Theory question 109
Banking and Bank Reconciliation9. T. Emeka maintains a business bank account with 2nd Bank (Nigeria) Ltd. The bank statement received for the month of March 1999 showed a balance of N14,265 to his credit while according to his Cash Book, he should be having N13,380. Subsequent investigation revealed the following (a) Two cheques A000111 for N3,400 and X222419 for N6,000 deposited to the bank on 28th March, 1999 were not credited by the bank until 2nd April, 1999. (b) A cheque for N6,500 issued to Jango Ltd. had not been presented for payment (c) A cheque for N3,000 received from a customer in full settlement of a debt of N3,300 had been entered in the Cash Book at the full value of the debt. (d) Dividend of N650 from PZ Ltd. had been paid direct to the bank. (e) The bank deducted a total of N125 as its charges. (f) The bank had credited a cheque of N3,560 of V. Amaka in error to T. Emeka Account.
You are required to prepare: (i) Adjusted Cash Book; and (ii) a Bank Reconciliation Statement for the month of March, 1999.
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(i) Adjusted cash book: balance 13,380 + dividend 650 = 14,030; less overstatement of the customer's cheque 300 (3,300 − 3,000) and bank charges 125; adjusted balance 13,605.
(ii) Bank reconciliation statement, 31st March 1999: balance as per bank statement 14,265; add uncredited cheques 3,400 + 6,000 = 23,665; less unpresented cheque 6,500 and V. Amaka's cheque wrongly credited 3,560 = 13,605 = balance as per adjusted cash book.
Correct the cash book for items the bank already knows about; timing differences and bank errors go in the reconciliation.