Question

QUESTION 3 BANK RECONCILIATION The following information was obtained from the records of Senegal Traders for May 2016. REQUIRED 3.1 Complete the Cash Receipts Journal and Cash Payments Journal of Senegal Traders for May 2016 after taking the information given into account. Use only the columns illustrated below. In the details column write down the name of the contra account e.g. Rent income. Cash Receipts Journal Details Bank Cash Payments Journal Details Bank 3.2 Post to the Bank account in the General Ledger. Balance the account. 3.3 Prepare the Bank Reconciliation Statement as at 31 May 2016. Note: The balance of the bank statement should be calculated by using the Bank Reconciliation Statement. INFORMATION 1. A comparison of the May 2016 bank statement with the Bank Reconciliation Statement for April 2016 revealed the following: 1.1. Cheque no. 510 for R700 is now stale. The cheque was issued to Umlazi Chess Club as a donation. The club no longer exists. A cancellation entry is required. 1.2. Cheque no. 750 for R800 has not yet been presented to the bank for payment. 2. The bank account of Senegal Traders reflected a favourable balance of R1 000 on 01 May 2016. The bank columns of the cash journals reflected the following totals on 31 May 2016, before the May 2016 bank statement was received: Cash Receipts Journal R40 000 Cash Payments Journal R36 000 3. A comparison of the cash journals with the bank statement from RSA Bank for May 2016 revealed the following: 3.1. An electronic funds transfer of R3 000 was made into the bank account of Senegal Traders by P. Pan, whose account was previously written off as irrecoverable. 3.2. A debit order for R1 000 in favour of KLM Insurers for the firm's motor vehicles insurance appeared on the bank statement. 3.3.A cheque for R1 500, received from debtor K. Maple in settlement of a debt of R1 600, was dishonoured by the bank due to insufficient funds.

Answer 1

The cash journals can be prepared as under:

Cash Receipts Journal
Details	Bank
Cash receipts for the month of May 2016	40,000
Accounts Receivable- P. Pan	3,000
Accounts Receivable-K. Maple cheque dis-honoured by bank	(1,500)
Total cash receipts for the month of May 2016	41,500

Cash receipts to be decreased by K. Maple's cheque dis-honoured by bank

Cash Payments Journal
Details	Bank
Cash payments for the month of May 2016	36,000
Stale cheque no. 510 cancelled in books	(700)
Insurance expense- KLM insurers	1,000
Stationery-cheque no. 783 recorded for 5100 instead of 1500	(3,600)
Service fee	400
Cash deposit fees	150
Internet banking fee	30
Total cash payments for the month of May 2016	33,280

Cash payment journal to be reduced by stale cheque to be written off in the books of accounts.

Stationery-cheque no. 783 recorded for R 5100 instead of R 1500. Cheque recorded by higher amount in jpournal so difference amount is to be reduced from journal i.e. R 3600 ( 5100 - 1500)

Bank general ledger to be made as under:

Bank A/c
Particulars	Dr Amount	Particulars	Cr Amount
Balance as on 01 May 2016	1,000	Total cash payments for the month of May 2016	33,280
Total cash receipts for the month of May 2016	41,500	Balance as on 31 May 2016	9,220
	42,500		42,500

Balance as on 31 May 2016 = 41500 + 1000 - 33280 = R 9,220

Bank reconciliation statement to be made as under:

Bank reconciliation statement
Bank balance as per books		9,220
Add:
Cheque no. 750 yet not presented in bank	800
Cheque no. 777 yet not presented in bank	4,000
Errorneous deposit reflected in bank	7,000	11,800
Less:
Deposit not reflected in bank statement	8,000	8,000
Balance as per bank statement		13,020

Note: All the adjustments which are to be made in cash journals will be made in books of accounts i.e. in cash journals. Only adjustments which are to be posted by bank in their bank statement will be shown in bank reconciliation statement.