A company had a debit bank balance of R50,000 on 1 August 2017. During August, total payments were R640,000 and total receipts were R595,000. Bank charges of R15,000 had not yet appeared on the bank statement. What is the cash book balance at 31 August 2017?Group of answer choicesA. R10,000 balanceB. R5,000 balanceC. R5,000 overdrawnD. R10,000 overdrawn
Question
A company had a debit bank balance of R50,000 on 1 August 2017. During August, total payments were R640,000 and total receipts were R595,000. Bank charges of R15,000 had not yet appeared on the bank statement. What is the cash book balance at 31 August 2017?Group of answer choicesA. R10,000 balanceB. R5,000 balanceC. R5,000 overdrawnD. R10,000 overdrawn
Solution
To find the cash book balance at the end of August, we need to follow these steps:
- Start with the initial debit bank balance of R50,000.
- Subtract the total payments made during August, which is R640,000. This gives us a balance of R50,000 - R640,000 = -R590,000.
- Add the total receipts during August, which is R595,000. This gives us a balance of -R590,000 + R595,000 = R5,000.
- Subtract the bank charges that have not yet appeared on the bank statement, which is R15,000. This gives us a balance of R5,000 - R15,000 = -R10,000.
So, the cash book balance at 31 August 2017 is -R10,000, which means the account is overdrawn by R10,000. Therefore, the correct answer is D. R10,000 overdrawn.
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