ACCA Applied Knowledge · Financial Accounting · Bank reconciliations
Dunmore Co's cash book shows a bank balance of $6,300 debit before adjustments. The bank statement shows bank charges of $120 and a standing order of $450 not yet in the cash book, and a customer direct credit of $900 not yet in the cash book. What is the adjusted cash book balance?
The adjusted cash book balance is $6,630 debit. Start with $6,300, deduct bank charges of $120 and the standing order of $450 because they are payments, and add the $900 direct credit because it is a receipt not yet recorded.
- A$6,630Correct
- B$6,870
- C$5,730
- D$7,230
Explanation
Adjusted balance = 6,300 - 120 - 450 + 900 = 6,630 debit. Option $6,870 ignores the sign of the standing order (adds 450 less... i.e. 6,300 - 120 + 900 - 0 +... ) and is wrong; $5,730 treats the direct credit as a payment (6,300-120-450-... ) incorrectly; $7,230 adds the charges and standing order wrongly.
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