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ACCA Applied Knowledge · Financial Accounting · Bank reconciliations

Quill Co's cash book shows a bank balance of $12,300 in funds before adjustments. The bank statement shows direct debits of $450 and bank interest received of $120 that are not yet in the cash book. A standing order receipt from a customer of $900 is also not in the cash book. What is the adjusted cash book balance?

The adjusted cash book balance is $12,870. Starting from $12,300, deduct the $450 direct debits and add the $120 interest and $900 standing order receipt. All three items are on the statement but not yet recorded in the cash book.

  1. A$12,870Correct
  2. B$12,030
  3. C$12,720
  4. D$13,470

Explanation

Start at $12,300. Deduct direct debits of $450 to give $11,850. Add interest $120 to give $11,970. Add the standing order receipt $900 to give $12,870. The $12,030 option wrongly deducts the receipt rather than adding it, and the $12,720 option omits the interest.

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