CMA Foundation · Fundamentals of Financial and Cost Accounting · Journal and Ledger
Purchases of Rs 45,000 were made from Sunil on credit and goods worth Rs 5,000 were returned to him. The balance of Sunil's account was opening Rs 10,000 (Cr). A cheque of Rs 30,000 was then paid to Sunil. What is the closing balance in Sunil's account?
The closing balance is Rs 20,000 credit, meaning the firm still owes Sunil that amount. Credits of Rs 55,000 (opening plus purchases) less debits of Rs 35,000 (returns plus cheque payment) leave Rs 20,000.
- ARs 20,000 creditCorrect
- BRs 20,000 debit
- CRs 30,000 credit
- DRs 10,000 credit
Explanation
Credit side: 10,000 + 45,000 = 55,000. Debit side: returns 5,000 + payment 30,000 = 35,000. Balance = 55,000 - 35,000 = 20,000 credit, still payable to Sunil. Ignoring the return would give Rs 25,000 credit, which is wrong.
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