Question 4

On 30 June 2016, the cash at bank account for Holmes Traders showed a debit balance of $13,398 and the bank statement showed a credit balance of 20,008. A comparison of the two sets of records disclosed:

1. that there was a bank service fee of $10
2. the bank had collected $1000 on behalf of Holmes Traders on the maturity of a note
3. unpresented cheques totalling $8340
4. that the date of a deposit of $2740 was shown by Holmes Traders as 30 June 2016, whereas the bank did not record the deposit until 1 July 2016
5. the bank statement shows interest received on bank account, $20

Required:

1. Prepare the bank reconciliation statement for Holmes Traders for the month ended at 30 June 2016.

2. Do you agree with the statement: Internal control of cash is strengthened by requiring that each days receipts are deposited intact and that all payments are made by cheque or electronic transfer? Discuss.