Question

A company was entered in hire purchase agreement and had to pay Rs 1,000 per month. Three payments were made via bank account but no entry was found in cash book. Identify the correct adjustment in cash book.

• A. Rs 1,000 will be added in cash book balance
• B. Rs 2,000 will be deducted in cash book balance
• C. Rs 3,000 will be added in cash book balance
• D. Rs 3,000 will be deducted in cash book balance

Answer 1

The correct option is D

Rs 3,000 will be deducted in cash book balance

Rs 3,000 (3 x 1000) shall be deducted from cash book balance as the same has already been deducted from bank account.