[IGCSEStudent]

Peter Dlamini’s Cash Book (bank column) had a debit balance of $515 on 30 April 2003.
This did not agree with the bank statement of the same date, which showed a balance of
$290.
The Cash Book was checked against the bank statement and the following differences were
Found:
1. Cheques totalling $620 issued to creditors had not been presented to the bank for
Payment.
2. An amount of $950 paid into the bank did not appear on the bank statement.
3. Cash sales deposited into the bank amounting to $390 had been omitted from the Cash
Book.
4. The bank had received $150 by credit transfer (bank giro) from Klerk for Dlamini’s
Account. Dlamini had not been advised.
5. A cheque for $315 received from Joseph had been paid into the bank but it had now
Been returned unpaid. No action has been taken by Dlamini.
6. The following transaction by the bank had not been recorded in the Cash Book:
Bank charges $120

Can someone please tell me what the entries will be for 5.
Thank you.

[pready]

I would reverse the original entry, so your journal entry should be Debit Accounts Receivable and Credit Cash for the amount given.

[rehmanvohra]

The adjusted cash book balance is 620 whereas bank reconciliation shows 590. There is a difference of 30

[Fidget1]

In respect of #5, you have to deduct it from the cash book because it will have been recorded there, and because the cheque was returned, it means that it didn't clear, so must be deducted. Basically, the rec is this:

Cash book bal 515

adjustments:

Cheques not presented 620
Cheques not cleared -950
Cash sales 390
Klerk 150
Joseph -315
Bank charges -120

Cash book Total: 290
Bank statement balance: 290
Difference: 0

[rehmanvohra]

The steps for preparing a bank reconciliation statement are:
a. Adjust cash book to reflect items appearing in the bank statement but not in the bank account. - (CB)
b. Adjust bank statement balance to records items appearing in cash book but not in the bank statement - (BS)

I have mentioned CB or BS against each transaction to help you attempt problem.


1. Cheques totalling $620 issued to creditors had not been presented to the bank for
Payment. - BS it will reduce bank balance

2. An amount of $950 paid into the bank did not appear on the bank statement. - BS it will increase bank balance

3. Cash sales deposited into the bank amounting to $390 had been omitted from the Cash
Book. - CB increases cash book balance

4. The bank had received $150 by credit transfer (bank giro) from Klerk for Dlamini's
Account. Dlamini had not been advised. - CB increases cash book balance

5. A cheque for $315 received from Joseph had been paid into the bank but it had now
Been returned unpaid. No action has been taken by Dlamini. - CB decreases cash book balance

6. The following transaction by the bank had not been recorded in the Cash Book:
Bank charges $120 - CB decreases cash book balance

[Fidget1]

"b. Adjust bank statement balance to records items appearing in cash book but not in the bank statement - (BS)"

That's wrong. In a bank reconciliation you take the company cash/bank figure and make the necessary adjustments to it so that it agrees with the balance in the bank statement. You do not adjust the bank statement balance.

[Fidget1]

I've had a look into this, and discover that your method is actually fine, so it was quite wrong of me to dismiss it as incorrect. I do apologise.

[rehmanvohra]

I am glad I was of help. Thanks anyway, I was not offended by your earlier response.