ACCA Applied Knowledge · Financial Accounting · Cash
A company's bank statement shows a balance of $12,800 overdrawn. Unpresented cheques issued to suppliers total $3,100 and deposits not yet credited by the bank total $1,900. What is the balance per the cash book before any other adjustments?
The cash book shows $14,000 overdrawn. Starting from the bank statement overdraft of $12,800, add the outstanding lodgements of $1,900 and deduct the unpresented cheques of $3,100, giving a net overdraft of $14,000. Reversing the signs of the adjustments gives the wrong figure.
- A$14,000 overdrawnCorrect
- B$12,800 overdrawn
- C$11,600 overdrawn
- D$14,000 positive
Explanation
Start with the bank statement balance of -$12,800. Add outstanding lodgements (+$1,900) and deduct unpresented cheques ($3,100): -12,800 + 1,900 - 3,100 = -$14,000, i.e. $14,000 overdrawn. Reversing the adjustments gives $11,600 overdrawn, which is wrong.
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