On 30 April, 2021, Andrea's cash book showed a debit balance of 7,200. On the same...

 

 

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On 30 April, 2021, Andrea's cash book showed a debit balance of £7,200. On the same date her bank statement balance showed a credit balance of £4,022. On examination of the records, the following were revealed: • On 1 April, 2021 the cash book balance was overstated by £400 • A cheque issued for £275 was recorded as £257 • Cheques received from the following customers and paid into the bank account did not appear on the bank statement. Birk £700 £2,500 £4,500 £2,000 Kuman Michaels Davidson Cheques paid to the following suppliers had not been presented to the bank for payment: Monks £1,080 £2,000 £1,200 £1,800 Thomas Klien Hamzat The following customers who owed Andrea paid Andrea by bank transfer: Simons £520 Marks £500 Arafat £600 Cummins £300 Standing orders given by Andrea to the bank were paid on 29 April, 2021 as follows: Rent £700 Club subscription £300 Bank charges of £60 appeared on the bank statement only REQUIRED: a) Prepare an Adjusted Cash Book. (10 marks) b) Prepare a Bank Reconciliation Statement as at 30 April, 2021. (8 marks) c) Explain briefly the principal reasons for preparing a bank reconciliation and discuss the possible reasons why the cash book and bank statement balances may differ. (7 marks) On 30 April, 2021, Andrea's cash book showed a debit balance of £7,200. On the same date her bank statement balance showed a credit balance of £4,022. On examination of the records, the following were revealed: • On 1 April, 2021 the cash book balance was overstated by £400 • A cheque issued for £275 was recorded as £257 • Cheques received from the following customers and paid into the bank account did not appear on the bank statement. Birk £700 £2,500 £4,500 £2,000 Kuman Michaels Davidson Cheques paid to the following suppliers had not been presented to the bank for payment: Monks £1,080 £2,000 £1,200 £1,800 Thomas Klien Hamzat The following customers who owed Andrea paid Andrea by bank transfer: Simons £520 Marks £500 Arafat £600 Cummins £300 Standing orders given by Andrea to the bank were paid on 29 April, 2021 as follows: Rent £700 Club subscription £300 Bank charges of £60 appeared on the bank statement only REQUIRED: a) Prepare an Adjusted Cash Book. (10 marks) b) Prepare a Bank Reconciliation Statement as at 30 April, 2021. (8 marks) c) Explain briefly the principal reasons for preparing a bank reconciliation and discuss the possible reasons why the cash book and bank statement balances may differ. (7 marks)

Answer rating: 100% (QA)

Bank Reconciliation Statement can be prepared 1 After adjusting the Cash Book balance 2 Before adjus... View the full answer