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FA Chapter 15 Questions Bank Reconciliations

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  2. Sir,
    in question 5 they told that bank statement balance is $1920 overdrawn. that means 1920 negative nah?
    if it is yes, the answer should be,
    statement balance (1920)
    + Lodgements 192
    Corrected cash balance (1728)

    is my workings correct???

    • No, your workings are not correct.

      The $192 is a cheque drawn by the company and is therefore an unpresented cheque (not a lodgement).

      So it makes the overdraft bigger, not smaller.

      (You can see the workings for the correct answers by clicking on ‘review quiz’ after you have submitted your answers)

  3. Hi sir,
    In question 4, it said that the dishourned cheque of 1080 was debited instead of credited so that’s mean we have to deduct the cheque from our cash balance. I wonder why we have to add the double of 1080?
    Thank you in advance.

    • When the cheque was first received we debited cash. When it was cancelled we should have credited cash but instead we debited (wrongly).
      So we need to credit cash to cancel the wrong debit, and then we need to credit again to put in the correct entry.

      Have you watched my free lectures on bank reconciliations?

    • I explain this in my free lectures. The overdraft showing on the bank statement will be bigger than it should be because there are deposits (lodgements) that have not yet appeared. When the money does appear in the bank statement the overdraft will reduce.

  8. Yes we deduct the amount shown on cheque in the cash book balance if we make payment. But if this cheque dishonoured don’t we have to remove this amount completely from the cash book balance entering the amount on the credit side? I am confused 馃檨

  14. Can i just clarify question 5 please? I had credited back the dishonoured cheque to the cash account as it was dishonoured on 28th December, so as at 31st December it was already dishonoured. I assumed that the company was reconciling the account after the 31st December (as is usual practice) when a bank statement is received, so it did not matter that the company was not aware of the dishonoured cheque at the time, it would certainly have been aware of it after, once the statement was received. The cheque would be credited to the account and then debited when it has been dishonoured, so both sides would appear on the bank statement.

    Am I over-thinking the answer, or would that not normally be the case? Does this question assume that the transactions will not appear on a bank statement at all?

    • Have you watched the free lectures on bank reconciliations? (Because obviously there is no point in attempting the test if not).

      The answer is completely correct!

      The original statement in the questionis incorrect because the unpresented cheques increase the overdraft and the deposits credited after date reduce the overdraft.

  18. Dear sir, In question 4.The cash account balance shows $ 13620 is an overdrawn balance, thats means its a nagative balance , Then why we calculate as + 13620 -300+1080*2 ?, we should calculate as -13620-300+1080*2 , please clear it to me sir.

    • You will know from our free lectures that a dishonoured cheque should be credited in the cash account.

      Here it had been debited instead of credited, and so to correct it we need to credit once (to cancel the debit) and then credit a second time to make the correct entry.

  20. Hello,
    i would like to ask regarding question Number 5, Shouldn’t we deduct 192? because it is unpresented cheque, isn’t it? And also adjustments regarding dishonoured cheque we make only in cash book?

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