Question

Question 3 - Bank Reconciliation (15 marks) Jane Pandu received her bank statement for the month ended 31 December 2015 on January 2016. The bank statement showed a balance of N$11 788 (overdraft) as at 31 December 2015 while the cash book (bank account) showed a negative balance of N$ 20 770 (credit) as at the date. On examination of the cash book and the bank statement the following were discovered 1) A dishonored cheque of N$ 770 had been recorded as cash receipts, in error, in the cash book (bank account: 2) Bank charges of N$33 had not been recorded in the cash book (bank account: 3) Pendukeni has an approved overdraft level of N$10,000 from her bank. The bank statement contains a penalty of N$100 as Pendukeni exceeded the approved overdraft level. This has not been recorded in the cash book (bank account 4) A cheque of N$50 to replenish the petty cash bax, was recorded in the bank account but omitted from the cash book (bank account); 5) Cash receipts of N$ 2 350 were posted as cash payments of N$ 3 700 in the cash book (bank account); 6) On 17th December Pendukeni deposited cash of N$305 to her personal bank account. This was lodged to the business bank account in error by the bank 7) Standing orders of N$385 had not been posted to the cash book (bank account) 8) Receivables of N$2 175 were deposited directly to the business bank account. No record had been made of this in the cash book (bank account: 9) Deposit of N$ 2 095, deposited to the bank account on 31 December 2015, had not been credited by the bank 10) The following cheques, drawn on the bank account, had not been presented to the bank for payment as at 31 December 2015 Cheque Number Date Cheque was written No: 1425 24 June 2015 463 NS No: 2651 513 No: 3001 11 November 2015 28 December 2015 2620 Page 9 of 13 No: 3010 31 December 2015 1 060 You are required to: a) Prepare the adjusted cash book for the month of December 2015 (10 Marks) b) Prepare a statement on 31 December 2015, reconciling the adjusted cash book (bank account with the bank statement balance. (5 Marks)

Answer 1

Considering the fact that there is an cheque of amount $771 which was again dishonoured but added as receipt in cash book between 1st Jan-5th Jan,2016, as we have cash balance of $ (20770) as on 5th Jan,2016.

So Cash balance as on 31st Dec,2015 on bank column of cashbook should be (20770)+ (771)= $ (21541)

a) Amended cashbook as at 31st Dec,2015:-

Dr	Cash Book (Amended Bank Column)		Cr
Particulars	Amount	Particulars	Amount
Cash receipt which was wrongly treated as payment	3700	By Balance b/d	21541
The actual cash receipt which should be recorded	2350	Dishonoured cheque recorded as receipt in the cashbook	770
Cash deposited in personal bank account but treated by bank in the business account	305	Bank charges not debited in cashbook	33
Receivable directly deposited in the bank account but not in cashbook	2175	Penalty for overdraft	100
Balance c/f	14349	Cheque to replenish the petty cashbook recorded in bank but omitted to be recorded in cashbook	50
		Standing orders not posted to the cashbook	385
Total	22879	Total	22879

b)

Date	Particulars			Amount (in $)
31/12/15	Balance as per Cashbook			-14349
Add:-
	Cheque ssued but not presented for payment:-
	Cheque No	Date	Amount
	1425	24 June,2015	463
	2651	11 Nov,2015	513
	3001	28 Dec,2015	2620
	3010	31 Dec,2015	1060	4656
				4656
Less:-
	Deposit to bank account on 31st December,2015, not credited by bank			2095
				2095
	Balance as per Bankbook			-11788