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The following information relates to a bank reconciliation.
(1)The bank balance in the cashbook before taking the items into account below was $8,970 overdrawn.
(2) Bank charges of $550 on the bank statement have not been entered in the cashbook.
(3) The bank has credited the account I error with $425 which belongs to another customer.
(4) Cheque payments totalling $3,275 have been entered in the cashbook but have not been presented for payment.
(5) Cheque totalling $5,380 Have been correctly entered on the debit side of the cashbook but have not been paid in at the bank.What was the balance as shown by the bank statement BEFORE taking the items above into account?
A $8,970 overdrawn
B $11,200 overdrawn ( correct ans)
C $12,050 overdrawn
D $17,750 overdrawnCan you please explain how they get this ans. Many thanks
First you need to calculate the correct balance on the cash account, which is:
8970 + 550 = 9520 overdrawn.This s what the correct final balance on the bank account should be, so now you need to work backwards to find out what it is at the moment:
9520 + 5380 – 3275 – 425 = 11200 overdrawn
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