ACCA Applied Knowledge · Financial Accounting · Bank reconciliations
At 31 March, Kestrel Ltd's cash book shows a bank balance of $4,200 debit. A bank reconciliation identifies bank charges of $150 not yet recorded in the cash book and no other cash book errors. What is the corrected cash book balance?
The corrected cash book balance is $4,050 debit. Unrecorded bank charges of $150 are an expense that reduces cash, so they are credited to the bank account in the cash book, reducing the $4,200 debit balance to $4,050.
- A$4,350 debit
- B$4,050 debitCorrect
- C$4,050 credit
- D$4,200 debit
Explanation
Bank charges reduce the bank balance and must be credited to the bank account in the cash book. $4,200 - $150 = $4,050 debit. Adding the charges ($4,350) is the wrong-sign error.
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