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

Mrs. Amina, who maintains single-entry records for her grocery enterprise, provided the following details extracted from her cash summary for the year ended 31 December 2024:

- Cash balance in hand (1 January 2024): N15,000\text{N}15,000
- Cash receipts from trade debtors: N180,000\text{N}180,000
- Cash sales collected into till: N95,000\text{N}95,000
- Cash paid to trade creditors: N120,000\text{N}120,000
- Sundry business expenses paid in cash: N35,000\text{N}35,000
- Cash paid into bank account: N100,000\text{N}100,000
- Cash balance in hand (31 December 2024): N10,000\text{N}10,000

Assuming all unrecorded cash disbursements were taken by the proprietor for personal use, what is the amount of cash drawings for the year?

  1. A
    N15,000
  2. N25,000Answer
  3. C
    N35,000
  4. D
    N225,000

Answer

The cash drawings made by the proprietor during the year amount to N25,000.
To find missing cash drawings in an incomplete record system, prepare a summary of cash transactions. The debit side includes opening balance (N15,000), cash received from debtors (N180,000), and cash sales (N95,000), yielding total cash receipts of N290,000. The credit side accounts for cash paid to creditors (N120,000), sundry expenses (N35,000), cash banked (N100,000), and closing cash balance (N10,000), totaling N265,000. The difference of N25,000 (N290,000 - N265,000) represents the missing cash drawings.

Step-by-Step Solution

1
Calculate total cash available (Debit side of cash summary)
Total Receipts = Opening Cash Balance + Cash from Debtors + Cash Sales = N15,000 + N180,000 + N95,000 = N290,000
All cash inflows plus the opening cash balance represent the total cash accountable.
2
Calculate total known cash disbursements and ending balance (Credit side of cash summary)
Known Disbursements & Ending Balance = Cash to Creditors + Sundry Expenses + Cash Banked + Closing Cash Balance = N120,000 + N35,000 + N100,000 + N10,000 = N265,000
All recorded cash outflows and cash remaining on hand must be accounted for on the credit side.
3
Determine missing unrecorded cash drawings
Cash Drawings = Total Receipts (N290,000) - Known Disbursements & Ending Balance (N265,000) = N25,000
The balancing figure on the credit side represents unrecorded proprietor cash drawings.

Key Concept

Cash Summary Analysis for Missing Figures
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Topics

Cash and Bank Summary Analysis for Missing Cash Receipts and Payments

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