Theory question 105
Banking and Bank ReconciliationMomoh enterprise cashbook showed a debit balance of Le 4,500 on December 31, 2014. Further examination revealed the following: (i) A direct debit of Le 350 for subscription had been paid by the bank. (ii) Bank charges of Le 500 had not been reflected in the cash book. (iii) Payment settled by standing orders were omitted from the cash book; electricity bill Le 70, insurance Le 100 and medical bill Le 120. (iv) A dividend of Le 320 paid directly into the bank had not been entered in the cash book. (v) It was discovered that the cash book balance brought down was undercast by Le 180. (vi) Cheques amounting to Le 4,800 issued had not been presented for payment. (vii) Cheques amounting to Le 1990 paid into the bank had not yet been credited.
You are required to prepare: (a) the revised cash book; (b) bank reconciliation statement as at December 31, 2014.
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(a) Revised Cash Book (Le): Dr - balance b/d 4,500; undercast of opening balance 180; dividend 320 = 5,000.
Cr - subscription (direct debit) 350; bank charges 500; electricity 70; insurance 100; medical bill 120; balance c/d 3,860 = 5,000.
(b) Bank Reconciliation Statement at 31 December 2014 (Le): balance as per revised cash book 3,860; add unpresented cheques 4,800 = 8,660; less uncredited cheques 1,990; balance as per bank statement 6,670.
First correct the cash book, then reconcile only the timing differences.