DPA20033

FINANCIAL
ACCOUNTING 2

BAIZURA TIAI
SHANTY EMERSON GERIJIH
(POLYTECHNIC SERIES)

1
 FINANCIAL ACCOUNTING 2

FINANCIAL ACCOUNTING 2 covers topic on accounting

for cash and cash equivalents, inventories, plant,
properties and equipment, trade receivables, trade
payables, provisions and contingent liabilities / assets,
revenues and expenses and also partnership. This
course will help student to gain a comprehensive
understanding on various category
 CONTENTS

CHAPTER 1 ACCOUNTING FOR CASH AND CASH EQUIVALENTS

1.1 State the nature of cash and cash equivalents under MFRS 107 (MPERS: Section 7)
1.2 Recognize records under cash books
1.3 Discuss bank reconciliation statement
1.4 Identify the presentation of cash and cash equivalents in financial statements

Summary
Review questions
Tutorial exercises

CHAPTER 2 ACCOUNTING FOR INVENTORIES

2.1 State the nature of inventory under MFRS 102 (MPERS: Section 13)
2.2 Discuss the recognition and measurement of inventories.
2.3 Identify the measurement of profit and value of closing inventories
2.4 Identify the presentation of inventories in financial statements

Summary
Review questions
Tutorial exercises

CHAPTER 3 ACCOUNTING FOR PROPERTY, PLANT AND EQUIPMENT

3.1 State the nature of property, plant and equipment under MFRS 116 (MPERS:
Section 17)
3.2 Discuss the recognition and measurement of property, plant and equipment under
MFRS 13 and MFRS 116
3.3 Identify the de-recognition of property, plant and equipment under MFRS 13 and
MFRS 116
3.4 Identify the presentation of property, plant and equipment in financial statements
under MFRS 116
Summary
Review questions
Tutorial exercises

CHAPTER 4 ACCOUNTING FOR TRADE RECEIVABLES

4.1 State the nature of trade receivables under MFRS 9, MFRS 132 and MFRS 139
4.2 Discuss the recognition and measurement of trade receivables.
4.3 Identify the presentation of trade receivables in financial statements

Summary
Review questions
Tutorial exercises

CHAPTER 5 ACCOUNTING FOR TRADE PAYABLES, PROVISIONS AND CONTINGENT

LIABILITIES/ASSETS
5.1 State the nature of trade payables, provisions and contingent liabilities/assets
under MFRS 132 and MFRS 137/MFRS 17 (MPERS: Section 21 and 22)
5.2 Discuss the recognition and measurement of trade payables under MFRS 139
(MPERS: Section 22)
5.3 Identify the recognition and measurement of provisions, contingent liability and
contingent assets under MFRS 137/ MFRS 17 (MPERS: Section 21)
5.4 Identify the presentation of trade payables, provisions, contingent liability and
contingent assets in financial statements

Summary
Review questions
Tutorial exercises

CHAPTER 6 ACCOUNTING FOR REVENUES AND EXPENSES

6.1 State the nature of revenue and expenses
6.2 Discuss the recognition and measurement of revenues under MFRS 15 (MPERS:
Section 23).
6.3 Discuss the recognition and measurement of expenses
6.4 Identify the presentation of revenues and expenses in financial statements
Summary
Review questions
Tutorial exercises

CHAPTER 7 ACCOUNTING FOR PARTNERSHIP

7.1 State the nature of partnership business according to Partnership Act 1961.
7.2 Identify the types of accounts for partnership
7.3 Record the accounting treatments on admission new partners and retirement or
death of partners
7.4 Record the dissolution of partnership

Summary
Review questions
Tutorial exercises
 CHAPTER 1

ACCOUNTING FOR CASH AND CASH EQUIVALENTS

LEARNING OUTCOMES:

At the end of this chapter, you should be able to:

 State the nature of cash and cash equivalents

 Recognize records under cash books
 Discuss bank reconciliation statement
 Identify the presentation of cash and cash equivalents in financial statements

INTRODUCTION

Cash is normally represents by cash on hand, cash in bank and short term deposits. Cash
on hand includes bank notes and coins. Whereas demand deposits includes money orders
from customers and bank balances and both are readily available to be used on demand
in an entity’s business activities.

