Tutorial 9

Q1

Dillman Food Store developed the following information in recording its bank statement for the
month of March.

Balance per books March 31 RM 2,905

Balance per bank statement March 31 RM10,900

————————————————————————————————————

(1) Checks written in March but still outstanding RM6,000.

(2) Checks written in February but still outstanding RM2,800.

(3) Deposits of March 30 and 31 not yet recorded by bank RM5,200.

(4) NSF check of customer returned by bank RM1,200.

(5) Check No. 210 for RM594 was correctly issued and paid by bank but incorrectly entered in
the cash payments journal as payment on account for RM549.

(6) Bank service charge for March was RM50.

(7) A payment on account was incorrectly entered in the cash payments journal and posted to
the accounts payable subsidiary ledger for RM824 when Check No. 318 was correctly
prepared for RM284. The check cleared the bank in March.

(8) The bank collected a note receivable for the company for RM5,000 plus RM150 interest
revenue.

Required:
Prepare the bank reconciliation statement at 31 March 2018
Q2
The following is a summary from the cash book of Delish Enterprise for May 2018:

    Cash Book    
Date Item RM Date Item RM
31-May Balance b/d 2,814 31-May Payments 31,040
Receipts 30,146 Balance c/d 1,920
32,960 32,960
 
Upon investigation, the following were discovered:
1. Bank charges of RM70 shown on the bank statement have not been entered in the cash
book.

2. A cheque drawn for RM94 has been entered in error as a receipt in the cash book.

3. An error has occurred in the opening balance in the cash book where the opening balance
should have been carried down as RM2,940.

4. Three cheques paid to suppliers for RM428, RM740 and RM60 have not yet been
presented to the bank.

5. Credit transfer of RM600 from Marvin was entered in the bank statement but not in the
cash book.

6. A cheque received from Moonlight Berhad for RM606 and credited in the bank statement
on 15 May 2018 has now been dishonoured and debited in the bank statement on 19 May
2018. The only entry in the cash book for this cheque was its receipt on 12 May 2018.

7. The last page of the cash book shows a deposit of RM3,084 which has not yet been
credited to the account by the bank.

8. The bank has debited a cheque for RM144 in error to Delish’s account.

9. A payment of RM210 of Delish’s loan repayment has been recorded in the bank
statement but is not updated in the cash book.

10. The bank statement shows an overdrawn balance of RM428 for the month of May 2018.

Required:
Prepare the bank reconciliation statement at 31 May 2018
Q3
The following control procedures are used at Aldean Berhad for over-the-counter cash receipts.
1) To minimize the risk of robbery, cash in excess of RM100 is stored in an unlocked
attaché case in the stockroom until it is deposited in the bank.
2) All over-the-counter receipts are registered by three clerks who use a cash register with a
single cash drawer.
3) The company accountant makes the bank deposit and then records the day’s receipts.
4) At the end of each days, the total receipts are counted by cashier on duty and reconciled
to the cash register total.
5) Cashier are experienced, they are not bonded.

Required:
a) For each procedures, explain the weakness in internal control, and identify the control
principle that is violated.
b) For each weakness, suggest a change in procedure that will result in good internal
control.

Q4
The following control procedures are used at Monique Boutique Shoppe for cash disbursements
1) The company accountant prepares the bank reconciliation and report any discrepancies to
the owner.
2) The store manager personally approves all payment before signing and issuing checks.
3) Each week, 100 company checks are left in an unmarked envelope on a shelf behind the
cash register.
4) After payment, bills are filed in a paid invoice folder.
5) The company checks are unnumbered.

Required:
a) For each procedures, explain the weakness in internal control, and identify the control
principle that is violated.
 b) For each weakness, suggest a change in procedure that will result in good internal
control.
Extra Question

Q5
On May 31, 2017, Terell Berhad had a cash balance per books of RM6,781.50. The bank
statement from HomeTown Bank on that date showed a balance of RM6,824.60. A comparison
of the statement with the cash account revealed the following facts:

1. The statement included a debit memo of RM40 for the printing of additional company
checks.
2. Cash sales of RM836.15 on May 12 were deposited in the bank. The cash receipts journal
entry and the deposit slip were incorrectly made for RM886.15. The bank credited Terell
Company for the correct amount.
3. Outstanding checks at May 31 totaled RM276.25. Deposit in transit were RM1,916.15.
4. On May 18, the company issued check No. 1181 for RM685 to Barry Dietz on account.
The check, which cleared the bank in May, was incorrectly journalized and posted by
Terell for RM658.
5. A RM3,000 note receivables was collected by the bank for Terell on May 31 plus RM80
interest. The bank charged a collection fee of RM20. No interest has been accrued on the
note.
6. Included with cancelled checks was a check issued by Bridges PLC to Jon Newton
RM600 that was incorrectly charged to Terell by the bank.
7. On May 31, the bank statement showed an NSF charge of RM640 for a check issued by
Sandy Grifton, a customer, to Terell on account.

Required:
A) Prepare bank reconciliation at May 31, 2017
B) Prepare the necessary adjusting entries.