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The cash book shows a bank balance of $900 overdrawn at 31 July 2020. On reconciling the bank statement, it was discovered that a cheque drawn by your company for $470 has not been presented for payment and that cheques totaling $4,120 have been correctly entered on the debit side of the cashbook but have not been paid in at the bank. It was further discovered that a standing order for $250 has been entered twice on the bank statement, a dishonoured cheque for $330 has been debited in the cash book instead of credited, and bank charges of $80 on the bank statement has not been entered in the cashbook.
Calculate the balance as shown by the bank statement before taking the items above into account.
is this a trick question?
No, just try to work logically through the problem from the starting point of $900 overdrawn. Remember that bank statements are a mirror image of an entity’s own accounts. For example cash deposited will show as a credit on bank statement. An entity’s own entry will be a debit as it is an asset of the entity.
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