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CA Foundation · Accounting · Accounts from Incomplete Records

In a Cash and Bank Summary prepared from incomplete records, the opening bank overdraft is Rs 15,000 and the closing bank balance is a debit of Rs 25,000. Total deposits during the year were Rs 4,00,000 and the only other bank item is cheques issued to suppliers. What is the amount of cheques issued?

Cheques issued were Rs 3,60,000. Deposits of Rs 4,00,000 less the opening overdraft of Rs 15,000 less the closing balance of Rs 25,000 leaves Rs 3,60,000, since the overdraft is a credit opening balance.

  1. ARs 3,60,000Correct
  2. BRs 3,90,000
  3. CRs 4,40,000
  4. DRs 3,60,000 less 15,000

Explanation

Opening overdraft is a credit balance of 15,000. Credit side: cheques issued = X; closing balance 25,000 (debit side shown as balancing credit item). Debit: deposits 4,00,000. Then 4,00,000 - 15,000 - X = 25,000, so X = 3,60,000. Check: 3,60,000 + 15,000 + 25,000 = 4,00,000. Adding the overdraft instead of subtracting gives 3,90,000 or 4,40,000 incorrectly.

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