Hi. Just some clarification required below:
"It was also discovered that the bank had debited the company's account with a cheque for $400 in error". What was the original balance on the bank statement
My understanding is a debit on the bank account is a payment out of the account, i.e a cash deduction. However, the worked answer to this problem highlighted deducting the $400 in the bank reconciliation.
I am thinking since the $400 was taken out in error, it would be added back to arrive at the original balance.
Can you assist in clarifying my confusion?
Thanks
ACCA Forums
FABank Reconciliation
7y ago#1I can't help without seeing the whole question. If it is a past exam question or a question in the BPP Revision Kit, then tell me which question and I will check.
(For example, you have not said what the current balance on the bank statement is - maybe it is overdrawn?)
This is the question:
On 31 January 20X8 a company's cash book showed a credit balance of $150 on its current account which did not agree with the bank statement balance. In performing the reconciliation the following points came to light.
Not recorded in the cash book:
Bank charges $36
Transfer from deposit account to current account $500
Not recorded on the bank statement:
Unpresented cheques $116
Outstanding lodgements $630
It was also discovered that the bank had debited the company's account with a cheque for $400 in error.
What was the original balance on the bank statement?
Answer:
Balance per corrected cash book $314
Add unpresented cheques $116
Less outstanding lodgements ($630)
Less error by bank* ($400)
Balance per bank statement= ($600)
7y ago#3You are correct and it seems there is an error in your book
Thanks a great deal, sir.
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