Question

Despite all your efforts Mark is still concerned that he has very little money in the bank according to his bank statement. He has been speaking to his cousin Randy who has shown him some of the records of Deafening Racket which show the studio has a very healthy cash position at the end of September despite writing out a cheque of $15,000 to make sure Mark was liquid enough to pay some upcoming bills.

September Bank Statement
Date	Particulars	Debits	Credits	Balance
Sep-01				$ 5193 Cr
2		363	5992	10822 Cr
3			1560	12382 Cr
9	1568	$3645		8737 Cr
13			7756	16493 Cr
15			5272	21765 Cr
16	1570	2813		18952 Cr
23	1571	5497		13455 Cr
	Direct Deposit		3 988	17443 Cr
	Account Fees	276		17167 Cr
	Interest		87	17254 Cr
		TOTAL DEBITS $12 594	TOTAL CREDITS $24 655

Cash Receipts Journal			Cash Payments Journal
Date	Cash at bank		Cheque no		Cash at bank	Deafening Racket
September						Bank Reconciliation Statement
1	$1560		1568		$3645	as at 30 September
12	7756		1569		2394	Balance as per bank statement					$17254 Cr
16	5272		1570		2813	Add:
29	1830		1571		5497	Outstanding Deposit					1830
TOTAL	$16 418		TOTAL		$14 349
						Less:
October						Unpresented	# 1569				2394
3	1 820			1572	15000	cheques:
7	1460			1573	6850
12	2560			1574	3795	Balance as per
24	6980			1575	4227	Cash at Bank account					$16690 Dr
30	1000			1576	2138
TOTAL	$13 820			TOTAL	$32 010

Deafening Racket had a Debit Balance of $10822 in their Cash at Bank account at the end of August.

REQUIRED:

1. Using all of the information above calculate the Cash at Bank balance September. [6 marks]

2. Complete the bank reconciliation for Perfect Cover Insurance Brokers for September. [5 marks]

3. Explain the importance of determining if the bank statement shows a debit or credit balance at the end of the month when doing a bank reconciliation. [4 marks]

Answer 1

COMMENTS:

Stunning Racket has not thought about the impact of direct stores in bank, Interest, and record expenses in his compromise, consequently the right parity according to money diary is $ 12891 rather than S16690

We can likewise check the money balance by doing the accompanying estimation as under:

Opening balance of cash journal as on 01 September 10822

Add: Cash at bank receipts in September 16418

Less: Cash at bank payment in September (14349)

Balance as on 30 September 12891

Bank Reconciliation Statement as on 30 September

   Amount ($)

Balance as per Bank Statement 17254

Add: Cheques deposited but not cleared 1830

Less: Cheques issued but not deposited in bank (2394)

Add: Account Fees debited in bank but not recorded in cash book 276

Less: Direct deposit in bank not recorded in cash book (3988)

Less: Interest credited in bank not recorded in cash book (87)

Balance as per cash journal as on 30 September 12891