ACCA Applied Knowledge · Financial Accounting · Bank reconciliations
Dunmore Co's cash book shows a debit balance of $6,800 before adjustments. The bank statement reveals bank charges of $150 and a dishonoured customer cheque of $900, neither yet recorded. What corrected balance should appear in the statement of financial position?
The corrected balance is a $5,750 bank asset. Bank charges of $150 and the dishonoured cheque of $900 both reduce the cash book from $6,800, and the result remains a debit balance, so it is shown as cash at bank, not an overdraft.
- A$5,750 as a bank assetCorrect
- B$7,850 as a bank asset
- C$5,750 as a bank overdraft
- D$6,800 as a bank asset
Explanation
Both items reduce the cash book: 6,800 - 150 - 900 = 5,750 debit, an asset. The $7,850 option wrongly adds them. Since the balance remains positive, it is not an overdraft.
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