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Difficulty: MediumCauses of Discrepancies Between Cash Book and Bank Statement

On 30th June 2026, the Cash Book bank column of Emeka Enterprises showed a debit balance of NGN 45,000\text{NGN } 45,000. Upon comparison with the Bank Statement, the following items causing discrepancies were identified:

- Direct credit for dividends received directly by the bank: NGN 2,500\text{NGN } 2,500
- Bank charges not yet recorded in the Cash Book: NGN 1,200\text{NGN } 1,200
- Standing order payment for insurance: NGN 3,000\text{NGN } 3,000
- Unpresented cheques: NGN 8,500\text{NGN } 8,500
- Uncredited lodgements: NGN 5,400\text{NGN } 5,400

What is the adjusted Cash Book balance in NGN prior to preparing the Bank Reconciliation Statement?

Answer: 43300 NGN

Answer

The adjusted Cash Book balance is NGN 43,300.
The adjusted Cash Book balance is calculated by taking the initial Cash Book debit balance of NGN 45,000\text{NGN } 45,000, adding unrecorded direct credits (dividends of NGN 2,500\text{NGN } 2,500), and deducting unrecorded bank payments/charges (bank charges of NGN 1,200\text{NGN } 1,200 and standing order of NGN 3,000\text{NGN } 3,000), giving NGN 43,300\text{NGN } 43,300. Unpresented cheques and uncredited lodgements do not adjust the Cash Book because they are already present in the Cash Book.

Step-by-Step Solution

1
Categorize the discrepancy items based on accounting treatment.
Direct credit (NGN 2,500\text{NGN } 2,500), bank charges (NGN 1,200\text{NGN } 1,200), and standing order (NGN 3,000\text{NGN } 3,000) require entries in the Cash Book. Unpresented cheques and uncredited lodgements are timing differences handled in the reconciliation statement.
The Cash Book must first be updated for items that the bank has processed but the enterprise has not yet entered.
2
Calculate the updated Cash Book balance.
NGN 45,000+NGN 2,500−NGN 1,200−NGN 3,000=NGN 43,300\text{NGN } 45,000 + \text{NGN } 2,500 - \text{NGN } 1,200 - \text{NGN } 3,000 = \text{NGN } 43,300.
Direct receipts increase the debit balance, whereas unrecorded payments and fees decrease it.

Key Concept

Distinguishing Cash Book adjustment items (unrecorded bank transactions) from Bank Reconciliation Statement items (unpresented cheques and uncredited deposits).
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Topics

Causes of Discrepancies Between Cash Book and Bank Statement

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