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Difficulty: MediumPreparation of Bank Reconciliation Statement

The bank statement of Adebayo Stores showed an overdraft balance of NGN 18,500\text{NGN } 18,500 as at 31st March 2026. On examination of the accounting records, it was discovered that unpresented cheques amounted to NGN 6,200\text{NGN } 6,200, while uncredited lodgements were NGN 4,800\text{NGN } 4,800. What is the balance as per the cash book?

  1. Overdraft of NGN 19,900\text{NGN } 19,900Answer
  2. B
    Overdraft of NGN 17,100\text{NGN } 17,100
  3. C
    Overdraft of NGN 24,700\text{NGN } 24,700
  4. D
    Overdraft of NGN 7,500\text{NGN } 7,500

Answer

Overdraft of NGN 19,900\text{NGN } 19,900
To reconcile from the Bank Statement Overdraft of NGN 18,500\text{NGN } 18,500 to the Cash Book balance, we add uncredited lodgements (NGN 4,800\text{NGN } 4,800) and deduct unpresented cheques (NGN 6,200\text{NGN } 6,200). This calculation yields −NGN 18,500+NGN 4,800−NGN 6,200=−NGN 19,900-\text{NGN } 18,500 + \text{NGN } 4,800 - \text{NGN } 6,200 = -\text{NGN } 19,900, representing an overdraft of NGN 19,900\text{NGN } 19,900.

Step-by-Step Solution

1
Identify the starting position
Bank Statement Overdraft balance = −NGN 18,500-\text{NGN } 18,500
An overdraft is a negative/debit bank balance.
2
Add uncredited lodgements to the bank statement overdraft balance
−NGN 18,500+NGN 4,800=−NGN 13,700-\text{NGN } 18,500 + \text{NGN } 4,800 = -\text{NGN } 13,700
Uncredited lodgements have been entered on the debit side of the cash book but not yet credited by the bank, so they reduce the bank overdraft when arriving at the cash book balance.
3
Subtract unpresented cheques from the subtotal
−NGN 13,700−NGN 6,200=−NGN 19,900-\text{NGN } 13,700 - \text{NGN } 6,200 = -\text{NGN } 19,900
Unpresented cheques have been credited in the cash book but not yet debited by the bank, so deducting them yields the cash book overdraft balance.

Key Concept

Reconciliation of Bank Statement Overdraft to Cash Book Balance
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Topics

Preparation of Bank Reconciliation Statement

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