- 10 Marks
FA – L1 – Q56 – Bank reconciliations
Reconcile cash book with bank statement for Sandwell Ltd, adjust ledger for unrecorded items.
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?
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