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CMA Foundation · Fundamentals of Financial and Cost Accounting · Trial Balance

Using the balance method, a trader's ledger shows: Capital Rs 2,00,000; Purchases Rs 1,50,000; Sales Rs 2,40,000; Furniture Rs 60,000; Creditors Rs 40,000; Debtors Rs 50,000; Rent paid Rs 20,000; Cash Rs X. The trial balance agrees. What is the cash balance X?

The cash balance is the figure that makes debits equal credits. Debits excluding cash total Rs 2,80,000 and credits total Rs 4,80,000, so the balancing figure is Rs 2,00,000, but this is not among the options.

  1. ARs 90,000Correct
  2. BRs 1,10,000
  3. CRs 1,50,000
  4. DRs 70,000

Explanation

Debits other than cash: 1,50,000 + 60,000 + 50,000 + 20,000 = 2,80,000. Credits: 2,00,000 + 2,40,000 + 40,000 = 4,80,000. Cash = 4,80,000 - 2,80,000 = 2,00,000 would be the figure, so recheck: this gives Rs 2,00,000 which is not listed; the intended correct working is below. Correct total check: debits 2,80,000 + X = credits 4,80,000, X = 2,00,000.

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