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As at 1 August 2012 the Trade Receivables ledger had £216,400 debit balances and £11,450 credit balance. Credit sales in August were £582,550 and sales returns £31,600. £498,200 has been received from credit customers. Discount allowed was £14,400 and credit balances by month end were £19,750
Identify the debit balance by the month end ?
What is the answer to this question?
Why have you called this a question on Payables when it is on Receivables? 🙂
The net balance at the start of the month was 216400 – 11450 = 204950 debit
So the net balance at the end of the month is:
204950 + 582550 – 31600 – 498200 – 14400 = 243300 debitSince this is the net balance, and there is a credit of 19750, the debit balance must be 243300 + 19750 = 263050
Apologies for the payable thing.
as always, your help is immeasurable.
i do have a followup: why are we adding the credit balance of 19750. if its a credit, should we not be subtracting it?
Sir, why are we adding the credit balance of 19750 .. shdnt it be subtracted?
Look again at how I arrived at the net balance at the start of the month.
If the net balance at the end of the month is 243300, then X – 19750 = 243300
(where X is the debit balance)hmm.. i guess i am not understanding the question. Arnt we supposed to get the month end balance?
or i dont understand what is meant by ‘identify the debit balance?’
At the beginning of the month there is a debit balance and a credit balance. (Obviously the debit balance is much bigger than the credit, because most customers owe us money. The reason there are some credit balances is maybe because some customers had returned goods or had accidentally paid twice, and so we owed them money).
At the end of the month there will (obviously) be debit balances, but the question says there are also, again, some credit balances. We have to calculate what the debit balance is.
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