Question

30 june 2020 the balance of a entity bank statement was R500 overdrawn ,on the same date outstanding cheques amounted to R1000 and outstanding deposits to R3500 in the bank reconciliation statemnet. the balance as per bank account in the entities general ledger was ?

a. R4000debit
b.R5000 credit
c.R2000 debit
d.R3000 credit

Answer 1

A bank reconciliation is needed when the balance in the bank account of an entity's ledger is to be reconciled to the balance in the bank statement in a given date. Such reconciliation is made by identifying the reason for difference in both balances and by making adjustments to rectify it.

The correct answer is c. R2,000 debit.
The balance as per bank account of entity's general ledger is determined by preparing a bank reconciliation statement. It starts with the balance as per bank statement which is R500 overdrawn[(R500)]. Cheques outstanding R1,000 means, cheques issued by entity and in their ledger, bank account is deducted by R1,000. But the cheque is not presented into the bank for payment and therefore bank is not deducted till date. Hence, such deduction is made from the bank balance in the reconciliation statement. [(R500) - R1,000 = (R1,500)]
Then, deposits outstanding R3,500 means, check deposited into bank by entity and added the same in the entity's ledger bank account. But, the bank didn't collect the money and not added till the date. Hence, such addition is made in the reconciliation statement. [(R1,500) + R3,500 = R2,000]

R2,000 in bank statement means debit balance as per bank account in the entity's general ledger. Hence, the correct answer is R2,000 debit.