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 | 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 | 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 | 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 | 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]
$ 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.