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An accountant has inserted all the relevant figures into the trade receivables account, but has not yet balanced off the account.
TRADE RECEIVABLES ACCOUNT
Balance b/d 100,750 Cash at bank 250225
Sales 325Assuming there are no other entries to be made ,other than to balance off the account, what is the closing balance on the trade receivables account?
A. $425,760 DR
B. $175,535 DR
C. $425760 CR
D. $175,535 CRMy answer was D ,but book says B is right. Why? My answer is correct in amount ,but wrong in side. In this question, balance c/d is on the credit side. Right?? So, that should be the closing balance, because closing balance and balance c/d are equal. The closing balance or balance c/d should be on the credit side,not debit. The balance b/f or opening balance of next period should be on the debit side.
I would appreciate your help!
You cannot have typed the question correctly because there is no way they would have received 250225 if the sales were only 325 🙂
I am guessing that maybe the sales were 325,000.
In that case the missing figure would be on the credit side, but is then carried forward to the opposite side and we end up with a debit balance.
That also makes sense because all we are going is replacing the existing figures with the net result, and the debits are bigger than the credits which means we end up with a net debit.I do explain this in my free lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Sorry sir. The sales were 325010. Ok! you mean B is right and you also mean that they want net result in this question which is net debit here and therefore the closing balance is Dr 175535.OK How do I know that they want net result in a question? Because If they didn’t want net result, then closing balance would be on the credit side.
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