REQUIRED SECTION B ANSWER ANY TWO (2) QUESTIONS (a) Prepare an updated cash book. [13 marks] (b) Prepare a bank reconciliation statement to reconcile the updated cash book balance with the bank statement balance. [6 marks] QUESTION 2 [30 MARKS] On 30 June 2018, Sara's cash book showed that she had an overdraft of $600 on her current account at the bank (c) Explain how the cash book is both a book of prime entry and a ledger account. [5 marks] A bank statement as at the end of June 2018 showed that Sara was in credit with the bank by $130 (d) Discuss, with examples, the purpose of preparing Bank Reconciliation statements. [6 marks) On checking the cash book with the bank statement, the following is found: 1. Cheques drawn, amounting to $1,000, had been entered in the cash book but had not been presented. 2. Cheques received, amounting to $800, had been entered in the cash book, but had not been credited by the bank. 3. On instructions from Sara, the bank had transferred interest received on her deposit account amounting to $120 to her current account, recording the transfer on 5 July 2018. This amount had, however, been credited in the cash book as on 30 June 2018. 4. Bank charges of $70 shown in the bank statement had not been entered in the cash book 5. The payments side of the cash book had been undercast by $20. 6. Dividends received amounting to $400 had been paid direct to the bank and not entered in the cash book. 7. A cheque for $100 drawn on deposit account had been shown in the cash book as drawn on current account. 8. A cheque issued to Jones for $50 was replaced when out of date. It was entered again in the cash book, no other entry being made. Both cheques were included in the total of unpresented cheques shown above