1. avatar says

    I have a doubt. I want to know why lodgements are added to the balance. Aren’t they supposed to be an expense to the company and therefore lead to a fall in the bank balance?

  2. Profile photo of nakeshia says

    Allister is preparing a bank reconciliation at the end of January 2010. His bank statement shows a balance of $13,670 debit and he also ascertains the following:
    (1) A direct debit of $2,890 has not been entered in the cash book.
    (2) Cheques not yet presented amount to $1,700.
    (3) $3,780 has been paid in to the bank but not yet credited to the bank statement.
    (4) The ledger clerk has made an error when updating the cash book and recorded a payment of $270 as a receipt.
    What was the balance on the cash book before any adjustments were made?
    A B C D
    $1,350 debit $12,320 credit $8,160 credit $19,180 debit
    (2 marks)

    Sir I’m really in need of your help with this question. Plz plz plz

    • Profile photo of John Moffat says

      The bank statement show a DR, which means it is an overdraft.

      Unnpresented cheques will make it more overdrawn and the 3780 not yet appeared will make it less overdrawn. So the correct balance is 11590 overdrawn.

      So……. The correct balance on the cash account is 11590 credit.

      Best is to write up a little cash account. You do not know the current balance before corrections and so this will be a missing figure. To correct, you will credit with 2890, and for the other mistake you will credit with 540 (270 was on the wrong side).
      You know that the final balance is 11700 credit and so now you can calculate the missing figure.

      (The correct answer is 8160 credit)

      • Profile photo of mansoor says

        thank u sir!

        but i still am unclear:

        i get the 11590 figure.

        so, when you say credit 2980 and credit 540 i understand it to be as follows:


        where am i lacking the understanding. :(

        also when it says “a direct debit …” does it mean this money was taken out of the bank?

        thank u for ur patience

      • Profile photo of John Moffat says

        Don’t forget that 11590 is the final balance – not the original balance.

        So if the original balance is X, then X – 2890 – 540 = -11590
        So X = – 11590 + 2890 + 540

  3. avatar says

    Thank you Mr johnmoffat. i wonder why i went to pay such hefty amount for the f3 course..the pace my lecturer was going was amazing. i was not able to grasp a single thing and here your lecture.. i must say amazing and just amazing. in a single line you are breastfeeding..excellent

    from mauritius

  4. avatar says

    Hi Mr Johnmoffat you have been a great lecture so far , long live Mr John although im unable to view your lecture on my phone samsung SIII bt I really appreciate your effort and time given to us students all over the world without a single moneny . May God bless you.

  5. Profile photo of Mahoysam says

    Can you pls help me with the below question:

    At 31 January 2007, George’s bank statement shows a credit balance of $1,500. In
    comparing this with his cashbook, George has found the following:
    • cheque payments amounting to $450 have not yet been presented at the bank
    for payment
    • bank charges of $20 have not been recorded in his cashbook
    • cheque receipts amounting to $200 are not shown on the bank statement.
    What amount should appear in George’s statement of financial position for cash at
    A $1,500
    B $1,250
    C $1,750
    D $1,230

    According to your lecture and my understanding of bank recon the correct answer is D yet the answer given by them is B!!! Please do respond to me, I have posted a similar question in (allowance for receivable lecture) in which the naswer in my mock exam was different from what I learned in the lecture but no answer from opentuition, I need to clear that up as my exam is after tmr. Thanks!

    • Profile photo of John Moffat says

      The answer is B, and the reason is that the cheque receipts are lodgements/deposit not yet credited by the bank.
      So…the bank reconciliation would show balance of 1500 less unpresented cheques 450 plus deposits not yet credited 200 = 1250. This would equal the correct balance on the cash book (although we cannot check the cash book because we do not know the current balance on the cash book)

      (Your other question was answered in March)

      • avatar says

        Why I got my answer is 1270. 1250 is the correct cash amount in financial statement, but George didn’t record the rm20 due to error. The financial statement should show amount 1270 before correcting the error because the question didn’t state he corrected it.

  6. avatar says

    We entered 2100 in the cash account while it should have been 1200, therefore we’ve got an excess of £900 in the cash account, why do we debit the cash account (add another £900) instead of crediting the account with £900 in order to get the right figure i.e 1200. can you please explain? thanks

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