The cash book balance before adjustments is $5 120. The following items need recording: Item $ Bank charges 65 Interest received 40 Dishonoured cheque 300 D...
Question 1 Report
The cash book balance before adjustments is $5 120. The following items need recording:
| Item | $ |
|---|---|
| Bank charges | 65 |
| Interest received | 40 |
| Dishonoured cheque | 300 |
| Direct credit from customer | 550 |
What is the updated cash book balance?
Answer Details
The correct answer is $5 345.
Starting with the cash book balance of $5 120, adjust for each item:
Bank charges of $65 are a payment out, so subtract: $5 120 - $65 = $5 055.
Interest received of $40 is money in, so add: $5 055 + $40 = $5 095.
Dishonoured cheque of $300 means a receipt previously recorded must be reversed, so subtract: $5 095 - $300 = $4 795.
Direct credit from customer of $550 is money in, so add: $4 795 + $550 = $5 345.
The updated cash book balance is $5 345.
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