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Question: From the following details, calculate the closing bank statement balance;
Unpresented/outstanding Cheques $5,000
Deposits not credited (lodgements) $4,850
Closing bank balance in the records of the
business before adjustments shown below $50,000
Bank Chgs $250
Dishonoured Cheques $400A. $49,350
B. $49,200
C. $50,300
D. $49,500My workings: $50,000
(250)
(400)
My answer $49,350 (A)I was told the answer is $49,500 (D). Not sure how that is the answer.
Thanks!
$49350 will be the correct balance on the cash account.
However the bank statement will show different because there are unpresented cheques and outstanding lodgements that will have been entered in the cash account but which will not yet have appeared on the bank statement.
So the bank statement will be showing a different figure: 49350 + 5,000 – 4850 = 49500.
So in other words they’re asking for the original closing bank balance without any adjustments where outstanding lodgements/Cheques are concerned. So what we would normally add we minus and vice versa??
Yes – the question asked for the closing bank statement balance.
The only differences from the cash account balance will be outstanding/unpresented cheques and lodgements/deposits not yet credited – they are dealt with as in my precious answers.
Have you watched my lecture on bank reconciliations?
Thanks much, totally understand.
I haven’t yet watched the lectures but i intend too. I failed miserably at my very first attempt, got a lousy 44%…terrible. Need advice cause i’m balancing work and school but i’m doing self study for this paper cuz tuition isn’t cheap.
I just need to study study study!
You are welcome 🙂
The lectures on here are better than you would get if you paid for tuition.
All the tutors with OpenTuition are qualified accountants and have all been teaching for at least 30 years.
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The dishonoured cheque, if the bank doesnt honour the cheque drawn which already deducted from the Co. books ,wouldnt you add it back in the Co’s a/c.
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