State the reasons of the following statement: The balance in the cash column of the cash...
State the reasons of the following statement:
- The balance in the cash column of the cash book is always a debit balance where as that in the bank column is sometimes credit also.
- Contra entries in the cash book are not posted into the ledger.
- The cash account and the bank account are not posted in the ledger.
Homework Answers
1) Solution: In the cash book the cash column of will always reflect a debit balance as cash payment would never exceed the cash in hand; however for the banks there can be overdraft thus the bank column may at sometimes can show credit balance also
2) Solution: In the ledger folio column contra entries are marked with letter "C". These are not posted into the ledger because both the accounts i.e. Bank Account and Cash Account appear in the cash book
3) Solution: Contra entries are the entries which mainly impacts two accounts, Cash Account and Bank Account simultaneously. Both of these accounts appear together in the Cash Book thus impact of Contra Entries is completed in Cash Book itself and consequently there is no requirement to post them in the ledger
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State the reasons of the following statement:
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The following information is available to reconcile Branch
Company’s book balance of cash with its bank statement cash balance
as of July 31, 2017.
On July 31, the company’s Cash account has a $25,752 debit
balance, but its July bank statement shows a $26,965 cash
balance.
Check No. 3031 for $1,070 and Check No. 3040 for $527 were
outstanding on the June 30 bank reconciliation. Check No. 3040 is
listed with the July canceled checks, but Check No. 3031 is...
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