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Q:Mary is preparing her bank reconciliation statement .The bank balance in her general ledger is $540 credit.There are two items she has yet to deal with.
1)A Cheque for $620 was sent to a supplier but is not yet showing on the bank statement.
2)A bank charge of $28 was charged by the bank ,but was not recorded by mary.
What is the closing balance on mary,s bank statement assuming there are no other errors or adjustments?
A)$1,132 overdrawn
B)1,188 overdrawn
C)$52 credit
D)$108 creditWell here the confusion is that the bank ledger of mary is in credit already after adding $28 .The total mary ledger balance will be $568,why we have to deduct $620 from $568 on a already overdrawn account to arrive at a correct answer of C ?
Mary’s records show $540 o/d.
Item 1 will already be reflected in her cash account, but not eh bank’s records
Item 2 already on the bank’s records but not in Mary’s.
If the bank’s records and Mary’s are to reconcile, both must be brought up to date. Using ‘-‘ to show overdrawn:
So, -540 – 28 = Bank’s balance – 620
Bank’s balance = 620 – 540 – 28 = 52 in credit.
Check:
Balance per bank statement 52 CR
Less :Unpresented cheque 620
Up-to date balance = 568 DR (ie overdrawn)Balance per cash book = 540 CR
Add charges 28
Up-to-date balance = 568 Cr (ie overdrawn)@Gromit said:
Mary’s records show $540 o/d.Item 1 will already be reflected in her cash account, but not eh bank’s records
Item 2 already on the bank’s records but not in Mary’s.
If the bank’s records and Mary’s are to reconcile, both must be brought up to date. Using ‘-‘ to show overdrawn:
So, -540 – 28 = Bank’s balance – 620
Bank’s balance = 620 – 540 – 28 = 52 in credit.
Check:
Balance per bank statement 52 CR
Less :Unpresented cheque 620
Up-to date balance = 568 DR (ie overdrawn)Balance per cash book = 540 CR
Add charges 28
Up-to-date balance = 568 Cr (ie overdrawn)But sending a check of $620 from a already overdrawn account will increase her overdrawn balance ?Why are we deducting $620 from $568?
We are not deducting 620 from 568.
The bank things she has $x in the bank, but when the $620 check clears she will only have x-$620.
We are tying to find $x
Look at the ‘Check’ part above.
@Gromit said:
We are not deducting 620 from 568.The bank things she has $x in the bank, but when the $620 check clears she will only have x-$620.
We are tying to find $x
Look at the ‘Check’ part above.
Ok Sir! thanks now i got it.Give me a one more favor and please answer the question about the redemption yield i have asked in the MA2 forum.
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