ACCA Applied Knowledge · Financial Accounting · Bank reconciliations
At 31 March, Delta Co's cash book shows a debit balance of $4,250. The bank statement shows a credit balance of $5,100. Comparing the two records reveals: a direct debit of $380 for insurance not yet entered in the cash book; bank charges of $45 not yet entered; a customer's cheque for $600 returned unpaid (dishonoured) and not yet recorded in the cash book; and a standing order receipt of $200 from a customer not yet entered in the cash book. What is the correct adjusted cash book balance?
The adjusted cash book balance is $3,425 debit. Start with $4,250, deduct the unrecorded direct debit of $380, bank charges of $45 and the dishonoured cheque of $600, then add the unrecorded standing order receipt of $200. Only items missing from the cash book are adjusted.
- A$3,225 debitCorrect
- B$3,425 debit
- C$3,025 debit
- D$3,625 debit
Explanation
Start with the cash book debit balance of $4,250. Deduct the direct debit of $380, bank charges of $45 and the dishonoured cheque of $600, which gives $3,225. Then add the standing order receipt of $200 to reach $3,425. The figure of $3,225 is what you get if the $200 receipt is omitted, and $3,425 is the correct result. Recomputing: 4,250 - 380 - 45 - 600 + 200 = 3,425. So the correct answer is $3,425 debit, which is the second option, not the first.
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