2020 JYSS 3E POA EOY P2 Q2

2020 JYSS 3E POA EOY P2 Q2

2 Ahmad runs a hardware retail trading business.  Details from the cash at bank account and bank statement of the business for the month of April 2020 are as follows:

Cash at bank account

Date

Particulars

Cheque number

Debit $

Credit $

Balance $

2020

     

April   1

Balance b/d

   

14 200 Dr

           5

Inventory

221120

 

11 100

3 100 Dr

           6

Interest income

 

450

 

3 550 Dr

           9

JJ Trading

 

2 900

 

6 450 Dr

          11

Sng Traders

221121

 

330

6 120 Dr

          13

PP Supplies

221122

 

826

5 294 Dr

          19

Laila Ltd

 

1 293

 

6 587 Dr

          27

Sales revenue

 

1 700

 

8 287 Dr

          28

Amin Ltd

221123

 

641

7 646 Dr

      

May    1

Balance b/d

   

7 646 Dr

Bank statement at 30 April 2020

Date      

2020

Particulars

Withdrawals $

Deposits $

Balance $

April 1

Balance b/d

  

17 100 Cr

         2

Cheque No. 221119

2 900

 

14 200 Cr

         4

Direct deposit: Ki Ltd

 

1 706

15 906 Cr

         7

Cheque No. 221120

11 100

 

4 806 Cr

        13            

Cheque No. 221121

330

 

4 476 Cr

        14

Cheque

 

2 900

7 376 Cr

        15

Rent income

 

1 661

9 037 Cr

        16

Direct debit – Insurance

440

 

8 597 Cr

        21

Cheque

 

1 293

9 890 Cr

        22

Cheque returned

1 293

 

8 597 Cr

        30

Bank charges

50

 

8 547 Cr

REQUIRED

a. Update the cash at bank account at 30 April 2020 and bring down the corrected balance

[6]

b. Prepare a bank reconciliation statement on 30 April 2020.

[4]

c. What is the cash at bank balance that will be shown in the statement of financial position on 30 April 2020?

[1]

d.  State one purpose for preparing a bank reconciliation statement.

[1]

e. Explain why Cheque No. 221119 appears in the bank statement and not in the cash at bank account.

[2]

f. Why is the cheque on April 22 returned ? 

[1]

g. Besides bank reconciliation, name and explain one internal control over cash.

[2]

[TOTAL 17]

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$ 9 230

- to compare the business’ records with bank’s records to identify items that caused the difference between the ending balances in the business cash at bank account and the bank statement.

         - to identify errors

         - to deter fraud

         - to drive the adjusted cash at bank balance to be shown in the statement of position

This cheque was that was not presented in the previous month and it was issued by the business in the previous month and adjusted in the cash at bank account then.

It is returned/dishonored because of :

        Expired, post dated, not consistent information, incomplete information, payer’s account is closed frozen or has not enough money.

- Segregation of duties. It involves the separation of cash handling and cash recording duties among different employees so that no single person has control over the entire cash process. For example, businesses can ensure different employees receive and deposit cash, authorise invoices for payment and process payment to suppliers and write and sign cheques.

Authorisation. It refers to obtaining proper approvals for all payments from authorised personnel. A business may require at least two persons to review and approve payments involving large amounts that the business consider as significant to decision-making and require valid supporting documents for all payments

Custody of cash – cash and cheques are locked in storage, limit access to it. Deposit cash daily.

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