The bank reconciliation made by Johnson Ltd on 31 August 2016 showed a deposit in transit of $570 and two outstanding cheques: no. 597 for $260 and no. 603 for $180. The adjusted balance per books on 31 August was $7980 debit.

The bank statement shown below is available for September. A list of deposits made and cheques written during September is shown here:

The cash at bank account balance on 30 September was $8061. In reviewing the cheques, the bookkeeper discovered that cheque no. 610, written for $258 for a repairs expense, was recorded in the cash payments journal as $285. The 'return' item for $335, which Johnson deposited on 24 September, was a payment on account from customer D. Lewis (dishonoured cheque).

1. Prepare a bank reconciliation statement for Johnson Ltd at 30 September.
2. Prepare the necessary general journal entries to bring the cash at bank account up-to-date as at 30 September 2016.
3. Could a business dispense with its own cash records and rely entirely on bank statements?

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Deposits made Sept. 1 4 8 12 16 24 29 30 $ 350 420 296 580 404 535 256 430 3271 No. Cheques written 607 608 609 610 611 612 613 614 615 616 $ 450 325 192 285 410 242 214 453 357 262 3190