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Difficulty: EasyPreparation of Bank Reconciliation Statement

The adjusted cash book of Kalu Traders shows a debit (favourable) balance of NGN 25,000\text{NGN } 25,000. Unpresented cheques total NGN 4,000\text{NGN } 4,000, while uncredited lodgements amount to NGN 3,000\text{NGN } 3,000. What is the balance as per the bank statement?

  1. \text{NGN } 26,000Answer
  2. B
    \text{NGN } 24,000
  3. C
    \text{NGN } 18,000
  4. D
    \text{NGN } 32,000

Answer

The balance as per the bank statement is NGN 26,000\text{NGN } 26,000.
To reconcile from an adjusted cash book debit balance to the bank statement balance, unpresented cheques are added because the bank has not yet deducted these payments, while uncredited lodgements are subtracted because the bank has not yet credited these deposits. Computing NGN 25,000+NGN 4,000−NGN 3,000\text{NGN } 25,000 + \text{NGN } 4,000 - \text{NGN } 3,000 gives NGN 26,000\text{NGN } 26,000.

Step-by-Step Solution

1
Identify the starting balance and reconciling items
Adjusted Cash Book Balance = NGN 25,000\text{NGN } 25,000; Unpresented Cheques = NGN 4,000\text{NGN } 4,000; Uncredited Lodgements = NGN 3,000\text{NGN } 3,000.
These items represent timing differences between the Cash Book and the Bank Statement.
2
Add unpresented cheques to the cash book balance
NGN 25,000+NGN 4,000=NGN 29,000\text{NGN } 25,000 + \text{NGN } 4,000 = \text{NGN } 29,000.
Unpresented cheques have been credited in the cash book but not yet debited by the bank, so they increase the bank statement balance relative to the cash book.
3
Deduct uncredited lodgements from the total
NGN 29,000−NGN 3,000=NGN 26,000\text{NGN } 29,000 - \text{NGN } 3,000 = \text{NGN } 26,000.
Uncredited lodgements have been debited in the cash book but not yet credited by the bank, so they must be subtracted when reconciling from the cash book to the bank statement.

Key Concept

Reconciliation of Adjusted Cash Book Balance to Bank Statement Balance
Estimated Time:45s
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Topics

Preparation of Bank Reconciliation Statement

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