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Hi everyone,
I know this may sound stupid but I am having a bit of trouble with bank reconciliations. Can someone please explain me how to solve this question:
” Your cash book at 31 Dec 20×3 shows a bank balance of $565 overdrawn. On comparing that with your bank statement you discover:
1. A cheque for $57 drawn by you on 29 Dec 20×3 has not yet been presented for payment.
2. A cheque of $92 from a customer, which was paid into the bank on 24 Dec 20×3 has been dishonoured on 31 Dec 20×3.What is the correct bank balance to be shown in the SOFP at 31 Dec 20×3?”
Thank you!
The correct figure for the SOFP is the correct cash book balance.
The unpresented cheque will not affect the cash account balance (because it will have already been entered – it has just not appeared on the bank statement).
The dishonoured cheque will affect the cash account balance. The account will have been debited when the cheque was received, but when it is found to be dishonoured then it needs to be cancelled by crediting the account. It will therefore make the credit balance (overdrawn) even more overdrawn.
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