BANK RECONCILLIATION

QUESTION 1

You are preparing accounts for Thabo Avery for the year to 30 November 2002. At
that date, the bank current account in Thabo’s general ledger had a credit balance of
P15 503, while the bank statement showed cash at bank of P3 628.

You have obtained the following from an examination of Thabo’s records:

(i) A cheque paid to a supplier for P4 595 has been recorded in the general’
ledger as P5 495
(ii) Cheques written by Thabo in November totaling P22 865 were presented
at the bank December
(iii) A lodgment for P5 634 made on 29 November was credited on the bank
statement on 2 December.
(iv) A customer’s cheque for P400 which had been lodged on 18 November
was not honored by the drawer’s bank. Thabo’s bank had debited the
cheque on her statement on 25 November.
(v) Standing orders with a total value of P3 600 had been debited on the
bank statement during the year but had not been included in Thabo’s
records.
(vi) Included on the current account statement is a lodgment for P5 000. This
should have been credited to Thabo’s deposit account

Required:

(a) Show the general ledger bank account including the necessary correcting
entries. (8
marks)
(b) Prepare a bank reconciliation statement as at 30 November 2002. (8
marks)
(c) State the amount of the bank balance, which will be reported in Sylvia’s
QUESTION 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 P2, 759 (credit) and her
bank statement showed that she had funds of P131 at the bank. She has the
following information:
i. The bank debited Sarah’s account with charges of P129 during May. Sarah
has not recorded the charges.
ii. Sarah arranged for P2, 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 P100 cash which she did not record.
iv. Cheque number 543987 which Sarah issued to a supplier appears on the
bank statement not as P650. Sarah incorrectly recorded the cheque as P560.
v. On 31 May, Sarah lodged P457. This amount appears on the bank statement
dated 3 June.
vi. Sarah was advised by the bank that she earned P52 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.
vii. Three of the cheques issued in May, with a total value of P942, were not
debited on the bank statement until after 31 May.
viii. A cheque for P276, issued to a supplier was cancelled, but Sarah has not
recorded the cancellation of the cheque.

Required:
i) Show the bank account in Sarah’s general ledger, including any adjusting
entries required due to the information in (i) to (viii) above.
(7 marks)
ii) Prepare a reconciliation of the bank statement balance to the corrected
balance on the bank account in Sarah’s general ledger.
(5 marks)
iii) Indicate how the bank balance will be reported in Sarah’s final accounts
and the value to be reported.
(3 marks)