Explanation:
A trainee accountant working for a sole trader, Juma Mambo Leo had
prepared the following summary of the cash book for the month of March
2020
Cash book Sh Sh
Opening balance b/d 561000 Payments 4,189,000
Receipts 3748000 Closing balance c/d 120,000
4309000 4309000
Whilst checking the cash book against t the bank statement you find the
following discrepancies;
(i) Bank charges of Sh 8000 shown in the bank statement have not been
entered inthe cash book
(ii) The bank has debited a cheque of Sh 37000 in error in the account of
Juma Mambo Leo
(iii) Cheques totaling Sh 96000 have not been presented to the bank for
payment.
(iv) Dividends received for Sh 4200 have been credited on the bank
statement but not yet recorded on Juma Mambo Leo’s cash book
(v) There were cheques received of Sh 484000 which were entered in the
cash book but not yet credited by the bank.
(vi) A cheque of Sh 17000 has been returned by the bank marked as ‘refer to
drawer’ but no entry relating to this has been made in the books.
(vii) The opening balance in the cash book should have been Sh 651000 and
not Sh 561000
(viii) The bank statement shows that there is n overdraft at 31st march 2020
of Sh 198000
Required
(i)State and briefly explain two purposes of a bank reconciliation
statement. ( 2 Marks)
(ii)(ii) Entries necessary to correct the cash book ( 7 marks)
(iii)(iii) A bank reconciliation statement as at 31st march 2020 (6
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Answers & Comments
Explanation:
A trainee accountant working for a sole trader, Juma Mambo Leo had
prepared the following summary of the cash book for the month of March
2020
Cash book Sh Sh
Opening balance b/d 561000 Payments 4,189,000
Receipts 3748000 Closing balance c/d 120,000
4309000 4309000
Whilst checking the cash book against t the bank statement you find the
following discrepancies;
(i) Bank charges of Sh 8000 shown in the bank statement have not been
entered inthe cash book
(ii) The bank has debited a cheque of Sh 37000 in error in the account of
Juma Mambo Leo
(iii) Cheques totaling Sh 96000 have not been presented to the bank for
payment.
(iv) Dividends received for Sh 4200 have been credited on the bank
statement but not yet recorded on Juma Mambo Leo’s cash book
(v) There were cheques received of Sh 484000 which were entered in the
cash book but not yet credited by the bank.
(vi) A cheque of Sh 17000 has been returned by the bank marked as ‘refer to
drawer’ but no entry relating to this has been made in the books.
(vii) The opening balance in the cash book should have been Sh 651000 and
not Sh 561000
(viii) The bank statement shows that there is n overdraft at 31st march 2020
of Sh 198000
Required
(i)State and briefly explain two purposes of a bank reconciliation
statement. ( 2 Marks)
(ii)(ii) Entries necessary to correct the cash book ( 7 marks)
(iii)(iii) A bank reconciliation statement as at 31st march 2020 (6