- This topic has 25 replies, 3 voices, and was last updated 10 years ago by
.
- Posts
cash book has a balance of 500 overdraft.
chqs for 6000 written and sent out but not on bank statement
receipts of 5000 are in the cashbook but not on bank statement
what is the balance on the bank statement?my answer was:
X-6000+5000=-500: solving for X gives 500 debit.
but the answer is 500 credit
how????
It is because the bank statement has debits and credits the other way round 🙂
If the bank statement has a credit balance it means that there is cash in the bank (and the cash account would show a debit balance).
If the bank statement has a debit balance it means that there is an overdraft (and so the cash account would show a credit balance).There is a good reason that this happens – if you want the explanation the watch my lecture on bank reconciliations.
Sir…i watched ur lectures and they were great.
but cd u tell me how to setup this equation?
my understanding now is:corrected cash balance+unpresented checks-lodgements=corrected bank statement balance
thus -500+6000-5000=-500
cd u add to my explaination?
Your equation is set up correct, but the answer to it is +500 (not -500)
That means that the bank balance is positive which means it is a credit balance on the bank statement
You wrote – 500 + 6000 – 5000 , which is correct. However the total comes to + 500 (not – 500 as you wrote)
So the balance on the bank statement is positive I.e. there is money in the bank per the bank statement.
As I wrote before, a credit balance on the bank statement means that there is money in the bank, and a debit balance on the bank statement means that there is an overdraft.
Since the bank statement shows there to be 500 in the bank, it means that the bank statement would be showing a credit balance of 500.
(As I wrote earlier, the bank statement appears to show debits and credits the opposite way round to what we do in the cash account. If you are confused about why, then if you watch my lecture I explain the reason for it)
Hi
Jo/s bank ledger account shows a balance of 190 credit. Her bank statement reports a balance of 250 credit.My question is
Cash balance is 190 – it is clear that it’s positive
But why bank statement shows +250, although it is credit
there are 2 tests confusing me.
in one test1. balance per bank statement (overdraft) 38640
answer shows -38640
2. in another test
why correct answer is like that “an overdraft is a debit balance in the bank statement”Ledger account shows 190 Cr … means its negative.
bank ledger account is ur asset …. so positive means there is a debit balance and a cr means there is a negative balance.
the bank statement shows a balance of 250 Cr, which means positive… u have this money in your bank.
Mansoor: thanks for answering, but this is Ask the Tutor (and I am the tutor 🙂 ). Please restrict yourself to the general F3 forum.
Gabrielle: mansoor is correct. The problem is that the bank ‘appears’ to do things the opposite way round.
A debit balance in the cash account is a credit balance on the bank statement. A credit balance in the cash account is a debit balance on the bank statement.
(There is a good reason for this – if you want to understand why, watch my free lecture on bank reconciliations)An overdraft is a negative balance, whether in bank ledger or bank statement.
how is this negative balance translated in Dr/Cr?
in the books of the business, if the bank ledger is +, then Dr. if -, then Cr
in the books of the bank, if the amount is +, then Cr, if -, then Dr.——————————————————————
why is this the opposite of each other?
because (bank’s point of view):
if u have money in the bank, then the bank owes u that money. that means, the bank is LIABLE to pay u this money, thus u r a sort of a supplier (of cash) to the bank. Thus, bank will show it as a LIABILITY, which means a Cr.
on the other hand, if the balance in the bank is -, then YOU OWE MONEY TO THE BANK. Thus, it becomes a receivable for the bank. thus Dr.
Dear John
i had started to get a steady stream of questions from the fa/ma exams in fia.
i was enjoying answering them..but for the past 2 months…they stopped.
is it because of june exams?
I would guess so. It is always quieter between the exams and the results because fewer people are studying.
I think you will find that the questions start coming again after the results are out next week 🙂
ha ha…ok..looking forward to the flow to begin.
i want some advice from u regarding teaching FIA in Azerbaijan. shd i ask here or shd i send u a message?
I am from pakistan tho.
that wd be @johnmoffat? because its not accepting it. i am @mansoor50
A bank error has resulted in a cheque for 97 being debited to dalla’s account istead of Dynasty’ s account.
How will be correct it bank statement
+194? Or +97If the bank has debited the account, then they will have taken money out.
So to correct the mistake we need to add 97 to the balance on the bank statement (but be careful – if the bank statement shows an overdraft, then obviously correcting the mistake will reduce the overdraft).
A cheque for 980 from customer paid in on 26 March was dishonoured after 31 March 2008 and Goerge decided that debt would have to be written off as the customer was now untraceble.
For adjustment to cash book will we credit it or not? and how will it be in bank reconcilation add or less/
Thanks
A company is preparing its bank reconcilation at 31 december 2007. The following receipts and payments hae been entered the in the cash account.
Date of cash book entry Data entered on bank statement
receipts
31 december 2007 2 January 2008 17432
30 december 2007 31 december 2007 18243Payments
28 december 2007 30 december 2007 10947
31 december 2007 2 January 2008 89761.What amount will appear on the bank reconcilation as uncleared deposits?
2/ what amount will appear on the bank reconcilation as unpresented cheques?
First question:
In the cash account, when we find out that the cheque is dishonoured we will Cr cash (to remove it) and Dr Receivables (because they will owe us).
(Then we will remove the receivable as an irrecoverable debt).
It will not appear in the bank reconciliation because the money will never have appeared on the bank statement.
- You must be logged in to reply to this topic.