Theory question 106
Banking and Bank ReconciliationOn 31st December, 2016, the bank column of the cash book of Aminata Enterprise showed a debit balance of D 48,500. However, the bank statement showed a credit balance of D 54,900 as on the same date. A detailed comparison of entries revealed the following: (i) Customers' cheques amounting to D 8,450 had not been credited by the bank as at 31/12/2016. (ii) Cheques amounting to D 8,850 had not been presented for payment as at 31/12/2016. (iii) Bank charges of D 1,000 and interest on investments of D 2,500 collected by the banker appeared only in the bank statement. (iv) On the 30/12/2016, there was a wrong credit of D 3,500 in the bank statement. (v) Kesse Enterprise, a customer, had paid into the bank directly a sum of D 3,000 on 29th December, 2016. This had not been recorded in the cash book. (vi) A cheque for D 2,000 received from Jallo Enterprise, a customer, which was deposited had been returned unpaid. This had not been entered in the cash book.
You are required to: (a) Write up the adjusted cash book. (b) Prepare a bank reconciliation statement as at 31/12/2016.
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(a) Adjusted Cash Book (D): Dr balance b/d 48,500; interest on investments 2,500; Kesse Enterprise (direct payment) 3,000 = 54,000 | Cr bank charges 1,000; Jallo Enterprise (dishonoured cheque) 2,000; balance c/d 51,000.
(b) Bank Reconciliation Statement at 31/12/2016: balance per adjusted cash book 51,000; add unpresented cheques 8,850 = 59,850; less uncredited cheques 8,450 = 51,400; add wrong credit by the bank 3,500; balance per bank statement 54,900.
Charges, interest, direct payments and the dishonoured cheque go in the cash book; the bank's wrong credit is a reconciling item.