account                  40000

Explanation of Journal Entry:

In the above journal entry, the Goods Withdrawn Account and Cash Withdrawn Account are debited as these accounts are used to record the withdrawals made by the proprietor for his personal use.

The Stock Account and Cash Account are credited as these accounts are used to record the reduction in the value of goods and cash held by the business respectively.

Impact on Financial Statements:

This transaction will have the following impact on the financial statements:

- The asset side of the balance sheet will reduce by Rs. 65,000 (Rs. 25,000 for goods and Rs. 40,000 for cash).
- The capital (owner's equity) side of the balance sheet will reduce by Rs. 65,000.
- The income statement will not be affected as this transaction is not considered as an expense for the business.

Conclusion:

In conclusion, when a proprietor takes goods or cash from the business for personal use, it is considered as withdrawal and the journal entry for such transactions is as explained above.