Topic: Accounting Records

The accounts clerk of Eat Well Ventures has completed the financial statements for the year ended 31/12/2022.

While checking the cash book against the bank statement and carrying out other audit checks, the following were discovered: a. A cheque for $\mathrm{GH} \in 50,000$ had been entered in the cash book but had not yet been presented. b. Cheques from customers totaling $\mathrm{GH} \in 72,250$ entered in the cash book on 31/12/2015 were credited by the bank on $31 / 1 / 2023$. c. Bank charges of GHc80 appear in the bank statement but had not been recorded in the books of Eat Well Ventures. d. A cheque for $$\G \mathrm{c} 2 25,500$ drawn by the business to pay for a new item of plant had been mistakenly entered into the cash book and the plant account as $\mathrm{G} \mathrm{c} \mathrm{c} 2,500$. e. A cheque for $\mathrm{G} \mathrm{H} \mathrm{c} 24,500$ from a credit customer paid on $23 /12 / 2022$ was dishonoured. f. A cheque for $\mathrm{G} \mathrm{H} \mathrm{c} 60,000$ in payment for some motor repairs had mistakenly been entered in the cash book as a debit and posted to the credit of motor vehicle account. g. The total of the payments side of the cash book had been understated by $\mathrm{G} \mathrm{H} \mathrm{c} 25,000$. On further investigation, it was found that the debit side of the purchases account had also been understated by $\mathrm{G} \mathrm{H} \mathrm{c} 25,000$. h. The cash book showed a debit balance of $\mathrm{G} \mathrm{H} \mathrm{c} 420,250$ before any correcting entries had been made.

You are required to: i. Prepare an adjusted cash book showing the revised balance which should appear in the balance sheet of Eat Well Ventures as at 31/12/2022. (7 marks) ii Prepare the bank reconciliation statement of Eat Well Ventures as at 31/12/2022. (8 marks) iii) State five causes of discrepancies between the bank balance shown by the bank statement and that shown by the cash book of the business. (5 marks)

(Total: 20 marks)