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suleymanabuzerli
Sandilands Co uses a computer package to maintain its accounting records. A printout of its cash book
for the month of May 20X3 was extracted on 31 May and is summarised below.
$ $
Balance b/d 546 Payments 5,966
Receipts 6,293 Balance c/d 873
6,839 6,839
The company’s chief accountant provides you with the following information.
(a) Bank charges of $630 shown on the bank statement have not been entered in the company’s
cash book.
(b) Three standing orders entered on the bank statement have not been recorded in the company’s
cash book: a subscription for trade journals of $52, an insurance premium of $360 and a
business rates payment of $2,172.
(c) A cheque drawn by Sandilands Co for $693 and presented to the bank on 26 May has been
incorrectly entered in the cash book as $936.
After correcting the errors above, what is the revised balance on the cash book?
A $2,098 debit
B $2,584 debit
C $3,868 credit
D $3,382 creditl solved this exercise but my answer was 2098 credit because l considered credit balance
but correct answer 2098 debit
why is this so?The correct answer is indeed a credit balance of 2098.
There seems to be a typing mistake in your book!
CASH BOOK (this is the answer)
$ $
20X3 20X3
31 May Balance b/d 873 31 May Bank charges 630
Error $(936 – 693) 243 Trade journals 52
Balance c/d 2,098 Insurance 360
Business rates 2,172
3,214 3,214
1 May Balance b/d 2,098
Sorry if i miss something but why balance b/d is 873
ThanksBecause the question says that the balance carried forward (before correcting anything) was 873.
The balancing figure was 873 on the credit side, but as always it is carried forward to the opposite side and so we start with a debit balance of 873.
Similarly, in the answer as you have copied it out, the correct balancing figure is 2,098 on the debit side and so the balance is brought down on the opposite side and is a credit balance of 2,098 (as I stated in my previous reply).
Have you watched my free lectures on the balancing of accounts? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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