Question Two

The cash book of Ramogi stores had adebt balance of sh 24000 on 30th June 2006. On

the same date the bank statement had a credit balance of sh 25900. The two

documents were compared and the following differences were realized.

i) Acheque of sh 7600 deposited on june 29 had not been evident by the

bank.

ii) Cheque no. 003 drawn for sh 5,200 was recorded in the cash book as sh

2500

iii) The bank had collected cheque from debtors worth sh 9700.

iv) The bank charges for the month amounted to sh 1600

v) Acheque issued to a creditor of sh 11,200 was paid bank as sh 12000

vi) Acheque drawn against Runninga stores for sh 6800 was charged in error

against Ramogi strores account

vii) A standing order of sh5500 had been paid by the bank

viii) A dividend cheque for sh 9000 had been collected and credited by the

bank.

ix) Un represented cheques amounted to sh 15,800.

Required.

a) Prepare adjustment cash book (5 marks)

b) Bank reconciliation statement

1. A partnership has the following capital balances: A ( 20% of profits and losses) $ 100,000 B ( 30% of profits and losses) $ 120,000 C ( 50% of profits and losses) $ 180,000 If the partnership is to be liquidated and $ 30,000 becomes immediately available, who gets that money? Show your work: 2. The following balance sheet is for a local partnership in which the partners have become very unhappy with each other.Which one of the following statements best explains the most important difference between the balance sheet and the profit and loss statement? O The income statement presents the economic and operational results of financial performance of firms by considering revenues and expenses over a specific operating period. The balance sheet reflects the financial condition with its sections on a particular date or specific point in time. The balance sheet is prepared on cumulative basis (over a period of time, such as year) but the income statement is not prepared on cumulative basis. The balance sheet shows the net profit or loss incurred over a specific operating period. The profit and loss statement shows the liquidity and solvency position of a particular company. O The balance sheet proves and reflects the fundamental accounting equation but the income statement does not because it is cumulative.The accountant for Orange Line Company is almost nished preparing the work sheet for the year ended August 31, 2017. The totals of the accounts in the income statement and balance sheet columns are presented below. Calculate the prot or loss, write this in the proper columns, and calculate the nal totals for these columns. Clearly indicate whether the company had a prot or loss. Income Statement Balance Sheet Dr. Cr. Dr. Cr. Totals 53,875 43,425 55,550 66,000 Prot or loss Totals