Question

In: Accounting

The following information is provided regarding Busy Business: Bank Statement - Issued: 31/05/20 Bank Statement 55...

The following information is provided regarding Busy Business:

Bank Statement - Issued: 31/05/20
Bank Statement 55 Page 1
Date Transaction Withdrawal Deposit Balance
1-May Balance $ 5,455.00   CR
3-May Deposit 560.00 $ 6,015.00   CR
6-May 1133 1,200.00 $ 4,815.00   CR
8-May Dividend Telstra 160.00 $ 4,975.00  
12-May Deposit 4,000.00 $ 8,975.00   CR
14-May Deposit 1,444.00 $ 10,419.00   CR
18-May Deposit 1,672.00 $ 12,091.00   CR
19-May 1132 3,600.00 $ 8,491.00   CR
21-May Deposit 650.00

$ 9,141.00  

CR
25-May EFT Deposit 300.00 $ 9,441.00   CR
27-May 1135 960.00 $ 8,481.00   CR
28-May DD- City Rentals 880.00 $ 7,601.00   CR
29-May Returned cheque 120.00 $ 7,481.00   CR
30-May Bank Fees 45.00 $ 7,436.00   CR
31-May 1136 5,000.00 $ 2,436.00   CR
Notes:
      - Deposit on 8th May was a direct deposit from Telstra as a dividend on shares held
      - EFT Deposit on 25th was payment by debtor/accounts receivable
      - 28th May DD- City Rentals is monthly payment for rent
      - 29th May returned cheque is a cheque returned 'not sufficient funds (NSF)' from an accounts receivable/debtor

  

Cash at Bank
Date Item Ref Debit Credit Balance
1/05/2020 Balance bd $ 5,455.00 DR
31/05/2020 Cash Rec 5 8,826.00 $ 14,281.00 DR
31/05/2020 Cash Pay 5 11,770.00 $ 2,511.00 DR

Required:

Using the templates provided below
(a) prepare a bank reconciliation statement

(b) post the necessary adjustments to Cash at Bank in the General Ledger at 31st May 2020 .

(c) A bank reconciliation statement is an example of an internal control. Provide 2 further examples of internal controls that a business might have to safeguard its assets.

Solutions

Expert Solution

a)

Particulars

debit ($) credit ($)
Balance as per Cashbook 2511
Total credits as per passbook 8786
Total recipts as per cashbook 8826
Total debits as per passbook 11805
Total payments as per cashbook 11770
Balance as per passbook 2436

NOTE: In absence of clarification on whether the items of pass book are entered in cashbook or not and cashbook only containing totals of amount paid and recieved which too are different from passbook ,we cant show entry by entry reconcilliation.

b) Since "cash at bank" only shows total cash recieved and paid during the month we need to post entries for each transaction of the passbook for which explanation is given, assuming they might not be entered in cashbook.

Date Particulars dr cr
8/05/2020

Cash at bank a/c dr

To Dividend recieved a/c

(For dividend directly recieved by bank)

160

160

25/05/2020

Cash at bank a/c dr

To Debtor

(Being amount directly paid to bank by debtor)

300

300

28/05/2020

Rent a/c dr

To Cash at bank a/c

(Being monthly rent paid by bank)

880

880

29/05/2020

Debtor a/c dr

To Cash at bank a/c

(Being cheque of debtor dishonoured)

120

120

30/05/2020

Bank Charges a/c dr

To Cash at bank a/c

(For bank fees deducted by bank)

45

45

c) Apart from bank reconcilliation Stock register and fixed assets register can be maintained as a internal control measure to safeguard its assets.


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