On the 30th of June, the bookkeeper of Salem Limited got a statement from one of their creditors, Port Alfred Stores, that was dated the 25th of June. The bookkeeper promptly wrote a check to the creditor for the amount of R1,800 that was stated as being due on the statement, and the bookkeeper mailed the check to the creditor on the same day.

Shortly after that, as part of his routine control procedures, the accountant for Salem Limited verified the statement obtained from Port Alfred Stores with the account for the latter in his company's accounts payable ledger. He discovered the following inaccuracies and discrepancies:

1. The sum of the invoices that were reported on the creditor's statement had been understated by R10, while the credits that were recorded in the accounts payable ledger account had been overstated by the same amount.

2. The gross amount of Invoice 504, which was supposed to be discounted by 33 1/3 percent as part of a transaction, was incorrectly put on the creditor's statement. The net amount of R1 068 had been appropriately recorded for the invoice in both the purchasing journal and the accounts payable ledger account of the company.

3. A payment that was paid to Port Alfred Stores on June 18 (to pay off the balance of R184 that was stated on the creditor's May statement), however, was not reported on the June statement. The accountant was able to determine that the bookkeeper at Port Alfred Stores had failed to record the money that was received after contacting Port Alfred Stores through telephone.

4. Credit note 68 for the amount of R122 was correctly recorded on the creditor's statement; nevertheless, for some reason, it had been erroneously entered in Salem Limited's purchases log and filed in the accounts payable ledger as if it had been an invoice.

5. Invoice number 706 for the amount of R368 with a due date of June 28 had been properly journalized and recorded in the ledger for accounts payable; however, it did not appear on the statement for June.

6. The proper amount of R220 was displayed accurately on the creditor's account, and the appropriate entry had been made in the purchases log of Salem Limited. When the bookkeeper was posting from the journals to the subsidiary ledgers, unfortunately, she credited the amount that should have been paid to the appropriate account in the accounts payable ledger to the account for Port Alfred Stores in the accounts receivable ledger.
(Because Port Alfred Stores also purchases products from Salem Limited, a separate account in the ledger that tracks accounts receivable has been established for the latter).

7. The bookkeeper had neglected to subtract the five percent discount that was provided for prompt payment of the net purchases made by Salem Limited for the month of June before making the payment that was to be made in favor of Port Alfred Stores on the 30th of June.


REQUIRED:

(a) After considering all of the information presented above, you are required to show a statement that will be sent to Port Alfred Stores to explain how much money is still owed to them or how much should be repaid by them on June 30.

(b) What are some of the most important goals of the process of reconciling the bank accounts? How can we make the most of this technique so that it can serve as an effective internal control measure?