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JAMB Principles of Accounts 2008 Question 18

Question 18

Cash Book

Capital ₦12 700; Debtors ₦4 000; Sales ₦2 400; Purchases ₦7 100; Stationery ₦1 900; Wages ₦1 230.
The owner wishes to maintain an amount equal to ¾ of capital as drawings.
Determine the closing balance of the cash book.

  1. A.N655 credit
  2. B.N355 debit
  3. C.N130 credit
  4. D.N130 debit
Show the answer and explanation

Answer: A (N655 credit)

Explanation

Receipts: capital 12 700 + debtors 4 000 + sales 2 400 = ₦19 100. Payments: 7 100 + 1 900 + 1 230 + drawings 9 525 = ₦19 755. Payments exceed receipts by ₦655, a credit (overdrawn) balance.