Question 7

(a) Define the following terms:

1. Unpresented Cheques
2. Standing Order
3. Bad Debt provision (6marks)

(b) On March 31 2010 the bank column of Mr. L Reids cash book showed a debit balance of $2 900. The monthly bank statement written up to March 2002 showed a credit balance of $2 950.

Investigations revealed the following:

(i) A credit transfer of $500 had been collected by the bank

(ii) Bank charges $30 was not entered in the cash book

(iii) A direct debit of $70 had been paid by the bank

(iv) A standing order $200 for insurance payment had been paid by the bank

(v) Two cheques totalling $540 were paid to supplier but had not been presented to the bank

for payment

(vi) Cash and cheques amounting to $690 had been paid into the bank on March 31 but were

not credited by the bank until April 2 2003.

Required:

(i) Starting with the balance of $2 900, bring the cash book up to date.

(10 marks)

(ii) Prepare a bank reconciliation statement as at March 31 2010 (9 marks)