Question

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

Kofi operates a retail store with single-entry records. For the year ended 31 December 2025, his cash records revealed the following information:

- Cash in hand (1 January 2025): ₦15,000\text{₦}15,000
- Cash banked during the year: ₦120,000\text{₦}120,000
- Cash paid for business expenses: ₦35,000\text{₦}35,000
- Cash drawings by Kofi: ₦18,000\text{₦}18,000
- Cash paid to trade creditors: ₦42,000\text{₦}42,000
- Cash in hand (31 December 2025): ₦8,000\text{₦}8,000

Assuming all cash received originated exclusively from cash sales, what was the total cash sales for the year?

  1. ₦208,000\text{₦}208,000Answer
  2. B
    ₦238,000\text{₦}238,000
  3. C
    ₦190,000\text{₦}190,000
  4. D
    ₦172,000\text{₦}172,000

Answer

The total cash sales for the year was ₦208,000\text{₦}208,000.
The total cash sales is found by constructing the cash account summary. Total cash outlays (bankings of ₦120,000\text{₦}120,000, expenses of ₦35,000\text{₦}35,000, drawings of ₦18,000\text{₦}18,000, and payments to creditors of ₦42,000\text{₦}42,000) plus closing balance of ₦8,000\text{₦}8,000 equal ₦223,000\text{₦}223,000. Subtracting the opening cash balance of ₦15,000\text{₦}15,000 gives ₦208,000\text{₦}208,000.

Step-by-Step Solution

1
Calculate total cash accounted for on the credit (payments) side of the cash summary
Total Payments + Closing Balance = ₦120,000+₦35,000+₦18,000+₦42,000+₦8,000=₦223,000\text{₦}120,000 + \text{₦}35,000 + \text{₦}18,000 + \text{₦}42,000 + \text{₦}8,000 = \text{₦}223,000
All cash payments and remaining cash at the end of the period must be balanced against cash available.
2
Deduct opening cash balance to determine missing cash receipts (cash sales)
Cash Sales = ₦223,000−₦15,000=₦208,000\text{₦}223,000 - \text{₦}15,000 = \text{₦}208,000
Total cash accounted for minus initial cash in hand equals total cash collected during the period.

Key Concept

Cash Account Balancing for Missing Cash Sales
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