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X company 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 supplier but is not yet showing on the bank statement.
2) a bank charge of 28$ was charged by the bank but not recorded in companyI solved this from the two aspect
540 credit means debit balance in our cash book and credit balance in bank.620 is unpresented cheque and it will deducted from the bank balance.it will remain 80 debit balance in bank, which is means 80 overdrawn in our cash book and soo I didnt find the answer 52 cash at bank. if there is a unpresented cheque 620 and this amount is decrease bank and cash balance. and this amount is bigger than two number(540 and 28) how will the 52 cash at bank find? 🙂Sir, I have one more question
undercast in sales journal affect suspense account, whereas undercast of overcast in sales day book doesn’t affect?is this true?Have you watched the free lecture on bank reconciliations?
If a cheque is not yet showing in the bank statement, it is an unpresented/outstanding cheque. It will not affect the balance in our cash account because it will already have been entered in our books.
If there have been bank charges that we have not recorded, then the balance in our cash account is wrong – we need to record it by crediting the cash account.
Second question:
Sales journal and sales day book are two names for the same thing!
An undercast will not affect the suspense account, because the total will have been debited to receivables and credited to sales. Even if the total is wrong, the debit entry will still equal the credit entry, and therefore the trial balance will balance and there will be on entry in a suspense account.
(The free lectures on books of prime entry, and on suspense accounts, will help you 🙂 )
But you first question doesn’t ask for anything!!
If it is wanting the correct balance in the cash account, then it is 568 credit (i.e. overdrawn)
I also agree with the amount of 568 credit which exists in cash book. but in the bank statement closing balance will be 52 cash at bank. in my opinion it will be opening balance not the closing balance. because in the bank statement at the beginning we have 52cash at bank then we deducted unpresented cheque from this amount. my answer is 52cash at bank is the opening balance in the bank statement which is not according to the example’s answer.
You still have not said what the question asked for!
If it asks for the correct balance in the cash account, then the answer is 568 credit.
If it asks what the balance is in the bank statement, then the only reason it will not be 568 credit is because of the unpresented cheques of 620. Therefore the balance on the bank statement will be 52. (There is no opening/closing balance relevant in the bank statement. The bank statement will show cash at bank of 52. The cash account will show an overdraft of 568 (which is what will appear on the Statement of profit or loss) and the reconciliation between the two is the unpresented cheques.
Again, I really do suggest that you watch the free lecture on bank reconciliations!
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