1.1 STATE THE NATURE OF CASH AND CASH EQUIVALENTS UNDER MFRS 1 107 (MPERS
2: SECTION 7)

1.1.1 Define cash and cash equivalents:

Cash and cash equivalents refers to the line item on the balance sheet that reports
the value of a company's assets that are cash or can be converted into cash
immediately. According to MFRS 107, Cash comprises cash on hand and demand
deposits. Cash equivalents are short term, highly liquid investments, that are readily
convertible to known amount of cash, and which are subject to insignificant risk of
changes in value.

1. MFRS: The Malaysian Financial Reporting Standards

2. MPERS: The Malaysian Private Entities Reporting Standards

1
1.1.2 List purpose of cash and cash equivalents based on three main activities

Cash and cash equivalents are used by business in their daily activities such as
operating, investing and financing activities. Cash is mainly used to meet the
purpose of the activities listed as below:
a. Operating activities: are the principal revenue-producing activities of the entity
and other activities that are not investing or financing activities
- Cash payment to suppliers for goods and services rendered by them
- Cash payment for salaries, insurance, taxes, contacts
b. Investing activities: are the acquisition and disposal of long-term assets and other
investments not included in cash equivalent
- Cash payment to acquire property, plant and equipment (PPE), intangibles
and non-current assets
- Cash payment to acquire equity or debt instruments of other entities and
interest in joint ventures
- Cash payments for future contracts, forward contracts, option contracts and
swap contracts
c. Financing activities: are activities that result in changes in size and composition
of the contributed equity and borrowings of the entity
- Cash payment to owners to acquire or redeem the entity’s share
- Cash repayment of amounts borrows
- Cash payment by lease for the reduction of the outstanding liability relating
to finance lease.

1.2 RECOGNIZE RECORDS UNDER CASH BOOKS

 Business transaction will normally involve receipts and payments of money either
by cash or by checks. Since the Cash account and the Bank account contain the most
number of entries compared to other ledger accounts, these two accounts are taken
out and recorded in a book known as the Cash book.

2
  The Cash Book is considered a book of prime entry and considered to be a ledger
account.
 When posting the cash book, the following operations are carried out:
i. All money received (whether by cheque, bank notes or coin) is recorded on
debit side of cash book.
ii. All money paid (whether by cheque, bank notes or coins) is entered on the
credit side of the cash book.
 The particular column in the cash book records the name of the accounts based on
the double entry principles.
 The folio column record for cross reference purpose. For example Contra
 Contra – refers to a transaction which involves a transfer of money from bank
account into cash account or vice versa and will be indicate as “C” in column Folio:
The entries are as follows:
i. To record transfer of money from cash into bank:
Debit bank column and Credit cash column.
ii. To record transfer of money from bank into cash:
Debit cash column and Credit bank column.

1.2.1 Identify the differences between two-column cash book and three-column cash
book

Two-Column Cash Book

A two-column cash book simply means that the cash amount and the bank account
are placed side by side. The purpose of doing this is to ensure that all money
received and all money paid out are properly accounted for.

3
Two – column cash book format shown as below
CASH BOOK
Date Details Fol Cash Bank Date Details Fol Cash Bank

Three-Column Cash Book

The three-column cash book is very similar to the two-column cash book, except that it
has extra column; one in debit side and other on the credit side of cash book. These
extra column are referred to as discounts column.
The discounts column on the debit side is called the “discount Allowed” column while
the one on the credit side is called the ‘discount received’ column. Discount given or
receive are usually quoted as a percentage of the outstanding amount.

