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Hi
I have watched your lectures and i am a little stuck on this question could you help me?sharmin’s bank statement at 31 october 20×8 shows a balance of $13400. she subsequently discovers that the bank has dishonoured a customer’s cheque for $300 and has charged bank charges of $50, neither of which is recorded in the cash book.
There are unpresented cheques totalling $1400 and an automatic receipt from a customer of $195 has been recorded as a credit in sharmin’s cash book.
Sharmin’s cash book balance prior to correcting the errors and omissions was
A.$11455
B.$11960
C.$12000
D.$12155
(Source: kaplan exam kit)
Thank youI future please ask about whatever it is in the answer that you are not clear about (given that you obviously do have an answer in the kit 🙂 )
You need to prepare the bank reconciliation statement in the normal way, and the final figure is what should appear as a balance in the cash book.
However the question asks what the cash book balance was before correcting any errors and omission in it. So you need to take the figure that you have calculated from the bank reconciliation statement (which is the correct cash book balance) and then work backwards dealing with the errors and omissions in order to work out what the balance was before correcting them.
I keep arriving at 12040
I start with -13400 add 300 for the dishonoured cheque and 50 for the bank charges add 1400 for the unpresented cheque and minus 195 twice.
Where am i going wrong?
Thank you very much for your time.
Much appreciated.The balance from the bank reconciliation is 13,400 – 1,400 = 12,000.
This should be the final balance on the cash account, after correcting the cash book mistakes.
So the balance before correcting the mistakes (do a little t-account and work backwards) is 12,000 + 300 + 50 – 390.
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