Question 6
Double Entry and the LedgerUse the following information to answer questions 6 to 8.
1/1/08 Capital introduced by cash: ₦50,000
2/1/08 Bought goods for retail by cash: ₦10,000
3/1/08 Bought fixtures by cash: ₦5,000
4/1/08 Sold goods to Lagbaja on credit: ₦3,000
5/1/08 Bought goods on credit from Tamedu: ₦8,000
Cash balance at 5/1/08 is
- A.₦50,000
- B.₦40,000
- C.₦35,000
- D.₦30 000
Show the answer and explanation
Answer: C (₦35,000)
Explanation
Cash in 50,000 − goods 10,000 − fixtures 5,000 = ₦35,000; the credit transactions do not affect cash.