In the draft accounts for the year ended 31 October 20X9 of Thomas P Lee, garage proprietor, the balance at bank according to the cash book was £894.68 in hand. Subsequently the following discoveries were made:

(1) Cheque number 176276 dated 3 September 20X9 for £310.84 in favour of G Lowe Limited has been correctly recorded in the bank statement, but included in the cash book payments as £301.84.

(2) Bank commission charged of £169.56 and bank interest charged of £109.10 have been entered in the bank statement on 23 October 20X9, but not included in the cash book.

(3) The recently received bank statement shows that a cheque for £29.31 received from T Andrews and credited in the bank statements on 9 October 20X9 has now been dishonoured and debited in the bank statement on 26 October 20X9. The only entry in the cash book for this cheque records its receipt on 8 October 20X9.

(4) Cheque number 177145 for £15.10 has been recorded twice as a credit in the cash book.

(5) Amounts received in the last few days of October 20X9 totalling £1,895.60 and recorded in the cash book have not been included in the bank statements until 2 November 20X9.

(6) Cheques paid according to the cash book during October 20X9 and totalling £395.80 were not presented for payment to the bank until November 20X9.

(7) Traders’ credits totalling £210.10 have been credited in the bank statement on 26 October 20X9, but not yet recorded in the cash book.

(8) A standing order payment of £15.00 on 17 October 20X9 to Countryside Publications has been recorded in the bank statement but is not mentioned in the cash book.

Required:

(a) Prepare a computation of the balance at bank to be included in Thomas P Lee’s balance sheet as at 31 October 20X9.

(b) Prepare a bank reconciliation statement as at 31 October 20X9 for Thomas P Lee.

(c) Briefly explain why it is necessary to prepare bank reconciliation statements at accounting year ends.