2020 PHS 3E POA EOY P2 Q4

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

  

Debit

Credit

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]

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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. 

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