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Mauritz Co is preparing a bank reconciliation. The bank balance in the general ledger is $540
credit. There are two items that have not yet been dealt with.
1 A cheque for $620 was sent to a supplier but is not yet showing on the bank statement.
2 A bank charge of $28 was charged by the bank, but was not recorded by Mauritz Co.
What is the closing balance on Mauritz Co’s bank statement?
A $1,132 overdrawn
B $1,188 overdrawn
C $52 cash at bank
D $108 cash at bankI thought B was the correct answer because I thought 620 is meant to be deducted from the closing balance as it is a payment out of the bank account but the answer says to add the 620 amount to the closing balance
The cheque for $620 will have already been recorded in the ledger and so the balance of $540 is after having paid $620.
However the $620 has not yet appeared in the bank statement. When it does appear the bank balance will reduce, but given that it has not yet appeared, the bank statement will show a higher amount than the balance in the ledger.
Have you watched my free lectures on bank reconciliations? 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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