Question 5 The following is Ms Mowatts cash book for May 2007. All the details concern the bank columns only. 2007 $ May 1. Overdraft brought forward 3,340 May 4. Bought motor van by cheque 5,000 May 7. Cash sales banked immediately 1,630 May 10. Mills introduced extra capital 10,000 May 18. Paid D. Marple Ltd by cheque 237 May 29. Cheque received from Gary Chambers and banked 555 May 30. Cashed a cheque to pay staff 470 Additional Information: The bank statement of Ms Kemisha on 31 May 2007 shows a balance of $1,995. The following information was discovered. a. Bank charges of $110 have been entered in the bank statement but not in the cash book. b. Dividends received from Mr. Walker of $280 and banked in the month have not been recorded in the cash book. c. The cheque banked on 29 May for $555 has not been entered on the bank statement. d. Standing orders of $920 for insurance have been entered on the bank statement but not in the cash book. e. A cheque of $75, received as cash sales on 7 May and banked, has been returned marked insufficient funds. No entry has been made in the books. f. The cheque paid to Marple of $237 has not yet been presented by them. Requirements: 1. You are to enter up all relevant information to date in Ms Kemishas cash book for May 2007 and balance off. 2. Draw up a bank reconciliation statement as on 31 May 2007, reconciling the corrected cash book balance with the bank statement balance. 3. Explain why bank reconciliation statements are drawn up.