The cash book shows a bank balance of £2,675 overdrawn at 30 September 20X1. It is discovered that a dishonoured cheque for £450 has been debited to the cash book instead of credited and a standing order for £125 has been entered twice.
The correct bank balance should be:

Question

Quizplus · Accepted Answer

The dishonoured cheque should be credited, not debited, so add £450 to the balance. The standing order was entered twice, so subtract £125 once. The corrected balance is £2,675 + £450 - £125 = £3,000 overdrawn.

The Cash Book Shows a Bank Balance of £2,675 Overdrawn