Examkin

Question

Difficulty: HardCash and Bank Summary Analysis for Missing Cash Receipts and Payments

Tunde operates a retail store using an incomplete records system. For the accounting year ended 31 December 2025, the following cash summary details were extracted:

- Cash in hand (1 January 2025): ₦24,000\text{₦}24,000
- Cash received from trade debtors: ₦415,000\text{₦}415,000
- Cash sales: ₦310,000\text{₦}310,000
- Business operating expenses paid in cash: ₦96,000\text{₦}96,000
- Proprietor's cash drawings: ₦55,000\text{₦}55,000
- Cash lodged into bank account: ₦380,000\text{₦}380,000
- Cash in hand (31 December 2025): ₦18,000\text{₦}18,000

Assuming all cash receipts were fully accounted for and no cash was stolen, what was the total cash paid to trade suppliers during the year?

  1. A
    ₦188,000\text{₦}188,000
  2. ₦200,000\text{₦}200,000Answer
  3. C
    ₦255,000\text{₦}255,000
  4. D
    ₦960,000\text{₦}960,000

Answer

The total cash paid to trade suppliers during the year was ₦200,000\text{₦}200,000.
By constructing a summary cash account, total cash receipts (Opening cash ₦24,000\text{₦}24,000 + Cash from debtors ₦415,000\text{₦}415,000 + Cash sales ₦310,000\text{₦}310,000) total ₦749,000\text{₦}749,000. Subtracting all known cash payments (Operating expenses ₦96,000\text{₦}96,000 + Drawings ₦55,000\text{₦}55,000 + Cash banked ₦380,000\text{₦}380,000) and the closing cash balance (₦18,000\text{₦}18,000) gives ₦749,000−₦549,000=₦200,000\text{₦}749,000 - \text{₦}549,000 = \text{₦}200,000, which represents the unrecorded cash paid to trade suppliers.

Step-by-Step Solution

1
Calculate the total cash receipts available on the debit side of the cash account
Total Cash Available = Opening Cash (₦24,000\text{₦}24,000) + Receipts from Debtors (₦415,000\text{₦}415,000) + Cash Sales (₦310,000\text{₦}310,000) = ₦749,000\text{₦}749,000
Opening cash balance and all cash receipts must be summed to establish the total cash accounted for during the period.
2
Sum all known cash disbursements and closing cash balance on the credit side
Known Outflows = Operating Expenses (₦96,000\text{₦}96,000) + Proprietor Drawings (₦55,000\text{₦}55,000) + Cash Lodged into Bank (₦380,000\text{₦}380,000) + Closing Cash (₦18,000\text{₦}18,000) = ₦549,000\text{₦}549,000
All recorded payments and the ending cash balance represent accounted cash outflows.
3
Compute the missing cash payments to trade suppliers
Cash Paid to Suppliers = Total Cash Available (₦749,000\text{₦}749,000) - Known Outflows (₦549,000\text{₦}549,000) = ₦200,000\text{₦}200,000
Under double-entry principles, the total receipts side must equal the total payments side plus closing balance in a cash summary.

Key Concept

Cash Summary Analysis for Missing Figures
Rate this question

Topics

Cash and Bank Summary Analysis for Missing Cash Receipts and Payments

More questions from this topic