Question 2(10 marks)

The following information is produced by comparing the records of the SolaryEnergy Ltd with their most recent bank statement:

1. Debit balance as per cash at bank account in Solarys ledger as at 30 June, $25,288
2. Credit balance as per bank statement as at 30 June, $33,720
3. Deposits not reflected on bank statement, $4,180
4. Unpresented cheques at 30 June, $12,469
5. Service charge on bank statement, $50
6. Interestearned on bank account, $25
7. Cheque for insurance expense, $1,790 incorrectly recorded in books as $1,970
8. A dishonoured cheque written by a client Paul Smith, $1,300
9. Electronic transfer from a customer of $1,288

The entity doesnt use special journals for record keeping. The entity prepares bank reconciliation statement at the end of each month.

Required:

1. Prepare a bank reconciliation statement for Solary Energy Ltd at 30 June. (6 marks)
2. Explain the purpose of a bank reconciliation and discuss why a bank reconciliation is still necessary even most of the transactions take place using electronic transfer of funds nowadays.(4 marks)