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Answer in the kit is ‘A’ .
If possible give me an explanation how the answer is been made!Here all the four adjustment have been taken, but after taking option 2 & 3 balance c/d of bank statement is coming 51,700 which is overdrawn. that means it will be the credit balance c/d in cash book. then, the rest of the adjustment 1 & 4 will calculated in cash book, the answer is coming 60,300.
Which edition of the Revision Kit are you using? I have the edition valid up to 31 August 2017 and there is no question 28.20.
You will have to type out the question in order for me to help you.
kit is for February 2014 to August.
Ques #27.20 is:
Sigma’s bank statement shows an overdrawn balance of $38,800 at 30 June 20X5. A check against the company’s cash book revealed the following differences:1. Bank charge $200 have not been entered in the cash book.
2. Lodgement recorded in 30 June 20X5 but not credited by the bank on 2 July $ 14,700.
3. Check repayment entered in the cash book but not presented for payment at 30 June 20X5 of $27,800.
4. A check payment to a supplier of $ 4,200 charged to the account in June 20X5 recorded in the cash book as a receipt.Based on this info, what was the cash book balance before any adjustment ?
A. 43,100 overdrawn
B. 16,900 overdrawn
C. 60,300 overdrawn
D. 34,100 overdrawnFirstly, you would be better to buy a current edition of the Revision Kit – 2017 is several years after 2014 🙂
Secondly, I have found the question (it is in the current edition but with a different number) but you have mistyped it – the overdrawn balance is 38,600 (and not 38,800).
The bank statement shows 38,800 overdrawn. For the bank statement, items 1and 3 are not relevant because they affect the cash account.
So the correct balance on the bank statement should be adjusted for the lodgement not yet credited and for the unpresented cheques which gives an overdraft of 38.600 – 14,700 + 27,800= 51,700 overdrawn
This is therefore what the correct balance on the cash account should be. However the were mistakes in the cash account and the question wants to know what the balance on the cash account was before correcting them.
The bank charges should have been entered, so before correcting then the overdraft would have been 200 higher at 51,500.
The payment of 4,200 has been recorded at as receipt when it should have been recorded as a payment.
So before correcting, the overdraft would have been 8,400 lower at 51,500 – 8,400 = 43,100.Have you watched my free lectures on bank reconciliations? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
sorry for my mistyping and thanks for helping.
After taking option 2 & 3 balance c/d of bank statement is coming 51,700 which is overdrawn. I got that, but the problem is began after that ,
51,700 which is overdrawn that will be the credit balance c/d in cash book. then, the rest of the adjustment 1 & 4 will calculated in cash book, as credit balance ?? isn’t it ??
then all the credit balance 51,7000+8400+200=60,300I’m new here, can you please suggest me how can i get your lecture on F3??
Sorry, I made one mistake in my previous answer.
The correct balance on the cash account is 51,700 overdrawn (a credit balance).
However the have not entered the bank changes, and so the balance at the moment would only be 51,500 overdrawn (when they are entered the the credit balance would be 51,700).
So the correct answer is 51,700 – 200 – 8,400 = 43,100 overdrawn.
That is the balance before any corrections (which is what was asked for). When the two mistakes are corrected, they will credit the cash account and will end up with a credit balance of 51,700
To watch the lectures, go to the main F3 page by clicking on ACCA on the top bar, and then on F3. On that page you will find links to all of our free resources including the lectures.
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