Three – column cash book format shown as below

CASH BOOK
Date Details Fol Discount Cash Bank Date Details Fol Discount Cash Bank

4
1.2.2 Record business transactions by using:

a. Two-column cash book

To understand how cash book will be prepared, let us study the two account below:
Example 1.1:
Cash
2019 RM 2019 RM
Jan-01 Capital 30000 Jan-02 Bank 25000
11 Sales 150 7 Purchases 400
29 Sales 300 15 Plus Sdn. Bhd 600
21 Carriage outwards 160
30 Salary expenses 850
31 Balance c/d 3440
30450 30450
Feb-01 Balance c/d 3440

Bank
2019 RM 2019 RM
Jan-02 Cash 25000 Jan-05 Equipment 3000
23 Sales 180 19 Rent expenses 450
27 Electricity expenses 45
31 Balance c/d 21685
25180 25180
Feb-01 Balance c/d 21685

Solution 1.1:
These two account will be combined and shown in the cash book as follows:
CASH BOOK (TWO COLUMN)
Date Details Fol Cash Bank Date Details Fol Cash Bank
Jan-19 Jan-19
1 Capital 30000 2 Bank C 25000
2 Cash C 25000 5 Equipment 3000
11 Sales 150 7 Purchases 400
23 Sales 180 15 Plus Sdn. Bhd 600
29 Sales 150 19 Rent expenses 450

5
 Carriage
21 outwards 160
Electricity
27 expenses 45
30 Salary expenses 850
31 Balance c/d 3440 21685
30450 30450 25180 25180
Feb-
19
Balance
1 c/d 3440 21685

b. Three-column cash book

Example 1.2
The cash book balances of Kanga & Roo Company on 1 January 2019 are as follows:
Cash in hand RM 120
Cash at bank RM2,280
The followings are transactions for the month of January 2019:
Jan 2 Paid Tinker Bell Company by cheque RM900 after discount of RM100.
3 Received cash RM190 from Kitty after discount of RM10.
7 Received cheque RM950 from Pooh Company after discount of RM50.
10 Received cheque RM285 from Minnie after discount of RM15.
11 Paid general expenses by cash RM90.
15 Sold goods by cash RM300.
16 Paid Donald Company by cheque RM570 after discount of RM30.
20 Paid postage and stamping expenses by cash RM10.
25 Paid Winnie Enterprise by cheque RM195 after discount of RM5.
28 Received cheque RM760 from Fairy Company after discount of RM40.
30 Transfer of money RM450 from office to bank.
Required: Record all the above transactions into Three Column Cash Book.
6
 Solution 1.2
CASH BOOK (THREE COLUMN)
Date Details Fol Discount Cash Bank Date Details Fol Discount Cash Bank

2019 RM RM RM 2019 RM RM RM

Jan 1 Balance b/d 120 2,280 Jan 2 Tinker Bell 100 900
Co.

3 Kitty 10 190 11 General 90

exp.

7 Pooh Co. 50 950 16 Donald Co. 30 570

10 Minnie 15 285 20 Postage & 10

stamping

15 Sales 300 25 Winnie Ent. 5 195

28 Fairy Co. 40 760 30 Bank C 450

30 Cash C 450 31 Balance c/d 60 3,060

115 610 4,725 135 610 4,725

Note: Transfer of money RM450 from office to bank on 30 January 2019 is a contra entry.

7
1.3 DISCUSS BANK RECONCILIATION STATEMENT

1.3.1 Identify the differences between bank statement and cash book (bank column)

 The business which maintaining a “current account” with a bank would periodically
receive a bank statement from the bank. Upon receiving the bank statement, the focus
is normally on the ending balance besides the transactions on whatever deposits and
payments made.
 The business expects to see the ending balance appearing in the bank statement to be
the same as the actual amount of money that is supposed to be in the bank. However,
it is always come with different ending balance between bank column and bank
statement.
 Bank reconciliation is required to prepare necessary adjustments to come up with the
same ending balance as recorded by the bank.
 A bank reconciliation statement will compare the cash book balance with the bank
statement and identify the differences.
 If the business has current accounts with more than one bank, bank reconciliation has
to be done for each of the bank accounts and must be prepared monthly to justify
amounts reported in the bank statement and the bank account kept by the business.

