The summary of the cash book of Inter Ltd for the month ending 30 September 2017 showed that the business had 1,920 in its current account at the bank.

On checking the cash book against the bank statement you discover the following:

1. Bank charges of 70 shown on the bank statement have not been entered in the cash account.

2. A cheque drawn for 94 has been entered in error as a receipt in the cash account.

3. A cheque for 36 has been returned by the bank marked return to drawer but it has not been written back in the cash account.

4. The opening balance as at 1 September 2017 in the cash account was brought down in error as 2,814 while it should have been entered as 2,940.

5. Three cheques paid to suppliers for 428, 740 and 60 have not yet been presented to the bank.

6. The final entry in the paying-in book shows a deposit of 3,084 which has not yet been credited to the account by the bank.

7. The bank has debited a cheque for 144 in error to Inter Ltds account.

8. A monthly direct debit of 30 payable to an internet service provider was paid twice by the bank in error. However, this 30 direct debit has not been entered into the cashbook.

9. The bank statement shows an overdrawn balance of 308^[1].

Requirement

1. Make any adjustments to the cash book balance that you consider necessary.

7 Marks

2. Prepare a bank reconciliation statement as at 30 September 2017.

[1] An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. Usually there is a prior agreement with the account provider for an overdraft, but the amount overdrawn must be within an authorized limit.