- 10 Marks
FA – L1 – Q56 – Bank reconciliations
Question
A company, Sandwell Ltd, receives a bank statement. The balance on its cash book (= bank account in the main ledger) is a debit balance of GH₵1,600,000. In reconciling the cash book balance with the bank statement balance, the accountant discovers that the bank statement does not show cheques received from customers for GH₵8,200,000 and banked, or cheque payments to suppliers for GH₵4,700,000. The bank statement also shows bank charges of GH₵150,000, a direct debit payment of GH₵400,000, and a dishonoured cheque for GH₵300,000. None of these three items have yet been recorded in the ledger.
Required:
- What is the balance on the bank statement?
- What entries should be made in the company’s ledger accounts when the cash book and the bank statement balances have been reconciled?
Answer
(a) Balance on the bank statement
| Bank Reconciliation Statement | GH₵ |
|---|---|
| Balance as per cash book | 1,600,000 |
| Add: Cheques received not yet credited | 8,200,000 |
| Less: Cheques paid not yet presented | (4,700,000) |
| Less: Bank charges | (150,000) |
| Less: Direct debit payment | (400,000) |
| Less: Dishonoured cheque | (300,000) |
| Balance as per bank statement | 4,250,000 |
(b) Entries to be made in the company’s ledger accounts
| Account | Dr (GH₵) | Cr (GH₵) |
|---|---|---|
| Bank charges | 150,000 | |
| Bank account | 150,000 | |
| Direct debit expense | 400,000 | |
| Bank account | 400,000 | |
| Accounts receivable | 300,000 | |
| Bank account | 300,000 |
- Topic: Bank reconciliations
- Uploader: Samuel Duah