2020 PHS 3E POA EOY P2 Q4
4 The following cash at bank account was prepared by Ho Ming for the month of July 2020.
Cash at Bank Account | |||||
2020 | Balance | ||||
$ | $ | $ | |||
Jul | 1 | Balance b/d | 8 512 Dr | ||
2 | Salaries (cheque no. 52) | 1 336 | 7 176 Dr | ||
6 | Cheng (cheque no. 53) | 2 392 | 4 784 Dr | ||
11 | Commission | 532 | 5 316 Dr | ||
16 | Rent (cheque no. 54) | 1 200 | 4 116 Dr | ||
19 | Jordan | 596 | 4 712 Dr | ||
19 | Nicky (cheque no. 55) | 3 416 | 1 296 Dr | ||
23 | Joey | 52 | 1 348 Dr | ||
26 | Insurance (cheque no. 56) | 492 | 856 Dr | ||
Aug | 1 | Balance b/d | 856 Dr | ||
The following bank statement was received from the bank on August 2.
Bank Statement as at 31 July 2020 | |||||
Date | Withdrawal | Deposit | Balance | ||
2020 | $ | $ | $ | ||
Jul | 1 | Balance b/d | 10 916 Cr | ||
4 | Cheque 52 | 1 336 | 9 580 Cr | ||
8 | Cheque 53 | 2 392 | 7 188 Cr | ||
10 | Cheque 50 | 2 404 | 4 784 Cr | ||
12 | Cheque | 532 | 5 316 Cr | ||
17 | Direct payment: Utilities | 1 600 | 3 716 Cr | ||
19 | Cheque | 596 | 4 312 Cr | ||
23 | Credit transfer: Shane | 4 800 | 9 112 Cr | ||
25 | Cheque 55 | 3 416 | 5 696 Cr | ||
30 | Interest income | 80 | 5 776 Cr | ||
31 | Cheque returned | 596 | 5 180 Cr | ||
REQUIRED
a. Suggest a reason for the cheque to be returned on July 31.
[1]
b. Update the cash at bank account and bring the updated balance to 1 August 2020.
[4]
c. Prepare a bank reconciliation statement to explain the discrepancy between the updated cash at bank balance and the bank statement balance.
[4]
d. State the amount of cash at bank balance to be shown in the statement of financial position on 31 July 2020.
[1]
e. Explain why it is important for businesses to perform bank reconciliation regularly.
[3]
[TOTAL 13]
Errors on the cheque – unauthorised signature, wrong name,
inconsistency for amount in word and figure.
Post-dated cheque
Stale or expired cheque
Drawer has insufficient fund in his bank account.
$3 540
Bank reconciliation is a form of internal control over cash.
With regular performance of bank reconciliation, it deters fraud and
allows business to check on its cash at bank balances for possible fraud and errors
Bank reconciliation process also updates the cash at bank account
balance, allowing the business to have the updated cash at bank
figure for better decision making.