FA Chapter 15 Questions Bank Reconciliations
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Sir I need help on this one. The cash account shows a balance of $13,620 overdrawn at 30 September 2015. It is later discovered that a standing order of $300 has been entered twice, and that a dishonoured cheque of $1,080 has been debited to the cash account instead of credited. What is the correct balance?
Hi John, love your videos and if you don’t mind, I have a question on Q5. Why don’t we have to adjust for the $312 in dishonoured cheques? When the company gets paid with the cheque originally, they debit the cash account, decreasing bank overdraft. However when the cheque is dishonoured, this cash balance is not realised. Shouldn’t the bank overdraft increase back to $2,424 instead, since the company originally accounted for the $312 in cash which reduced it to $2,112? If it wasn’t realised and the company did not know about it, shouldn’t the correct balance be $2,424, the state of which there was no dishonoured cheque in the first place? Thank you!
You are correct as far as the cash account is concerned. However on the bank statement the receipt will never have appeared (because the cheque was dishonoured) and so there is no need to adjust the figure on the bank statement.
What is the difference between balance at the bank and balance overdrawn Sir?
A balance overdrawn is a negative bank balance.
Have you watched the free lectures on this?
in Question 4 Why we did not deduct dishonoured cheque is error
The current balance is overdrawn. Correcting for the dishonoured cheque makes it more overdrawn.
Good evening sir
I am confused a bit with the first Question. I chose “8,800 balance overdrawn”. I would like to ask what is the difference between “balance overdrawn” and “balance at the bank”. Why in this question the correct one “balance at the bank”
Thank you so much for help
sorry, there is typo.
not “8,800 balance overdrawn” insead “8,808 balance overdrawn”
balance overdrawn is a negative balance while balance at bank is a positive balance.