7 of 8 Question 5 Weller Ltd has just received the bank statement for December showing a credit balance of 1,150. The cash book has a debit balance of 3,435 at the end of the month. Upon investigation, the following items were found: (0) bank charges of 300 shown on the bank statement have not yet been entered in the cash book. (ii) a cheque received from a customer for 725 has been dishonoured. This has not been entered in the cash book. (iii) 500 received as interest income on investments was paid straight into the bank account and has not been entered in the cash book. (iv) A cheque for 1,050 had been credited in error by the bank to the account of Christies Ltd. (v) Cheques totalling 2,755 had been issued by Weller Ltd but have not yet been presented to the bank. (vi) Cheques totalling 3,250 were lodged at the bank on 2 January but have not yet been credited by the bank. (vii) A direct debit of 1,750 paid to the Landlord has not been recorded in the cash book. (viii) A cheque issued for 760 was incorrectly recorded in the cash book as 670. (ix) A transfer of 2,000 from the current account to a deposit account has not been entered into the cash book. (x) A customer, J Jones, has made an electronic transfer of funds totalling 1,525 to the current account that has not been reflected in the cash book. Required: (a) Make the necessary amendments to the cash book and prepare a bank reconciliation statement using the above information. (10 marks) (b) Explain the purpose of preparing a bank reconciliation statement (3 marks) (c) Describe the differences between the internal and external auditors. (3 marks) (Total 16 marks)