1.3.2 Interpret the reasons for discrepancies between the cash book (bank column)
balance with the bank statement balance
The transaction have been recorded in the cash book, but not in the bank
statement.
Uncredited cheques This happens when a business deposited money or cheques
but the amount does not appear in the bank statement since

8
 deposits have not yet to be processed by the bank but have
already been recorded by the business
Unpresented Cheques issued for by the business and the Bank column of
cheques the cash book has subsequently been credited. However, the
bank has not debited the business’s account either due to
timing or the payees have not yet presented the cheques to
the bank. Therefore, there are no corresponding entries in
the bank statement.
The transactions have been recorded in the bank statement, but not in the cash
book.
Transactions that i) Interests from savings credited directly into the bank
have been credited account of the business.
to bank statement, ii) Credit transfer from debtors who pay straight into the
but not yet debited business’s bank account, rather than by cheques to the
to the cash book. business.
iii)Dividends received by the bank on behalf of the business
Transactions that i) Charges on various services by the bank
appear on the debit ii) Payment for cheque books
side of the bank iii)Interest on overdraft
statement, but no iv)Dishonoured cheques: when a cheque is received from a
recording has yet debtor and pain into bank, it is recorded on the bank
made on the credit debit side of the cash book and shown on the credit side
side of the cash of the bank statement. However, for a variety reasons,
book the cheque may dishonoured. Thus, the bank will debit

9
 bank the bank statement. The business will discover this
once it receives the bank statement.
Bookkeeping errors may be made by either the bank, the business or both
Misstatement in the Example 1: A cheque issued in the amount of RM563 may
cash book have been wrongly recorded as RM356 in the cash book.
Example 2: Other transaction that are posted wrongly to the
cash book.
Detail in the bank Example 1: A RM50 cheque paid by the bank is wrongly
statement may have stated as RM500.
been wrongly stated Example 2: The bank debited Abdul Samad’s account
instead of Abdul Samat’s account. (Two different accounts)

1.3.3 Show the bank reconciliation statement format.

The preparation of the bank reconciliation statement can either start with balance on cash
book balance (Bank Column) or balance at Bank Statement.

1.3.4 Record bank reconciliation statement from:

a) Record bank reconciliation statement from Cash book balance (bank column) the
format shown as below:

BANK RECONCILIATION STATEMENT AS AT ….

Debit/ (Credit) balance as per cash book (bank column) XX
ADD Unpresented cheques
Credit transfer, dividend, saving interest

10
 (Transactions that have been credited to bank XX
statement, but not yet debited to the cash book.)
XX
LESS Uncredited cheques
Bank charges, bank commission, standing order
(Transactions that appear on the debit side of
the bank statement, but no recording has yet (XX)
made on the credit side of the cash book)
(Debit)/ Credit balance as per bank statement XX

b) Record bank reconciliation statement from Bank statement balance the format
shown as below:
BANK RECONCILIATION STATEMENT AS AT ….
(Debit)/ Credit as per bank statement XX
ADD Uncredited cheques
Bank charges, bank commission, standing order
(Transactions that appear on the debit side of XX
the bank statement, but no recording has yet
made on the credit side of the cash book)
XX

LESS Unpresented cheques

Credit transfer, dividend, saving interest
(Transactions that have been credited to bank (XX)
statement, but not yet debited to the cash book.)

11
 Debit/ (Credit) balance as per cash book (bank column) XX

1.3.4 Record bank reconciliation statement from:

a) Adjusted cash book.

