ABC Company prepared a bank reconciliation for October 2020, the balance on the bank statement at the end of October was $3,145 and the unadjusted balance for 'Cash' in ABC's general ledger was $2,945. The following information was included on the reconciliation: ABC had written cheques totalling $320 which had not cleared the bank, bank interest earned was $30, and a customer had paid ABC $150 in October, but the cheque was returned as not sufficient funds (NSF),

REQUIRED:

1. Why is a bank reconciliation such an important internal control?

2. Provide journal entries for all the reconciling items on the October 2020 bank reconciliation, or explain why no entry is required.

3. What balance would appear for 'Cash' in the statement of financial position at October 31, 2020? [Show any calculation]

ABC Company prepared a bank reconciliation for October 2020, the balance on the bank statement at the end of October was $3,145 and the unadjusted balance for 'Cash' in ABC's general ledger was $2,945. The following information was included on the reconciliation: ABC had written cheques totalling $320 which had not cleared the bank, bank interest earned was $30, and a customer had paid ABC $150 in October, but the cheque was returned as not sufficient funds (NSF),

REQUIRED:

1. (4 marks) Why is a bank reconciliation such an important internal control?

2. (6 marks) Provide journal entries for all the reconciling items on the October 2020 bank reconciliation, or explain why no entry is required.

3. (2 marks) What balance would appear for 'Cash' in the statement of financial position at October 31, 2020? [Show any calculation]