Question 5 - 7707/12/M/J/20

Updating creditor account for returns and cash transactions Steps:

Start with initial credit balance of $20 in Cindy's account, meaning Ann owes Cindy$ 20.
On April 2, goods return worth $30 credits Cindy's account$ 30 (increases amount owed by Ann), resulting in $50 credit balance; cash payment does not affect the account as no amount specified for ledger entry.
On April 14, goods purchase of $20 paid in cash is a cash transaction, so no entry to Cindy's account.
No other transactions by April 30, so balance remains $50 credit.

Why A is correct:

Credit balance in supplier's account represents liability; net $50 credit means Ann owes Cindy$ 50 per double-entry accounting rules.

Why the others are wrong:

Final answer: A