- This topic has 5 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
rivision29.19- Sigma’s bank statement shows an overdrawn balance of $38,600 at 30 June 20×5, 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 20×5 but credited by the bank on 2 July $14,700.
3-cheque repayments entered in cash book but not presented for payment at 30 uune 20×5 $27,800.
4-A cheque payment to a supplier of $4,200 charged to the account in June 20×5 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 overdrawnthe answer is A.
Balance per bank statement (38,600)
Bank charges 200
Lodgements 14,700
Cheque payments (27,800) Cheque payment misposted 8,400
________________________
=Balance per cash book (43,100)
1#why bank charges added while they want C.B balance before adjustments?
2#why cheque payment misposted is 8,400 not 4,200 while they want the balance before adjustment?1. If bank charges have not been entered, then the balance showing in the cash book will be higher than it should have been (so the overdraft will show as lower than it should have).
2. The 4,200 has been shown as a receipt and there was no receipt, and so the balance in the cash account will be 4,200 higher than it should be. In addition, there was actually a payment and the payment is not recorded, and so again the balance will be another 4,200 higher than it should be. so a total of 8,400 higher.
The 4,200 had been recorded but as a receipt when it should have been recorded as a payment.
Suppose you started with a balance of 10,000. Had the payment been recorded properly then the balance would be 10,000 – 4,200 = 5,800.
But because it was recorded as a receipt, the balance would come to 10,000 + 4,200 = 14,200.
So it is 14,200 – 5,800 = 8,400 more than it should be.if the balance in the question is -(15,500)
so,should be -(15,500) -(4,200)=55,700
but if they record it as a receipt will be -(15,500) +4,200=47,800
therefore 55,700 -47,800=8,400 less than it should be
& this will lead to wrong answer ! because must be 8,400 more than it should be to get the right answer.
- The topic ‘bank reconciliation’ is closed to new replies.