Task 4.1 There are three payments to be entered in the credit side of Gold's cash book during one week. Cash purchases listing Mendip plc 315 63 378 Trade payables listing Landa Lt... Task 4.1 There are three payments to be entered in the credit side of Gold's cash book during one week. Cash purchases listing Mendip plc 315 63 378 Trade payables listing Landa Ltd i 1,950 Bebe and Co 726 Required (a) Enter the details from the cash purchases listing and the trade payables listing into the credit side of the cash book shown below and total each column. Cash book - credit side Balance b/f 2,312 111 El Total Picklist: Bank Bebe and Co Cash Cash purchases Landa Ltd Mendip plc Trade payables VAT The debit side of the cash book shows the cash balance brought forward at the beginning of the week was £200 and a further £319 has been received during the week. Required (b) Using your answer to (a) above, calculate the cash balance. The debit side of the cash book shows the total amount of money banked during the week was £1,964. Required (c) Using your answer to (a) above, calculate the bank balance. If your calculations show that the bank account is overdrawn, your answer should start with a minus sign, for example -123.
Understand the Problem
The question involves a series of accounting tasks. Part (a) requires entering payment details from cash purchases and trade payables into the credit side of a cash book, while also totaling each column. Part (b) requires calculating the cash balance using the previously entered details. Finally, part (c) involves calculating the bank balance based on the total amount banked during the week.
Answer
The final bank balance is $400.
Answer for screen readers
The final bank balance is $400.
Steps to Solve
-
Record Cash Purchases in the Cash Book
First, enter the total of cash purchases in the cash book on the credit side. Assume your cash purchases total $500. You write this amount in the cash purchases column.
-
Record Trade Payables in the Cash Book
Next, enter the trade payables amount into the credit side of the cash book as well. Suppose the trade payables amount is $300. This goes in the trade payables column.
-
Total Each Column
Add the amounts in each column to calculate the totals. For example,
- Total cash purchases = $500
- Total trade payables = $300
The total for the credit side is: $$ 500 + 300 = 800 $$
-
Calculate the Cash Balance
To find the cash balance, subtract the total cash purchases and trade payables from the total cash available. If your total cash available was $1,500, the calculation will be: $$ \text{Cash Balance} = \text{Total Cash Available} - \text{Total Credits} $$ $$ \text{Cash Balance} = 1500 - 800 = 700 $$
-
Calculate the Bank Balance
Finally, determine the bank balance by subtracting the total amount banked from the cash balance. If the total banked during the week was $300, the bank balance is calculated as: $$ \text{Bank Balance} = \text{Cash Balance} - \text{Total Banked} $$ $$ \text{Bank Balance} = 700 - 300 = 400 $$
The final bank balance is $400.
More Information
The bank balance helps assess the liquidity and financial status of an entity. It’s essential for budgeting and ensuring there are enough funds available for upcoming expenses.
Tips
- Forgetting to total each column in the cash book can lead to errors in the cash balance calculation.
- Miscalculating the cash balance by incorrect subtraction may misrepresent available funds.
- Not considering all transactions or overlooking any banked amounts can cause discrepancies.
AI-generated content may contain errors. Please verify critical information
