2020 USS 3N POA EOY P2 Q2

2020 USS 3N POA EOY P2 Q2

2 Gabrielle has a furniture business. Details from the cash at bank account and bank statement of the business for the month of January 2020 are as follows:

Cash at Bank Account

Date

2020

Particulars

Cheque Number

Debit $

Credit $

Balance $

Jan

1

Balance b/d

   

11 350 Dr

 

3

Colin Trading

 

3 720

 

15 070 Dr

 

7

Inventory

42001

 

5 100

9 970 Dr

 

9

Fariq Supplies

42002

 

2 060

7 910 Dr

 

16

Sales revenue

 

8 170

 

16 080 Dr

 

20

Salaries

42003

 

7 350

8 730 Dr

 

20

Liza Holdings

 

2 460

 

11 190 Dr

 

23

Drawings

42004

 

1 990

9 200 Dr

 

25

Cash in hand

 

1 300

 

10 500 Dr

 

28

Harris Trading

42005

 

3 420

7 080 Dr

       

Feb

1

Balance b/d

   

7 080 Dr

Bank Statement

Date

Particulars

Withdrawal

Deposit

Balance

2020

 

$

$

$

Jan

1

Balance b/d

  

11 350 Cr

 

4

Cheque deposit

 

3 720

15 070 Cr

 

6

Credit transfer: Danny Co

 

1 050

16 120 Cr

 

10 

Cheque no: 42001

5 100

 

11 020 Cr

 

15

Cheque no: 42002

2 060

 

8 960 Cr

 

18

Cash

 

8 170

17 130 Cr

 

20

Standing order: Insurance

1 220

 

15 910 Cr

 

22

Cheque no: 42003

7 350

 

8 560 Cr

 

26

Cash deposit

 

1 300

9 860 Cr

 

27

Direct payment: Deli Ltd 

3 630

 

6 230 Cr

 

29

Cheque no: 42004

1 990

 

4 240 Cr

 

31

Interest

  

  120  

4 360 Cr

REQUIRED

a. Prepare the adjusted cash at bank account for January 2020.

[5]

b. Prepare the bank reconciliation statement as at 31 January 2020.

[4]

c. State the effect of bank reconciliation adjustments on profit for the month ended 31 January 2020

[1]

d. State one reason why it is important for a business to prepare a bank reconciliation.

[1]

e. Describe the transactions which took place on the following dates in the cash at bank account.

[2]

i. 16 January 2020

ii. 25 January 2020

f. Suggest one reason why a bank would return a cheque marked dishonoured.

[1]

[TOTAL 14]

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Profit will decrease by $(1220 - 120) = $1100

To check for fraud

To identify and correct errors in recording transactions

To identify the transactions that cause the difference

To show the accurate bank balance after updating the CAB

To account for for the difference between the balance in the CAB

(i) Received a cheque of $8170 for goods sold

(ii) Deposited office cash $1300 into the business bank account

Insufficient funds in the payer's bank account

Information on cheque is incomplete eg. No date, no signature, no amount, etc.

Information on cheque is inconsistent.

Cheque is post-dated.

Cheque has expired or become "stale".

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