Cash book of Buddies Cafe on 30 April 2021 shows a credit balance amounted RM29,040. However,...

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Cash book of Buddies Cafe on 30 April 2021 shows a credit balance amounted RM29,040. However, bank statement balance shows a debit balance of RM16,944. Detailed examination of the two records revealed the following: A cheque for RM1,456 drawn in payment of the utility account had been entered in the cash book as RM1,024 but was shown correctly in the bank (1) statement. A cheque for RM12,480 drawn in favour of Cute Sdn. Bhd. had been omitted from the bank statement. The bank had debited it wrongly to another customer's account. (2) (3) The debit side of the cash book had been undercast by RM2,400. A cheque for RM1,680 from James Wong Enterprises that was banked into bank was dishonoured and shown as such on the bank statement although no entry relating to this had been made in the cash book. (4) The bank had debited a cheque for RM1,008 to Herry Cafe account in error. It should have been debited by them to Jerry Cafe account. (5) Interest amounting to RM1,824 had been debited by the bank but not entered in the cash book. (6) (7) A lodgment of RM8,640 on 25 April 2021 had not been credited by the bank. Cheques totaling RM10,080 drawn on 24 April 2021 had not been presented for payment. (8) (9) A dividend of RM720 for ordinary shares had been paid directly to Herry Cafe bank account and no entry made in the cash book. REQUIRED: (a) Prepare an adjusted cash book as at 30 April 2021. (7 marks) (b) Prepare a Bank Reconciliation Statement as at 30 April 2021. (6 marks) "The bank will debit the account of the business for payment such as insurance and subscription. However, for the bank to do that the instruction comes from the business itself rather than the creditors." (c) With reference to the above statement, state the method used and briefly explain (7 marks) [Total: 20 marks] THREE (3) advantages of using this method for a business. Cash book of Buddies Cafe on 30 April 2021 shows a credit balance amounted RM29,040. However, bank statement balance shows a debit balance of RM16,944. Detailed examination of the two records revealed the following: A cheque for RM1,456 drawn in payment of the utility account had been entered in the cash book as RM1,024 but was shown correctly in the bank (1) statement. A cheque for RM12,480 drawn in favour of Cute Sdn. Bhd. had been omitted from the bank statement. The bank had debited it wrongly to another customer's account. (2) (3) The debit side of the cash book had been undercast by RM2,400. A cheque for RM1,680 from James Wong Enterprises that was banked into bank was dishonoured and shown as such on the bank statement although no entry relating to this had been made in the cash book. (4) The bank had debited a cheque for RM1,008 to Herry Cafe account in error. It should have been debited by them to Jerry Cafe account. (5) Interest amounting to RM1,824 had been debited by the bank but not entered in the cash book. (6) (7) A lodgment of RM8,640 on 25 April 2021 had not been credited by the bank. Cheques totaling RM10,080 drawn on 24 April 2021 had not been presented for payment. (8) (9) A dividend of RM720 for ordinary shares had been paid directly to Herry Cafe bank account and no entry made in the cash book. REQUIRED: (a) Prepare an adjusted cash book as at 30 April 2021. (7 marks) (b) Prepare a Bank Reconciliation Statement as at 30 April 2021. (6 marks) "The bank will debit the account of the business for payment such as insurance and subscription. However, for the bank to do that the instruction comes from the business itself rather than the creditors." (c) With reference to the above statement, state the method used and briefly explain (7 marks) [Total: 20 marks] THREE (3) advantages of using this method for a business.

Answer rating: 100% (QA)

a b c This method is known as Standing Orders ... View the full answer