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Question:
On 1 January, the bank is overdrawn by $1,367. Sales on credit were $21,564, purchases on credit were $27,105, payments to credit suppliers in the year totalled $8,536 and cash received from credit customers amounted to $7,222. On 31 December the closing balance was a debit balance of $2,227. What were the cash sales for the year?
Answer:
Cash sales – $7,681
Bal c/f – 5,000. I don’t know how to get this figure… The cash sales is the balancing figure. (The answer given for this question is in T account format.)Would appreciate it if anyone can explain to me.. I just don’t understand how to get the bal c/f figure of $5,000…
Thanks in advance!
Either you have not copied the question correctly, or there is a mistake in the answer.
The balance carried forward cannot be 5,000 from what you have typed. The closing balance given in the question is 2227 (not 5000).
They paid out cash of 8536 and on its own this would increase the overdraft to 1367 + 8536 = 9903
The received 7222 from customers, and this would reduce the overdraft to 9903 – 7222 = 2681.
However the final balance is 2227 cash in hand, and so they must have received an additional 2227 + 2681 = 4908 which must be the cash sales.
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