Eastern Ceramic Limited (ECL) prepares monthly bank reconciliations of the companys cheque account balance. The bank statement of ECL shows that the company has $9 477 in its cheque account as on 31 May 2022. However, the closing balance of the cheque account as per ECLs accounting records on 31 May was $10 227.

On further investigation it was found that:

A customers cheque (cheque No. 399) for $1 000 previously recorded in the account books as cash receipt and deposited into the bank was bounced due to not sufficient funds (NSF) in the customer bank account.

The deposit of $2 700 in the bank statement for bank collection of a note receivable ($2 500) and the related interest ($200) had not been recorded in the accounting records of ECL.

The May 31 Interest deposit of $40 had not been recorded in the accounting records of ECL.

Cheque number #5489 for $650 paid to Eastern Energy for an electricity bill and cheque number #5490 for $230 paid to Office Works for stationery and recorded as payments in the books of accounts were not presented to the bank yet.

A cheque for $1 780 received from Torrens Tiles and a cheque for $1560 received from Metric Tiles for tile designing services were deposited into the bank on 30 May and does not appear on the bank statement.

REQUIRED

a. Prepare a bank reconciliation statement in proper form for 31 May 2022, showing reconciliation statement starting with balance as per bank statement, and then showing reconciliation statement starting with balance as per account books.

b. What amount would ECL report as the cash balance in the statement of financial position (balance sheet) on 31 May 2022?

ANSWER:

	$	$
Balance as per Bank Statement

	$	$
Balance as per Business books