- 20 Marks
FA – L1 – Q65 – Bank Reconciliations
Demonstrate adjustments needed to KW Ltd's cash book for July 20X9 due to errors and unrecorded transactions.
Question
The following is a summary from the cash book of KW Ltd for July 20X9:
| Opening balance | 1,530 |
|---|---|
| Receipts | 23,104 |
| Payments | 23,005 |
| Closing balance | 1,629 |
On investigation it was discovered that:
(i) Bank charges of GH₵15 shown on the bank statement have not been entered in the cash book.
(ii) A cheque drawn for GH₵110 to pay a supplier has been entered in the cash book as a receipt.
(iii) A cheque from a customer for GH₵120, which was banked (and included above in receipts), has been returned by the bank, but this has not been adjusted in the company’s books.
(iv) An error of transposition which occurred in the opening balance of the cash book should have been recorded as GH₵1,350.
(v) Cheques totaling GH₵264 have been sent by post to suppliers but were not presented to the company’s bank until August 20X9.
(vi) The last page of a bank account paying-in book shows a deposit of GH₵1,040 which was not credited to the account by the bank until 1st August 20X9.
(vii) The company’s bank statement at 31st July 20X9 shows a balance of GH₵318.
Required:
(a) Demonstrate any adjustments needed to the company’s accounting records.
(b) Prepare a Bank Reconciliation Statement as at 31st July 20X9.
(c) Explain THREE benefits to KW Ltd of reconciling its cash book and bank statement balances.
Find Related Questions by Tags, levels, etc.
- Tags: Adjustments, Bank reconciliation, Bank statement, Cash book, Cheques, Deposits, Error Correction, Financial accounting
- Level: Level 1
- Topic: Bank reconciliations
