Examkin

Question

Difficulty: MediumBalancing Ledger Accounts and Extracting Trial Balance

The following ledger balances were extracted from the books of Amaka Traders at the end of her financial year:

Account TitleBalance (₦)
Capital95,000
Premises120,000
Purchases110,000
Sales185,000
Rent Expense15,000
Trade Debtors35,000
Trade Creditors25,000
Cash at Bank25,000

What is the total of the debit column in the Trial Balance?

  1. ₦305,000Answer
  2. B
    ₦330,000
  3. C
    ₦490,000
  4. D
    ₦610,000

Answer

The total of the debit column in the Trial Balance is ₦305,000.
In trial balance extraction, assets (Premises, Trade Debtors, Cash at Bank) and expenses (Purchases, Rent Expense) carry debit balances. Summing ₦120,000 + ₦110,000 + ₦15,000 + ₦35,000 + ₦25,000 yields ₦305,000.

Step-by-Step Solution

1
Identify all ledger accounts that carry a debit balance
Assets and expenses have debit balances: Premises (₦120,000), Purchases (₦110,000), Rent Expense (₦15,000), Trade Debtors (₦35,000), and Cash at Bank (₦25,000).
According to double-entry accounting rules, assets and expenses are recorded as debit balances.
2
Sum up the identified debit balances
₦120,000+₦110,000+₦15,000+₦35,000+₦25,000=₦305,000₦120,000 + ₦110,000 + ₦15,000 + ₦35,000 + ₦25,000 = ₦305,000
Adding these figures gives the total amount expected in the debit column of the Trial Balance.
3
Verify against credit balances to confirm trial balance equilibrium
Credit balances: Capital (₦95,000) + Sales (₦185,000) + Trade Creditors (₦25,000) = ₦305,000.
The total debits equal total credits (₦305,000=₦305,000₦305,000 = ₦305,000), confirming arithmetic accuracy.

Key Concept

Classification of ledger account balances into debit and credit columns when extracting a Trial Balance.
Estimated Time:1m 30s
Rate this question

Topics

Balancing Ledger Accounts and Extracting Trial Balance

More questions from this topic