Liam Carr received a bank statement for the month of October 2020 which showed a debit balance of $29,686 as at 31 October 2020. His cashbook had an overdrawn balance of $19,195 as at this date.

On examining the cash book and the bank statement, the following additional information was found:

i. A post-dated cheque for $6,000 received from a customer on 31 October 2020 had been entered in the cash book.

ii. A cheque for $440 received from a customer had been debited twice in the cash book.

iii. Three cheques drawn by the business during October 2020 had not yet been presented for payment. The amounts were as follows: $220, $460 and $1,380

iv. A cheque payment of $2,677 made to a trade creditor had been entered in the cash book as $2,766.

v. Share dividends of $800 were credited directly into the bank account but had not been entered in the cash book.

vi. During October 2020, the bank paid the following amounts on behalf of the business under standing orders:

Subscription to a trade association $500

Office rent $4,000

vii. Owing to a casting error, the total of the credit side of the cash book had been overstated by $500.

viii. A cheque of $3,000 received and banked at 30 October 2020 was not credited by the bank until 2 November 2020.

Required

a) Prepare the updated Cash book to show the adjusted balance. (4.5 marks)

b) Starting with the updated cash book balance, draw up a bank reconciliation statement for Liam Carr. (4 marks)