The 31 August 2021 bank statement of Bach Ltd has just arrived from United Bank. To prepare Bachs bank reconciliation, you gather the following data:

a) Bachs Cash account has a balance of $2,900 on 31 August.

b) The bank statement includes two dishonoured cheques from customers: B. Smith, $400 and A. Green, $110.

c) The following cheques appear in the cash payments journal of Bach but have not yet been cleared by the bank at 31 August:

Cheque no. Amount

237 $190

288 170

291 520

294 630

d) Bach collects from a few customers by EFT. The August bank statement lists a $1,300 EFT deposit for a collection on account.

e) The bank statement includes two special deposits that Bach hasnt recorded yet: $970 for dividend revenue, and $80 interest revenue which Bach earned on its bank balance during August.

f) The bank statement lists a $30 bank service charge and a $15 excess transaction fee.

g) On 31 August, Bach deposited $350 from a customer, this deposit hasnt yet appeared on the bank statement.

h) The bank statement includes a $1,000 deduction for a cheque drawn by Interstate Freight Company, a business unrelated to Bach. Bach notified the bank of this error.

i) The 31 August balance on the bank statement is $4,855 Cr.

Required:

1. Record any required adjustments from the bank reconciliation in the Cash at bank account. Total and balance the account. [7 Marks]

2. Prepare the bank reconciliation statement for Bach Ltd at 31 August 2021. [5 Marks]

3. In preparing a bank reconciliation, explain how you would do the reconciliation if the bank statement showed a debit balance. [3 Marks]