 To prepare bank reconciliation statement with adjusted cash book, the cash book
balance must be updated first.
 It can be done by adjusting the items that have been recorded in the bank statement
but not yet recorded in cash book.
It can be shown below:

ADJUSTED CASH BOOK

Balance b/d xxx Direct Debit xx
(balance c/d unadjusted cash
book)
Credit transfer xx Bank charges xx
Dividend received Error adjustment xx
Saving interest Standing order xx
Chequebook fee xx
Dishonoured cheque xx
Balance c/d xxx
(receipt in bank statement (Payment in bank statement
but not yet recorded in cash not yet recorded in cash
book) book)
xxx xxx
Balance b/d xxx
(balance as per adjusted
cash book)

12
Below is the format of bank reconciliation statement with adjusted cash book;
BANK RECONCILIATION STATEMENT AS AT ….

Debit/ (Credit) balance as per adjusted cash book (bank column) XX

ADD Unpresented cheques

(Transactions that have been credited in the cash book, XX

but not yet debited/ presented to the bank statement)

XX

LESS Uncredited cheques

(Transactions that appear on the debit side of the cash

book, but has not yet been credited in the bank (XX)
statement)

(Debit)/ Credit as per bank statement XX

BANK RECONCILIATION STATEMENT AS AT ….

(Debit)/ Credit as per bank statement XX

ADD Uncredited cheques

(Transactions that appear on the debit side of the cash XX

book, but has not yet been credited in the bank
statement)

XX

LESS Unpresented cheques

(Transactions that have been credited in the cash book, (XX)

but not yet debited/ presented to the bank.)

Debit/ (Credit) balance as per adjusted cash book (bank column) XX

13
 b) Unadjusted cash book
 To prepare bank reconciliation statement with unadjusted cash book, the cash balance
no need to be updated.
 It can be done by adding or deducting all the different items in bank statement and
cash book.
 Below is the format of bank reconciliation statement with unadjusted cash book;

BANK RECONCILIATION STATEMENT AS AT ….

Debit/ Credit balance as per cash book (bank XX
column)
ADD Unpresented cheques XX
All receipt item in bank statement:
Credit transfer XX
Dividend XX
Saving interest XX
XXX
XXX
LESS Uncredited cheques XX
All payment item in bank statement;
Bank charge XX
Bank commission XX
Standing order XX
Cheque book fees XX
(XXX)
BALANCE AS PER BANK STATEMENT XXX

14
BANK RECONCILIATION STATEMENT AS AT ….
Debit/ Credit as per bank statement XX
ADD Uncredited cheques XX
All payment item in bank statement;
Bank charge XX
Bank commission XX
Standing order XX
Chequebook fees XX
XXX
XXX
LESS Unpresented cheques XX
All receipt item in bank statement:
Credit transfer XX
Dividend XX
Saving interest XX
(XXX)
BALANCE AS PER CASH BOOK (BANK COLUMN) XXX

15
Example 1.3:
Prepare a bank reconciliation statement from the following information:

Bank a/c
2019 RM 2019 RM
Jan-01 Balance c/d 8200 Jan-04 Cash 1600 (√)
14 Zulkifli 1440 (√) 10 Tang 500 (√)
23 Azizah 1140 (√) 19 Siti 640 (√)
29 Adnan 340 (√) 28 Zubir (x) 880
30 James (x) 580 29 Chia (x) 560
30 Balance c/d 7520
11700 11700
Feb-01 Balance c/d 7520

Bank statement for January 2019

Date Details Debit Credit Balance (RM)
Jun-01 Balance b/d 8200 Cr
4 Cash 1600 (√) 6600
14 Zulkifli 1440 (√) 8040
16 Dividend (*) 1000 9040
17 Tang 500 (√) 8540
23 Azizah 1140 (√) 9680
25 Siti 640 (√) 9040
28 Chequebook (*) 150 8890
29 Adnan 340 (√) 9230
30 Service charge (*) 100 9130

16
Steps to prepare bank reconciliation:

Step 1:
Identify the transactions recorded both in the cash book and the bank statement. All
details marked by (√) – Items was recorded in cash book and bank statement
Step 2:
Identify transactions recorded in the cash book, but not in the bank statement. All details
marked by (x) – Items was not recorded at bank statement
Step 3:
Identify transactions recorded in the bank statement but not in the cash book. All details
marked by (*) - Items was not recorded at cash book
Step 4:
Prepare a bank reconciliation statement based on the item that not been ticked by using
the method chosen.

