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 | 42001 | 5 100 | 9 970 Dr | |||
9 | Fariq Supplies | 42002 | 2 060 | 7 910 Dr | ||
16 | 8 170 | 16 080 Dr | ||||
20 | Salaries | 42003 | 7 350 | 8 730 Dr | ||
20 | Liza Holdings | 2 460 | 11 190 Dr | |||
23 | 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 | |||
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]
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”.