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sigmas bank st shows an overdrawn balance of $38600 at 30 june 20X6.A check against the company’s cash book revealed the following diffrences:
1.bank charges $200 not in the cash book.
2.lodgement recorded on 30 june 20X5 bit credited by the bank on 2 july $14700.
3.cheque repayments entered on cash book but presented for payment at 30 june 20X5 $27800.
4.a cheque payment to supplier of $4200 charged to the account in june 20X5 recorded in the cash book as receipt.
based on this what was the cash book balance before any adjistments?
a. $43100 (OD)
b. $16900 (OD)
c. $60300 (OD)
d. $34100 (OD)my calculation was:
first reconcile the bank statement:
which gives us [(38600)+(27800)-14700]=(51700) cash book balance.
then we need to look at cash book adjustments:
51700+200+(4200×2)=60300 OD(ans)
but solution says 43100 OD.
I didn’t understand what went wrong please explain moffat sir..You cash book adjustments are the wrong way round.
Since the correct balances is 51,700 (overdrawn), the 200 bank changes being missed would have meant that at the moment then balance will be less overdrawn. Similarly with the payment recorded as a receipt.
by doing this will give us
$51700-8400-200=43100 od balance.
but why payment recorded as receipt amounted $8400?
I didn’t get it please explain..
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