Solution 1.3:

BANK RECONCILIATION STATEMENT AS AT 31 JANUARY 2019

RM RM
Debit balance as per cash book (bank column) 7520
ADD Unpresented cheques - Zubir 880
- Chia 560
Dividend 1000 2440

LESS Uncredited cheque - James 580

Cheque book fees 150
Bank service charge 100
(830)
BALANCE AS PER BANK STATEMENT 9130

17
1.4 IDENTIFY THE PRESENTATION OF CASH AND CASH EQUIVALENTS IN FINANCIAL
STATEMENTS

Cash and cash equivalents are items of current assets, and it presented in the statement
of financial position as shown below:

Cash and cash equivalents

At end of year At beginning of year
RM RM
Cash on hand and balance at banks XX XX
Short-term investments XX XX
Bank overdraft (XX) (XX)
XX XX

Illustration 1.1 Presentation of Cash and Cash Equivalents in Financial Statements

Summary
1. Cash and cash equivalents refers to the line item on the balance sheet that reports
the value of a company's assets that are cash or can be converted into cash
immediately
2. Three main activities in cash and cash equivalents are operating, investing and financing
activities.

18
3. A two-column cash book simply means that the cash amount and the bank account are
placed side by side. Whereas, three-column cash book is very similar to the two-column
cash book, except that it has extra column referred to as discounts column.
4. Bank reconciliation is a statement that required to prepare necessary adjustments in
order to identify the differences and balance up the cash book (bank column) with
statement recorded by the bank.

Review questions:
1. Define cash and cash equivalents in accordance with MFRS 107
2. Identify three main activities involve in cash and cash equivalents
3. Define bank reconciliation
4. Explain the reasons for discrepancies between the cash book (bank column) balance
with the bank statement balance

Tutorial exercises:

Question 1 (Cash Book)

Prepare a two-column cash book for a furniture shop from the following details, and
balance it off as at the end of month:

2019 TRANSACTIONS
May 1 Started in business with capital in cash RM10,000
3 Paid rent by cash RM1,000
7 En. Bakar lent us RM12,000, and he issued cheque to us
15 Purchased goods RM2,500 from Moore Sdn. Bhd paid by cash
19 Paid Jee Trading by cheque RM1,800 for office table
22 Cash Sales RM800
23 Cash sales paid direct into the bank RM600
25 Took RM4,000 out of the cash and banked it into bank account.
28 Paid motor expenses by cheque RM460
30 Paid wages in cash RM1,200

19
Question 2 (Cash Book)
Prepare two-column cash book for DEF Bookshop from the following transactions:
2019 TRANSACTIONS
Feb 1 Balance brought forward from last month: Cash RM2950. Bank 42,400
2 Cash Sales RM310
5 Took RM200 out of the cash and banked in into bank account
8 Received cheque from Bella RM194 for settlement her account
11 Paid postage stamps by cash RM80
12 Bought office equipment by cheque Rm310
15 Paid supplier Root Trading by cheque RM940
20 Withdrew RM1500 from bank for business use.
23 Paid salary by cash RM920
25 Cash sales RM430
27 Paid motor expenses by cheque RM118
28 Paid general expenses by cash RM85

Question 3 (Cash Book)

Prepare three-column cash book for ABC Trading based on the following transactions:
2019 TRANSACTIONS
Jan 1 Balance brought forward from last month: Cash RM1,255. Bank 32,800
1 Cash sales RM5,000
2 Purchase goods RM6,000 paid by cheque
5 Received cheque of RM3,700 from Leong Trading and gave a discount of
RM300
7 Bought office equipment for RM2,000 by cheque
10 Paid supplier Syarikat Express RM2,500 by cash and received a discount of
RM250
15 Received rental income of RM3,000 by cash
18 Paid utility bills totalling RM600 by cash
22 Banked in RM7,000 for cash sales
28 Paid RM4,000 as salary to workers by cheque
31 Bought goods for RM5,000 by cheque.

