August 29, 2016 at 8:42 am
I have a bank reconciliation question.
Question prompt is:
Your cash book at 31 December 20X3 shows a bank balance of $565 overdrawn. On comparing this with your bank statement at the same date, you discover the following:
A cheque for $57 drawn by you on 29 December has not yet been presented for payment.
A cheque for $92 from a customer, which was paid into the bank on 24 December 20X3, has been dishonoured on 31 December 20X3.
What is the correct balance to be shown in the statement financial position at 31 December 20X3?
Shouldn’t the answer be $657 instead of $714?
Thank you in advance!August 30, 2016 at 8:03 am
yes I think so, because that check must have been already entered on Cash book as it was drawn on 29-december.August 30, 2016 at 11:37 am
re check your workAugust 30, 2016 at 1:57 pm
What is the exact answer? Can you, please, explain to me step by step?August 30, 2016 at 5:07 pm
$565 will already contain the cheque for $57, so no adjustment is needed for that.
The $92 bounced cheque will need to be adjusted for in the cash book (I assume) and this will increase the overdraft to 565 + 92 = $657.
$714 is not right.August 30, 2016 at 5:50 pm
The correct answer is $657 as the dishonoured cheque for $92 need to be added to the cash book overdrawn balance of $565. As that cheque was recorded in the cash book before being sent to the bank it effectively reduced the overdaraft to the $565 currently showing, now that you will not be geting those funds from the customer (in the short run at least) the bank balance in the company’s book needs to reflect this.August 30, 2016 at 5:59 pm
September 8, 2016 at 2:57 pm
Thanks for your input!January 15, 2017 at 6:52 am
I think the answer should be714 because our liability in cash book is 565 and we have drawn 57 more and had included in 565 but we have given cheque to bank to decrease our liability but this was dishonoured by bank and we havr to increase our liability by 565+92= 657 which is correct balancing figure of cash book
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