Question Tag: Reconciling Items

b) Mensah is preparing his bank reconciliation for the month of June 2022. His bank statement shows a balance of GHȼ1,824 cash at the bank. The balance on the cashbook in his general ledger is GHȼ645 (credit).

He has identified the following reasons for the difference:

1. The bank has credited the account in error with GHȼ485, which belongs to another customer.
2. A cheque drawn, amounting to GHȼ345, has been entered in the cashbook as GHȼ354.
3. Bank charges of GHȼ320 on the bank statement have not been entered in the cashbook.
4. Cheques totalling GHȼ664 have been correctly entered on the debit side of the cashbook but have not been paid in at the bank.
5. A customer’s cheque for GHȼ460 was returned by Mensah’s bank in June as the customer had insufficient funds in his account. Mensah has not recorded the return of the cheque in his records.
6. Six cheques have not yet been presented at the bank. These are:

7. Cheque number 845739 was lost and was cancelled. Mensah has not recorded the cancellation of the cheque.

Required:

i) Prepare the adjusted cashbook for Mensah in a format which clearly indicates whether each entry is a debit or credit. (7 marks)

ii) Prepare a reconciliation of the bank statement balance to the adjusted cashbook balance. (7 marks)