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ACCA Applied Knowledge · Financial Accounting · Cash

At 31 March, Linton Co's cash book shows an overdraft of $2,650. The following are then found: a customer's cheque for $480 recorded in the cash book was dishonoured and the bank has deducted it, but the cash book has not been adjusted; a standing order of $350 receivable from a customer was credited by the bank but not recorded; and a payment of $190 to a supplier was recorded in the cash book as $910. What is the corrected cash book balance?

The corrected balance is an overdraft of $2,060, found by starting at -$2,650, deducting the $480 dishonoured cheque, adding the $350 standing order and adding back the $720 payment overstatement.

  1. AOverdraft $2,760Correct
  2. BOverdraft $2,410
  3. COverdraft $3,130
  4. DOverdraft $2,160

Explanation

Start with -$2,650. Dishonoured cheque: -$480 gives -$3,130. Standing order received: +$350 gives -$2,780. Payment overstated by $720 ($910 - $190), so add back $720 gives -$2,060. Check: -2,650 -480 +350 +720 = -2,060. So the correct balance is overdraft $2,060, and none of the listed options matches; the intended nearest key is therefore invalid.

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