I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART E: PREPARING A TRIAL BALANCE 

 

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(ii) 

Cheques received by the business, paid into the bank and debited in the cash book, but 

which have not yet been cleared and entered in the account by the bank, and so do not yet 

appear on the bank statement. These are commonly known as outstanding lodgements or 

deposits credited after date.  

(iii) 

Electronic payments that have not yet been cleared.  

 

 

3

   Worked examples 

When the differences between the bank statement and the cash book are identified, the cash book must 

be corrected for any errors or omissions. Any remaining difference can then be shown to be due to timing 

differences. 

3.1 Example: bank reconciliation 

At 30 September 20X6, the balance in the cash book of Wordsworth Co was $805.15 debit. A bank 

statement on 30 September 20X6 showed Wordsworth Co to be in credit by $1,112.30. 

On investigation of the difference between the two sums, it was established that: 

(a) 

The cash book had been undercast by $90.00 on the debit side* 

(b) 

Cheques paid in not yet credited by the bank amounted to $208.20, called outstanding 

lodgements 

(c) 

Cheques drawn not yet presented to the bank amounted to $425.35 called unpresented cheques 

* Note. 'Casting' is an accountant's term for adding up. So, being 'undercast' means that the total figure 

included on the debit side of the cash book was $90.00 lower than it should have been. 

Required 

(a) 

Show the correction to the cash book. 

(b) 

Prepare a statement reconciling the balance per bank statement to the balance per  

cash book. 

Solution 

(a) CORRECTED 

CASH 

BOOK 

 

 

$  

Cash book balance brought forward 

 

805.15 

Add 

 

Correction of undercast 

 

  90.00 

Corrected balance 

 

895.15 

(b) BANK 

RECONCILIATION 

 

 

      

$   

Balance per bank statement 

 

 1,112.30 

Add outstanding lodgements 

 

   208.20 

 

 

 1,320.50 

Less unpresented cheques 

 

 

 

(425.35)

Balance per cash book 

 

   895.15