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Kavita keeps incomplete records. Her opening bank balance was Rs 30,000 (debit). During the year she deposited Rs 4,50,000 into the bank, paid creditors by cheque Rs 2,60,000, paid expenses by cheque Rs 90,000, and withdrew Rs 40,000 from the bank for personal use. Bank charges of Rs 2,000 were debited by the bank. What is the closing bank balance?

The closing bank balance is Rs 88,000. Opening balance plus deposits gives Rs 4,80,000, and cheque payments to creditors, expenses, personal drawings and bank charges total Rs 3,92,000. The difference is Rs 88,000. Omitting bank charges would wrongly give Rs 90,000.

  1. ARs 88,000Correct
  2. BRs 90,000
  3. CRs 1,28,000
  4. DRs 1,30,000

Explanation

Receipts: 30,000 + 4,50,000 = 4,80,000. Payments: 2,60,000 + 90,000 + 40,000 + 2,000 = 3,92,000. Closing balance = 4,80,000 − 3,92,000 = 88,000. Ignoring bank charges gives Rs 90,000, which is wrong because the charges reduce the balance.

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