QUESTION 4

Cash Book of Syarikat Kemboja Sdn. Bhd. shows a debit balance of RM1,560,000 on 31 December 2019. This balance differs from the bank statement balance received on the same date. After checking, it was found that the difference is due to the following things:

1.Several checks amounting to RM652,000 have been recorded in the Cash Book but have not yet been credited in the bank statement.

2. A check to a creditor worth RM360,000 was wrongly recorded in the Cash Book as RM630,000.

3. A check amounting to RM280,000 paid to the Wholesale Company has not been submitted for payment.

4. The check received from Syarikat Zamani worth RM78,000 was returned by the bank.

5. The Bank Statement shows the following items that are not in the Cash Book:

DETAILS	RM
Cheque Book	3,000
Bank Charges/ Fees	9,000
Interest on savings	65,000
Dividend	40,000

Required:

1. Cash Book updated on 31 December 2019.

2. Bank Reconciliation Statement on 31 December 2019 after taking into account the updated Cash Book balance.

3. Explain the two (2) purposes why it is necessary to prepare a Bank Reconciliation Statement.