Ade Enterprises records its cash and bank transactions in a two-column cash book. On 1 June 2025, the opening cash balance was ₦45,000 and the bank balance was ₦120,000. During the month, the following transactions took place:
- Cash sales: ₦30,000
- Paid a supplier by cheque: ₦50,000
- Withdrew cash from the bank for office use: ₦15,000
- Paid office rent in cash: ₦10,000
What is the closing cash balance at the end of June 2025?
- A₦50,000
- B₦65,000
- ₦80,000Answer
- D₦30,000
Answer
₦80,000
The closing cash balance is ₦80,000. It is calculated by adding cash receipts (cash sales of ₦30,000 and cash withdrawn from bank of ₦15,000) to the opening cash balance (₦45,000), giving total cash available of ₦90,000, and deducting cash payments (office rent of ₦10,000). Payments by cheque affect the bank column only.
Step-by-Step Solution
Key Concept
Two-Column Cash Book Posting and Contra Entries
Estimated Time:1m 30s