20
Question 4 (Cash Book)
A three- column cash book for groceries shop is to be prepare from the following details:
2019 TRANSACTIONS RM
Jan 1 Balance brought forward from last month:
Cash RM10,000. Bank 25,000
5 Paid by cheque to Gagah Trading after receiving a cash discount of 6,860
RM140
9 A debtor, En. Hasan, settled amount owed by cheque after 11,640
receiving a 3% cash discount.
13 Paid En. Muthu cash for amount outstanding after receiving a cash 4,800
discount of 4%.
16 Receive a cheque from Dyna Sdn. Bhd. As full settlement of the 11,500
RM12,000 outstanding
19 Received cash from En. Hanafi after giving a 2% cash discount. 9,800
20 Paid by cheque as a full settlement amount of RM8,000 owed to 7,400
Y.Lee Trading
22 Sold goods for cash 15,000
24 Paid utilities expenses by cheque 700
26 Made cash sales 18,000
28 Paid salaries by cheque 7,000
31 Banked cash into the bank 30,000

Question 5 (Cash Book)

Ring Trading owned by Encik Fadil started his business on 1 March 2019. You are required
to r ecord the following transactions in the Three-Column Cash Book of Ring Trading for
the month of April 2019.
2019 TRANSACTIONS
April 1 En. Fadhil invested RM40,000 of his money to the business and deposited
the money into the business bank account
3 Purchased goods worth RM8,000 from Ezee Trading. Issued a cheque for
RM4,000 and the balance will be paid at the end of the month

21
 6 Bought a secondhand delivery van for RM30,000 from Automart Sdn. Bhd.
And paid a down payment of RM10,000 by cheque: the remainder to be paid
in 5 monthly instalment starting April 2019.
10 Cash sales worth RM1,250 to Jamila.
13 En. Fadil withdrew RM500 cash from the bank for his personal use
18 Issued a cheque for RM3,800 to Ezee Trading after deducting a cash discount
of 5%
20 Paid Jamila RM50 cash for defective goods returned
25 Received a RM20,000 loan by cheque from Ambank Finance
29 Withdrew RM300 cash from the bank for office use.
30 Paid shop assistant’s salary of RM800 by cheque.

Question 6 (Cash Book)

Enter the following transactions in a three-column cash book for the office supply shop.
Balance-off the cash book at the end of the month.
2019 TRANSACTIONS
March 1 Balance brought forward: Cash RM6,200; Bank RM57,142
3 Slim Trading paid by cheque for a debt amounting RM6,000 and received
5% discount.
8 Paid rent by cheque RM1,200
11 Paid White Enterprise by cheque for the debt amounting RM9,600 and
received 2% discount.
13 Paid motor expenses by cash RM180
15 J.Pie Trading Paid debt amounting RM880 by cheque and deducting RM10
cash discount
21 Bought fixture paying by cheque RM7,200
23 Cash withdrawn from bank RM4000 for business use.
25 Received commission by cash Rm720
28 Cash drawings RM200
31 Paid utility bills RM1,500 by cheque.

22
Question 7 (Bank reconciliation)
KeeYeeL Sdn Bhd received a bank statement on 31 August 2019 that shown the different
balance with cash book. The balance in cash book was RM8281. Subsequently the
following difference were identified:
i. 3 Cheque drawn in favour of creditors have not been paid by the bank. The
following were the detail of the cheques:
CHEQUE NO. DATE AMOUNT (RM)
100100 25 AUGUST 1140
100101 27 AUGUST 1003
100102 30 AUGUST 715

ii. Service charge by bank was RM75

iii. Amount of RM2046 payment for monthly installment of office premises was
debited by bank due to standing order.
iv. Profit from fixed deposit amounting RM501 was directly credited by the bank
v. A cheque for RM4450 received by the company and already entered in cash book
on 30 August 2019 but not yet credited by bank until 3 September 2019
vi. Cheque of RM1234 which received from a customer has been dishonored by the
bank.
You are required to determine:
a. Adjusted cash book for KeeYeeL Sdn Bhd
b. Bank Reconciliation Statement as at 31 August 2019

23
Question 8 (Bank reconciliation)
a) Company A's bank statement dated Dec 31, 2019 shows a credit balance of
RM24,594.72. The company's cash records on the same date show a debit balance of
RM23,196.79.

