Bank Reconciliations

You have not said what your answer was or what the answer in your book is, so I cannot say whether it is your error or not :-) Also, you have not said whether the cash book balance is a debit or a credit, which the question would have to say. However to correct the balance in the cash book you need to adjust for the bank charges and the dishonoured cheque. (The unpresented cheques and the lodgement not credited do not affect the cash book.) The correct balance is the bank balance that will appear in the SOFP. If the question wants to know what the balance on the bank statement will be (which is not how you have typed it) then you need to prepare a bank reconciliation statement working backwards from the corrected cash book balance and adjusting for the unpresented cheques and the receipts not credited to find out what the bank statement shows.

Hi Mr Maffot, I have a small doubt in this question, can you please help me? A business had a balance at the bank of $2500 at the start of the month. During the following month, it paid for materials invoiced at $1000 less trade discount of 20% and cash discount of 10%. It received a cheque from a customer in respect of an invoice of $200, subject to cash discounts of 5%. What was the balance at the bank at the end of the month? Part of the answer is: Payment ($1000-$200)x90%. My question is why is it 90% and not 10%. Thank you.

If the supplier is giving a discount of 10% then we will only pay 90% of the amount of the invoice.

Oh yes!.. Thank you very much

You are welcome :-)