CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Cycle
Mehta & Co. sold goods on credit to Ravi Traders for Rs 60,000. Ravi returned goods worth Rs 4,000 and later paid Rs 36,000 by cheque. What is the balance in Ravi Traders' account in Mehta & Co.'s ledger?
Ravi Traders' account shows a debit balance of Rs 20,000. The account is debited Rs 60,000 for the sale and credited Rs 4,000 for returns and Rs 36,000 for payment, so Rs 20,000 remains receivable from Ravi.
- ADebit balance Rs 20,000Correct
- BCredit balance Rs 20,000
- CDebit balance Rs 24,000
- DDebit balance Rs 28,000
Explanation
Debit side has Rs 60,000 for the credit sale. Credit side has Rs 4,000 for the return and Rs 36,000 for the cheque, totalling Rs 40,000. The difference is Rs 20,000 debit, meaning Ravi still owes this amount. Ignoring the return gives Rs 24,000, which is wrong.
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