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(1) the balance in the cash book before taking the item below into account was $8970.
(2) bank charges $550 on the bank statement have not been entered in the cash book.
(3) the bank has credited the account in error with $425 which belongs to another customer.
(4) cheques payments totaling $3275 have been entered in the cashbook but not have presented for payment.
(5) cheques totaling $5380 have been correctly entered on the debit side of the cashbook, but have not been paid in the bank.what was the balance as shown by the bank statement before taking the items above the account?
given answer is 11200 overdrawn.
but i cant get the answer.
somebody can explain for me? thank you~
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- Replies: 5
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Adjusted Cash Book
Balance : $8,970 (OD)
plus Bank charges : $ 550
Balance $9,520 (OD)Balance as per Bank Statement $ X+$425 (OD)
Less Amount not paid in $5,380
Add Unpresented cheque $3,275equals to $9,520
Solve X ; X=$11,200.
Hope this working is clear enough. Remember the balance is OD!
Use T account for the bank balance may help to clarify matter if you still have problem.thank you. very clear explain.
but I don’t understand, why the balance is od? how do you know?- Topics: 0
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Hi Jane,
Jason succinctly explained the math issue above, but I think you might be struggling with the exam technique.
There are 3 steps to doing a ‘Bank Rex’ question:
1) identify the errors and decide if they go to (a) cash book or (b) Bank Rec. Check a textbook, this is explained in all of them.
2) fix the cash book in a T account, the closing balance will be the correct number for both Cash Book and Bank Statement.
3) do the bank Reconciliation statement: the top is the bank’s balance, the bottom is the correct balance, from your cash book.
See the attachment to see the exam technique.
The issue is that the question will give you either (a) opening cash book balance, (b) opening Bank Balance, or (C) the correct balance (the same in both). Then the question asks you to calculate other number.
Whatever the variation of the question, you need to get to a balancing figure using the idea illustrated–they give you one number, dance through the T account or the Bank Rec. to get to the other.
Use the exam technique above, and practice, so you can “think on your feet” and solve this type of question.
Hi please someone explain why all the addition and subtraction signs are the other way around? In bank reconciliations we are supposed to record where it wasnt recorded because of some error. I did the same i.e.
Balance as per cashbook
opening 8970
less bank charges not recorded 550
gives us , adjusted cash balance – 8420Now since that has to be same for a reconciled statement,
balance as per bank after adjustment – 8420
then add back items which should have been subtracted to reconcile – 3275 & 425
and less the item that had to be added – 5380gives us balance before adjustment – 6740
Those were my calculations. Please explain why the addition and subtraction signs were opposite to what I have done.
Thanks a lot
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