Question

PLEASE TURN OVER Question 3 20 Marks The following is a summary of a cash book as presented by George Ltd for the month of October: Receipts Balance c/d 1,469 554 2,023 Balance b/d Payments 761 1,262 2,023 All receipts are banked and all payments are made by cheque On investigation you discover: (1) Bank charges of R136 entered on the bank statement have not been entered in the cash book. (2) Cheques drawn amounting to R267 had not been presented to the bank for payment. (3) Cheques received totaling R762 had been entered in the cash book and paid into the bank, but had not been credited by the bank until 3 November. (4) A cheque for R22 for sundries had been entered in the cash book as a receipt instead of as a payment. (5) A cheque received from K Jones for R80 had been returned by the bank and marked 'No funds available'. No adjustment has been made in the cash book. (6) A standing order for a business rates instalment of R150 on 30 October had not been entered in the cash book. (7) All dividends received are credited directly to the bank account. During October amounts totaling R62 were credited by the bank but no entries were made in the cash book. (8) A cheque drawn for R66 for stationery had been incorrectly entered in the cash book as R60. (9) The balance brought forward in the cash book should have been R711, not R761. Required: (a) Show the adjustments required in the cash book. (b) Prepare a bank reconciliation statement as at 31 October.

Answer 1

Sol:

(a) Cash A/C

Receipts	1469	Balance B/d	711
cheque not presented for payment	267	Payments	1262
Dividend received	62	Bank Charges not recorded in cash book	136
Balance c/d	1353	Cheque deposited but not cleared	762
		Business rate instalment not recorded in cash book	150
		stationery adjustment	6
		Cheque dishonoured from K jones	80
		Payments recorded as receipt	44
	3151		3151

(b)

Bank Reconciliation Statement

(as on 31st October)

Balance as per Cash Book		554
Add: cheque drawn but not presented for payment	267
Dividend received but not recorded in cash book	62	329
		883
Less: Bank Charges not recorded in cash book	136
Cheque deposited but not cleared	762
Business rate instalment not recorded in cash book	150
Cheque of R66 issued for stationery wrongly entered as R60 in cash book	6
Cheque dishonoured received from K jones	80
Adjustment of Balance brought forward in cash book	50
Payments of R22 recorded as receipt in cash book	44	1228
Balance as per pass book		-345