5.5 A young and inexperienced book-keeper is having great difficulty in producing a bank reconciliation statement at 31 December. He gives you his attempt to produce a summarized cash book, and also the bank statement received for the month of December. These are shown below. You may assume that the bank statement is correct and that the first cheque issued in December was number 7654. You may also assume that the trial balance at 1 January did indeed show a bank overdraft of

£7,000.12.

CASH BOOK SUMMARY – DRAFT Dr Cr £ £ £
Jan 1 Opening overdraft 7,000.12 35,000.34 Jan–Nov payments Jan–Nov receipts 39,500.54 Add: discounts 500.02 40,000.56 12,000.34 Balance Nov 30 47,000.68 47,000.68 Dec 1 brought down 12,000.34 Dec payments Cheque no Dec receipts 178.19 37.14 7654 121.27 192.79 7655 14.92 5,000.00 7656 16.88 123.45 7657 329.26 678.90 7658 Dec receipts 3,100.00 1.47 7659 171.23 19.84 7660 1,198.17 10.66 7661 4,469.40 10,734.75 Balance c/d Dec 31 16,799.00 16.799.00 Jan 1 balance brought down 10,734.75 Bank Statement – December 31 Withdrawals Deposits Balance £ £ £
1 December 800.00 7650 300.00 178.19 7653 191.91 121.27 7654 37.14 14.92 7651 1,111.11 16.88 7656 5,000.00 3,100.00 7655 129.79 171.23 7658 678.90 1,198.17 Standing order 50.00 117.98 7659 1.47 7661 10.66 Bank charges 80.00 31 December 3,472.34 Prepare the following.

(a) A corrected cash book summary and a reconciliation of the balance on this revised summary with the bank statement balance as at 31 December, as far as you are able.
(20 marks)

(b) A brief note as to the likely cause of any remaining difference. (2 marks)
(22 marks)
(ACCA, Paper 1, The Accounting Framework)