Question

Nose Mask Ltd (Nose Mask) is preparing his bank reconciliation at 31st May 2019. His bank statement balance failed to agree with the cash book balance. His bank statement shows a balance of GH₵684 cash at the bank.
After investigation the following were revealed;
a. The following cheques have not yet been presented at the bank. These are:
Cheque No. GH₵ 956784........1,875
956892........978
958452.........1,407
958541.........366
958668..........261
Total Amount = 4,887
b. Cheque number 958602 was incorrectly recorded in Nose Mask's cash book as GH₵1,140. The cheque was correctly debited on the bank statement on 2nd May as GH₵1,005.
c. Bank charges of GH₵1,149 were debited by the bank on 4th May.
d. A customer's cheque for GH₵960 was returned by Nose Mask's bank in May as the customer had insufficient funds in his account. Nose Mask has not recorded the return
of the cheque in his records.
e. The bank has incorrectly credited Nose Mask's account with interest of GH₵660. This
is interest on a deposit account held by Nose Mask personally. The bank had not
corrected the error by 31st May.
f. A lodgement of GH₵2,550 entered in Nose Mask's cash book on 31st May was credited
on the bank statement on 3rd June.
g. Cheque number 956784 was lost in the post and was cancelled. Nose Mask has not recorded the cancellation of the cheque.
Required:
(i) Show Nose Mask's general ledger bank account including the necessary correcting entries.

(ii) Prepare a reconciliation of the bank statement balance to the corrected general ledger balance.
(iii) Indicate how the bank balance will be reported in Nose Mask's final account

Answer 1

Bank statement
		Debit	Credit	Balance
Opening Balance			2178
	958602	1005		1173
Bank charges		1149		24
Interest credited			660	684
Closing balance			684

Working for bank statement above is to derive at the opening bank book balance. Assuming that there are no old cheques or deposits which are unreconciled.

		Nose Mask Ltd
	(i)	Bank Book		Value	GHC
		Date	Particulars	Check no.	Debit	Credit
		5/1/2019	Opening Balance		2178		Balancing figure
				956784		1875	Contra
				956892		978
				958452		1407
				958541		366
				958602		1140	Contra
				958668		261
			Customer cheque		960		Contra
		5/31/2019	Deposit		2550
			Balance C/d		339
					6027	6027
			Balance b/d			339
			Adjustments
			Reversal of entry	958602	1140		Contra
			Correct cheque amount	958602		1005
			Cheque return from customer			960	Contra
			Check lost in transit	956784	1875		Contra
		5/4/2019	Bank charges accounted			1149
			Balance b/d		438
					3453	3453
	(ii)		Bank reconciliation as on 31st May 2019
			Balance as per bank book			-438	Credit balance
		Add:	Cheques issued not presented
				956892		978
				958452		1407
				958541		366
				958668		261
						3012
		Less:	Deposits not credited by bank
		5/31/2019	Deposit			2550
			Balance as per bank statement			24
			Balance as per bank statement			684
		Less:	Amount wrongly credited			660	To be corrected by bank
			Correct balance as per statement			24
	(iii)		Bank balance will be shown as liabilities in Balance sheet