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Sigma’s bank statement shows an overdrawn balance of $38,600 at 30 June 20X5. A check against the
company’s cash book revealed the following differences:
1 Bank charges of $200 have not been entered in the cash book.
2 Lodgements recorded on 30 June 20X5 but credited by the bank on 2 July $14,700.
3 Cheque repayments entered in cash book but not presented for payment at 30 June 20X5
$27,800.
4 A cheque payment to a supplier of $4,200 charged to the account in June 20X5 recorded in the
cash book as a receipt.
Based on this information, what was the cash book balance before any adjustments?
A $43,100 overdrawn
B $16,900 overdrawn
C $60,300 overdrawn
D $34,100 overdrawnsir, we are supposed to adjust only error in bank statements and get cash book balance, isn’t it?
No.
You are asked what the cash book balance was before correcting the errors in it.
So you need to do the bank reconciliation to find out the correct cash book balance. Then you have to work backwards in the cash book to find what the balance would have been before correcting cash book errors.
Hi tutor,
The question is
Mauritz Co is preparing a bank reconciliation. The bank balance in the general ledger is $540 credit. There are two items that have not yet been dealt with.
(1) a cheque for $620 was sent to a supplier but is not yet showing on the bank statement
(2) a bank charge of $28 was charged by bank but was not recorded Mauritz Co.
What was the closing balance on Mauritz Co’s bank statement ?The answer is $52 cash at bank
The calculation is
540+28= 568 credit
(568)+620= 52
I don’t understand why we need to deduct 568 with 620?In the cash account, the balance is 568 overdraft (a credit balance).
However on the bank statement a payment of 620 has not yet appeared. So the bank shows 620 more. 620 more means that instead of an overdraft the bak shows is positive balance of 52.
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