Following additional information is available:

1. Following cheques issued by the company to its customers are still outstanding:
No. MBB846 issued on Nov 29 RM320.00
No. MBB875 issued on Dec 26 RM49.21
No. MBB878 issued on Dec 29 RM275.00
No. MBB881 issued on Dec 31 RM186.50
2. A deposit of RM400.00 made on Dec 31 does not appear on bank statement.
3. A cheque from Debtor NSF of RM850 was returned by the bank.
4. The bank charged RM50 as service fee.
5. Profit distributed on the company's average cash balance at bank was RM1,237.22.
6. The bank collected a note receivable on behalf of the company. Amount received by
the bank on the note was RM550. This includes RM50 interest income. The bank
charged a collection fee of RM10.
7. A deposit of RM430 was incorrectly entered as RM340 in the company's cash
records.

You are required to prepare the following:

(i) Updated Cash Book (Bank column); and
(ii) Bank Reconciliation Statement as at 31 December 2019.

24
Question 9 (Bank reconciliation)
The bank statement of Karen & Co for March 2019 is as follows:
Bank Statement
Date Details Dr Cr Balance
2019 RM RM RM
Mar 1 Balance b/d 375,984 Dr
3 Deposit 498,753 122,769 Cr
9 Cheque 135,950 13,181 Dr
11 Direct debit — Management fees 7,195 20,376 Dr
21 Deposit 77,987 57,611 Cr
25 Direct credit — Dividends 2,750 60,361 Cr
27 Cheque 3,860 56,501 Cr
31 Overdraft interest 18,756 37,745 Cr

The cash book (bank columns) for March 2019 is as follows:

Cash Book
2019 RM 2019 RM
Mar 4 Easy Co 498,753 Mar 1 Balance b/d 375,984
20 Fulton Ltd 77,987 7 Citizen Ltd 135,950
30 Paul Chan 7,590 22 Henry Lau 3,860
31 Balance c/d 58,339 28 Salem Ltd 126,875
642,669 642,669
You are required to:
(a) Update the cash book.
(b) Prepare a bank reconciliation statement as at 31 March 2019.

25
Question 10 (Bank reconciliation)
The following information relates to the banking transactions of Tai Sang Company for the
month of August 2019:
Cash Book (Bank Column Only)
2019 RM 2019 RM
Aug 1 Balance b/d 2,420 Aug 2 General expenses 67
(211012)
Aug 4 Sales 835 Aug 9 Wages (211013) 330
Aug 23 Sales 716 Aug 11 Drawings (211014) 410
Aug 31 Company A 185 Aug 12 Purchases (211015) 406
Sales 640 Aug 24 Rent (211016) 290
2,446 Aug 25 Wages (211017) 345
Aug 27 C Limited (211018) 502

Bank Statement
Date Details Dr Cr Balance
2019 RM RM RM
Aug 1 Balance b/d 2,420 Cr
Aug 3 CQ211012 67 2,353 Cr
Aug 4 Credit 835 3,188 Cr
Aug 7 Standing order (rates) 136 3,052 Cr
Aug 11 CQ211013 330 2,722 Cr
Aug 16 CQ211014 140 2,582 Cr
Aug 20 CQ211015 406 2,176 Cr
Aug 23 Direct debt (insurance) 153 2,023 Cr
Credit 716 2,739 Cr
Aug 27 CQ211017 345 2,394 Cr
Aug 30 Credit transfer – B Limited 268 2,662 Cr
Bank interest 8 2,670 Cr

(a) Update the cash book starting with the closing balance as at 31 August 2019.
(b) Prepare the bank reconciliation statement as at 31 August 2019, starting with the
bank statement balance.

26