Q.From the following transactions of Ms. Meera for May 2024, prepare the Cash Account and balance it as on 31st May 2024:
May 1: Started business with cash ₹80,000 and furniture ₹20,000
May 3: Purchased goods for cash ₹25,000
May 6: Purchased goods from Priya on credit ₹18,000
May 10: Sold goods for cash ₹20,000
May 14: Sold goods to Mohan on credit ₹15,000
May 18: Paid cash to Priya ₹10,000
May 22: Received cash from Mohan ₹9,000
May 25: Paid rent ₹4,000
May 28: Paid salaries ₹7,000
May 30: Withdrew cash for personal use (Drawings) ₹5,000

Only the transactions that actually involve CASH are posted into the Cash Account — the credit purchase from and credit sale to Priya and Mohan on May 6 and May 14 do not touch cash at all at that point.

Cash receipts (Capital ₹80,000, Sales ₹20,000, from Mohan ₹9,000) total ₹1,09,000; cash payments (Purchases ₹25,000, to Priya ₹10,000, Rent ₹4,000, Salaries ₹7,000, Drawings ₹5,000) total ₹51,000. Balancing gives a debit balance (cash in hand) of ₹58,000.

Only the FIVE transactions that involve an actual receipt or payment of cash are posted to the Cash Account (the credit purchase from Priya on May 6 and the credit sale to Mohan on May 14 do not touch cash and are posted only to Purchases/Priya's and Sales/Mohan's Accounts respectively).

Cash Account

Working: Total receipts = 80,000 + 20,000 + 9,000 = ₹1,09,000. Total payments = 25,000 + 10,000 + 4,000 + 7,000 + 5,000 = ₹51,000. Balance c/d = 1,09,000 − 51,000 = ₹58,000 (a debit balance, since Cash is a real/asset account — this is the actual cash in hand on 31st May 2024).

A quick check before posting: ask of every transaction, "did cash actually move?" Only transactions where the answer is yes are posted to the Cash Account — a credit purchase or credit sale never touches Cash on the date it is made.

A common mistake is posting the credit transactions (goods purchased from Priya, goods sold to Mohan) into the Cash Account as well, simply because they appear in the same list of transactions — credit transactions are posted only to the personal account and the Purchases/Sales account, never to Cash, until the actual cash payment/receipt happens later.