The balance as at 30 June 20X6 on the cash book of Jim France was a credit of £9,470. The balance per bank statement was £7,510 ‘in credit’.

An examination of the cash book and bank statements revealed the following:

1. A cheque drawn in favour of France by Holland for £2,600 had been dishonoured. No entry regarding the dishonour had been made in the cash book.

2. Cheques amounting to £15,700 had been issued by France before 30 June, but had not been presented by that date. 3. £6,500 receipts from customers had been credited to France’s bank account through the

bank Giro system but no entry had been made in the cash book.

4. France paid cheques amounting to £7,240 into a branch of his bank on the morning of 30 June but this deposit had not been recorded in the bank statement.

5. The bank had ‘credited’ France’s account with a receipt of £420 which should have been credited to the account of his brother, A. France.

6. The total of the payments side of France’s cash book at the foot of page 17 was £121,750 which had been carried to the top of page 18 as £127,150.

7. Bank charges and interest of £760 had been charged by the bank but had not been entered in the cash book.

8. France had purchased a subscription for an American trade magazine. The bank had made this payment on France’s behalf. France had estimated that the sterling cost of the subscription was £120 and had shown it in the cash book as such. The bank statement recorded that the cost had actually been £140.

Required:

(a) Make the appropriate adjustments in the cash book showing the correct balance.

(b) Prepare the bank reconciliation statement as at 30 June 20X6.

Answer rating: 100% (QA)

NOTE In accordance with the outstanding bank entries quoted the net difference between the balance a... View the full answer