ACCA Applied Knowledge · Financial Accounting · Cash
Marlow Co's cash book shows a bank balance of $5,000 debit. The following are discovered: a customer's cheque for $640 was returned unpaid by the bank and not yet recorded; a standing order of $210 was not recorded; interest of $35 was credited by the bank and not recorded. What is the correct adjusted cash book balance?
The adjusted cash book balance is $4,185. Deduct the dishonoured cheque of $640 and the standing order of $210, then add the bank interest of $35 to the original $5,000. Unrecorded bank items must all be entered in the cash book.
- A$4,185Correct
- B$4,255
- C$5,465
- D$4,115
Explanation
Dishonoured cheque reduces the balance by 640; standing order reduces by 210; interest increases by 35. 5,000 - 640 - 210 + 35 = 4,185. $4,255 results from ignoring the interest wrongly sign-reversed (-35 would give 4,115, and omitting something else). $5,465 adds the dishonoured cheque instead of deducting.
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