On December 31, 2020, TEJ Company had a cash balance
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On December 31, 2020, TEJ Company had a cash balance per books of $8,664. The statemen
from DUABI Islamic Bank on that date showed a balance of $15,900. A comparison of th
bank statement with the Cash account revealed the following facts.
1. NSF check of customer returned by bank $4,200.
2. Check No. 210 was correctly written and paid by the bank for $593. The cash payment journa
reflects an entry for Check No. 210 as a debit to Accounts Payable and a credit to Cash i
Bank for $539.
3. Bank service charge for December was $100.
4. A payment on account was incorrectly entered in the cash payments journal and posted to th
accounts payable subsidiary ledger for $824 when Check No. 318 was correctly prepared fo
$284. The check cleared by the bank in December.
5. The bank collected a note receivable for the company for $3,000 plus $100 interest revenue.
6. Checks written in December but still outstanding $8,000.
7. Checks written in November but still outstanding $5,150.
8. Deposits of December 29 and 30 not yet recorded by bank $5,200.
a. Prepare a bank reconciliation statement at September 30 for TEJ Company. (8 marks)
b. Explain the need and importance of the bank reconciliation
a. bank reconciliation statement:
(8 Marks: each column 4 marks)
b. Explain the need and importance of the bank reconciliation (2 marks)