The bank statement of a delivery round showed a balance of $1,742 in funds at 30 November. Cheques for $505 had not been presented and takings of $860 banke...

The reconciliation starts from the bank statement figure and adjusts it for the two items the bank has not yet processed. Takings already entered in the cash book but not yet credited are added, and cheques already entered in the cash book but not yet paid out by the bank are deducted, so the result is the balance the cash book should show once it has been brought up to date.

(a) Bank reconciliation statement at 30 November [3]

Working: $1,742 + $860 - $505 = $2,097 in funds. The takings are added because the money is already in the cash book and the bank will credit it in the next few days; the cheques are deducted because the cash book has already reduced the balance for payments the bank has yet to make.

(b) The cash book figure before the charges were entered [2]

The only entry made in bringing the cash book up to date was the bank charges of $37, which are credited in the cash book and therefore reduce the balance. To find the figure before that entry, the charges are added back: $2,097 + $37 = $2,134. [2]

The check is that the updating step must lower the balance, and $2,134 is indeed $37 higher than the updated $2,097.

The bank charges appear nowhere in the reconciliation statement itself, because by the time the statement is prepared the cash book has already absorbed them. Showing them again in the statement would count them twice.

Total [5].