Question

QUESTION 2 (BANK RECONCILIATION)

In the draft accounts for the year ended 31 October 2019 of Thomas, garage proprietor, the balance at bank according to the cash book was RM894.68 in hand.

Subsequently the following discoveries were made:

1. Cheque number 176276 dated 3 September 2019 for RM310.84 in favour of Gene Sdn Bhd has been correctly recorded in the bank statement, but included in the cash book payments as RM301.84.
2. Bank commission charged of RM169.56 and bank interest charged of RM109.10 have been entered in the bank statement on 23 October 2019, but not included in the cash book.
3. The recently received bank statement shows that a cheque for RM29.31 received from Andrews and credited in the bank statements on 9 October 2019 has now been dishonoured and debited in the bank statement on 26 October 2019. The only entry in the cash book for this cheque records its receipt on 8 October 2019.
4. Cheque number 177145 for RM15.10 has been recorded twice as a credit in the cash book.
5. Amounts received in the last few days of October 2019 totalling RM1,895.60 and recorded in the cash book have not been included in the bank statements until 2 November 2019.
6. Cheques paid according to the cash book during October 2019 and totalling RM395.80 were not presented for payment to the bank until November 2019.
7. Traders' credits totalling RM210.10 have been credited in the bank statement on 26 October 2019, but not yet recorded in the cash book.
8. A standing order payment of RM15.00 on 17 October 2019 to ABC Sdn Bhd has been recorded in the bank statement but is not mentioned in the cash book.

Required:

1. Prepare a computation of the balance at bank to be included in Thomas's statement of financial position as at 31 October 2019.
2. Prepare a bank reconciliation statement as at 31 October 2019 for Thomas.

Answer 1

(a) Computation of balance at bank as at 31 October, 2019
	RM
Balance at bank as per Cash Book before adjusting error	894.68
Adjustments :
(i) Recorded less payment to Gene Sdn Bhd for cheque no.176276	-9.00
So Cash book credited (301.84 - 310.84 )
(ii ) Received cheque dishonoured but not reversed in cash book.	-29.31
So reversed (credited) to Cashbook
(iii) Twice recorded received cheque no.177145 reversed (creddited) in	-15.10
Cashbook
Balance at bank as per Cash Book after adjusting error & ommission	841.27
(b) Bank Reconciliation Statement as at 31 October, 2019 for Thomas
	RM
Balance at bank as per Cash Book	841.27
Add:
Cheques paid (issued) but not cleared till date	395.80
Amount credited in bank from traders but not yet accounted in cashbook	210.10
Less:
Bank commission and interest charged in bank statement but	-278.66
not charged in cashbook (169.56 + 109.10)
Cheques deposited but not cleared till date	-1,895.60
Standing order payment credited in bank statement but not recorded in cashbook	-15.00
Balance at bank as per Bank Book (Bank Statement)	-742.09
Note: As balance as per bank book is negative. So it can be assumed that bank overdraft
facility is taken by Thomas garage.