After correcting its cash book, a business has a debit (cash at bank) balance of $5,675. The remaining differences with the bank statement are unpresented cheques of $2,860 and outstanding lodgements of $1,940. There are no other differences. What balance should be shown on the bank statement?

Correct answer: B) $6,595

Explanation

Start from the corrected cash book balance and reverse the timing differences. Cheques written but not yet presented have not reduced the bank balance, so they are added. Lodgements not yet credited by the bank are deducted: $5,675 + $2,860 - $1,940 = $6,595. Applying the timing differences the wrong way round gives $4,755, and adding both gives $10,475.