On 1 July 2026, a business had a cash balance of \text{₦}45,000 and a bank overdraft of \t… — JAMB UTME

On 1 July 2026, a business had a cash balance of $\text{₦}45,000$ and a bank overdraft of $\text{₦}18,000$ . During July, the following transactions occurred:
- July 4: Purchased goods with a list price of $\text{₦}120,000$ subject to a $10\%$ trade discount and a $5\%$ cash discount, paying by cheque immediately.
- July 12: Received a cheque of $\text{₦}95,000$ from a debtor in full settlement of a $\text{₦}100,000$ debt.
- July 18: Deposited $\text{₦}15,000$ cash into the bank account.
- July 25: A customer's cheque of $\text{₦}25,000$ previously deposited was returned dishonoured, and the bank charged a bank fee of $\text{₦}1,000$ directly to the account.
- July 28: Withdrew $\text{₦}10,000$ from the bank account for personal use.

Calculate the amount of the bank overdraft (in $\text{₦}$ ) at the end of July 2026.

Cevap: 46600 ₦

Cevap

The bank overdraft balance at the end of July 2026 is ₦46,600.

To find the ending overdraft, sum all credit entries in the bank column (Opening Overdraft ₦18,000 + Cheque Payment ₦102,600 + Dishonoured Cheque ₦25,000 + Bank Fee ₦1,000 + Drawings ₦10,000 = ₦156,600) and subtract total debit entries (Cheque Received ₦95,000 + Cash Deposit ₦15,000 = ₦110,000). The resulting net credit balance is an overdraft of ₦46,600.

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Calculate the net payment by cheque for the purchase on July 4

Invoice Price = ₦120,000 × (1 - 0.10) = ₦108,000. Net Cheque Paid = ₦108,000 × (1 - 0.05) = ₦102,600.

Trade discount is deducted first to arrive at the invoice price; cash discount is calculated on the net invoice price.

Identify all debit entries (increases) to the bank account

Total Debits = Cheque received (July 12) ₦95,000 + Cash deposited (July 18) ₦15,000 = ₦110,000.

Cheques received and cash paid into bank increase the bank balance.

Identify all credit entries (decreases/payments) to the bank account

Total Credits = Opening Overdraft ₦18,000 + Cheque Paid ₦102,600 + Dishonoured Cheque ₦25,000 + Bank Fee ₦1,000 + Drawings ₦10,000 = ₦156,600.

An opening overdraft starts on the credit side. Dishonoured cheques, bank fees, and drawings by cheque decrease the bank balance.

Compute the closing bank overdraft balance

Ending Bank Overdraft = ₦156,600 - ₦110,000 = ₦46,600.

Because total credit entries exceed total debit entries, the balance remains a bank overdraft.

Anahtar Kavram

Three-Column Cash Book Bank Account Balancing with Discounts and Adjustments

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