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WAEC Financial Accounting 2016 Question 5

Question 5

Banking and Bank Reconciliation

A bank statement shows an overdraft of GH¢ 190,000. Kofi, a debtor, paid GH¢400,000 into the account. The new bank balance is

  1. A.GH¢590,000.
  2. B.GH¢590,000 overdrawn.
  3. C.GH¢210,000.
  4. D.GH¢210,000 overdrawn.
Show the answer and explanation

Answer: C (GH¢210,000.)

Explanation

The lodgement first clears the 190,000 overdraft, leaving 400,000 - 190,000 = GH¢210,000 in credit (in favour of the customer).