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ACCA FA · Guided practice (Show me how)

Chapter 15: Bank Reconciliations

Fischer - correcting the cash account and reconciling the bank

Fischer prepares accounts to 31 March each year.

At 31 March 2022 the balance on his cash account was $9,450 debit, while the balance shown on the bank statement he received that day was $12,300 credit.

He investigated the difference and found seven reasons for it:

  1. A standing order for insurance of $180 had not been entered in the cash account.
  2. A credit transfer of $1,250 from a customer appeared on the bank statement but had not been entered in the cash account.
  3. Bank interest received of $40 had not been entered in the cash account.
  4. A cheque paid to a supplier for $560 had been entered in the cash account as $650.
  5. The bank had debited the account in error with a cheque for $400 belonging to another customer of the bank.
  6. Cheques totalling $3,350 had been written and sent out but had not yet been presented.
  7. Lodgements of $1,300 had not yet appeared on the bank statement.

  1. (a) Where each difference belongs

    Identify, for each of the seven differences at 31 March 2022, whether it is corrected in Fischer's cash account or shown in the bank reconciliation statement, and whether it is added to or deducted from that balance.

  2. (b) The corrected cash account

    Prepare Fischer's corrected cash account at 31 March 2022, showing the corrected balance.

  3. (c) The reconciliation statement, and the reported figure

    Prepare Fischer's bank reconciliation statement at 31 March 2022, and state the figure he reports for the bank in his statement of financial position at that date.

Opening this exercise…