Fa 2 Financial

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CAT-T3

Topic-Wise Past papers
June ‘04 To December ‘08

Maintaining Financial Records [INT]

CAT T3

Bank Reconciliation Statement

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CAT-T3 Bank Reconciliation Statements 1
Wilson is preparing his bank reconciliation at 31 May 2005. His bank statement shows a balance of $228 cash at the bank. The balance on the bank account in his general ledger is $113 (credit). He has noted the following reasons for the difference: (i) Cheque number 958602 was incorrectly recorded in Wilson’s cash book as $760. The cheque was correctly debited on the bank statement on 2 May as $670. (ii) Bank charges of $428 were debited by the bank on 4 May.

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(iii) A customer’s cheque for $320 was returned by Wilson’s bank in May as the customer had insufficient funds in his account. Wilson has not recorded the return of the cheque in his records. (iv)The bank has incorrectly credited Wilson’s account with interest of $220. This is interest on a deposit account held by Wilson personally. The bank had not corrected the error by 31 May. (v) A lodgement of $850 entered in Wilson’s cash book on 31 May was credited on the bank statement on 3 June. (vi) Five cheques have not yet been presented at the bank. These are: Cheque No. 956784 956892 958452 958541 958668 1 $ 625 see note (vii) 326 469 122 187 ––––– 1,629 ––––– (vii) Cheque number 956784 was lost in the post and was cancelled. Wilson has not recorded the cancellation of the cheque. Required: (a) Show Wilson’s general ledger bank account including the necessary correcting entries. (NB You MUST present your answer in a format which clearly indicates whether each entry is a debit or a credit) (6 marks) (b) Prepare a reconciliation of the bank statement balance to the corrected general ledger balance. (7 marks) (c) Indicate how the bank balance will be reported in Wilson’s final accounts. (2 marks) [Sec: B, Q: 2 T3 June 2005]

2
Sarah prepares a bank reconciliation statement for her business bank account at the end of each month. At 31 May 2007 her ledger balance was $2,759 (credit) and her bank statement showed that she had funds of $131 at the bank. She has the following information: (i) The bank debited Sarah’s account with charges of $129 during May. Sarah has not recorded the charges. (ii) Sarah arranged for $2,500 to be transferred from her personal bank account into the business bank account. The bank made the transfer on 30 May, but Sarah has not made any entry for it in her records. (iii) On 22 May Sarah withdrew $100 cash which she did not record. (iv) Cheque number 543987 which Sarah issued to a supplier appears on the bank statement as $650. Sarah incorrectly recorded the cheque as $560. (v) On 31 May, Sarah lodged $457. This amount appears on the bank statement dated 3 June. (vi) Sarah was advised by the bank that she earned $52 interest for the period in May that her account was in credit. Sarah recorded this in May, but the bank did not credit her account until June.

CAT-T3 Bank Reconciliation Statements
(vii) (viii) Three of the cheques issued in May, with a total value of $942, were not debited on the bank statement until after 31 May. A cheque for $276, issued to a supplier was cancelled, but Sarah has not recorded the cancellation of the cheque.

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Required: (a) Show the bank account in Sarah’s general ledger, including any adjusting entries required due to the information in (i) to (viii) above. Note: You MUST present your answer in a format which clearly indicates whether each entry is a debit or a credit. (7 marks) (b) Prepare a reconciliation of the bank statement balance to the corrected balance on the bank account in Sarah’s general ledger. (5 marks)

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(c) Indicate how the bank balance will be reported in Sarah’s final accounts, and the value to be reported. (3 marks)...
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