Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cliff Tools is an online business selling D - I - Y products to the public. The bookkeeper left the business in May 2 0
Cliff Tools is an online business selling DIY products to the public. The bookkeeper left the
business in May The new bookkeeper, Mrs Naidoo, started on July The June
reconciliation was prepared by Miss Baines, the Social Media manager, who did accounting at
school a while ago.
Q Mrs Naidoo is now preparing the July bank reconciliation and reviewed
the June reconciliation. She noted that some of the reconciling items on
the reconciliation did not appear to be correct. For example, the outstanding
deposit DS # was deposited on June but was recorded incorrectly
as R instead of R in the cash book receipts.
BANK RECONCILIATION STATEMENT FOR JUNE
R
Balance per bank statement overdraft
Items in cash journals not on bank statement:
Outstanding deposits: DS #
Outstanding deposit: DS#
Outstanding payments: EFT EDD
Stop order: Santam Insurance on bank statement but not
in cash book payments journal
Correction of bank charges not in the cash book journals
Deposit not in cash book journals June
Balance per Bank account
REQUIRED:
Q Name the two types of reconciling differences that are found on a bank
reconciliation statement.
Q Was Miss Baines correct to show the bank charges as a reconciling item on the
June bank reconciliation statement? Give a reason for your answer.
The Independent Institute of Education Pty Ltd
Page of
Q How should Mrs Naidoo adjust for the error relating to Deposit DS# on the
above June bank reconciliation?
Q Review the June reconciliation provided above and then prepare the
corrected June bank reconciliation you can assume that the balance per
the bank statement is the correct amount
Q What will the balance brought down in the general ledger bank account be on
July Is this a favourable or unfavourable balance?
Q Mrs Naidoo has compared the corrected June bank reconciliation
statement and the July cash journals to the July bank statement. She
has noted the following:
The balance per the bank statement at July is R
favourable
The totals of the cash books for July before any adjustments, were:
Cash book receipts: R
Cash book payments: R
Deposit DS# and EFT EDD appear on the July bank
statement.
An EFT payment to a creditor Mighty Tools had been recorded in the
cash book payments as R instead of R The bank statement
reflected the correct amount.
A deposit of R on the July bank statement does not appear in Cliff
Tools cash journals. Mrs Naidoo queried this with the bank who informed
her that the deposit had been made into the incorrect bank account and
would be reversed in August
A transfer of R to the fixed deposit savings account on July had
been recorded in the cash book receipts.
The following entries on the July bank statement do not appear in
the July cash journals:
Bank charges of R
Debit order for Metro Fibre for internet charges of R
Stop order: Santam Insurance for R
Fixed deposit interest deposited into the current bank account of
R
Direct deposit by a debtor, M Biyela, for R
The following transactions in the July cash journals did not appear in the
July bank statement:
Deposits: : R
Payments: : R
Required:
Q Record any differences identified in the July bank reconciliation process in
the supplementary cash book receipts and payments with columns for details
and amount. Begin with the totals before any amendments.
Q Open, post to and balance the July bank account in the general ledger.
Q Prepare the bank reconciliation statement as at July
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started