BANK RECONCILIATION: WORKED EXAMPLE
1.1. CONCEPTS
Indicate whether the following statements are TRUE or FALSE:
1.1.1.
Preparing a bank reconciliation statement is an important part of internal control in a
business. … TRUE
1.1.2.
A debit balance in the Bank ledger account indicates an unfavourable balance. …
FALSE
1.1.3.
A post-dated cheque issued must be recorded in the Cash Payments Journal on the
date issued. … TRUE
1.1.4.
Interest on overdraft is an operating expense. … FALSE
1.2. BANK RECONCILIATION
REQUIRED:
1.2.1.
Prepare the Cash Journals
1.2.2.
Calculate the correct Bank balance on 31 July 2015
1.2.3.
Prepare the Bank Reconciliation Statement as at 31 July 2015
1.2.4.
Suggest ONE reason why the deposit is not reflected on the Bank Statement and
give TWO internal control measures that must be applied to avoid this in the
foreseeable future.
The following financial information has been extracted from the books of Justina
Retailers on 31 July 2015:
INFORMATION:
A. Bank Reconciliation statement of Justina Traders as at 30 June
2015
, Credit balance as per the Bank Statement R5 040
Outstanding deposit R3 720
Outstanding cheques:
Number 44 (19 January 2015) R1 080
Number 90 R 168
Number 95 R 516
Number 97 R 240
Number 98 R 839
Balance as per the Bank Account ? R5 917
Provisional totals:
Cash Receipts Journal: R7 704
Cash Payments Journal: R6 204
B. On comparing the above Bank Reconciliation Statement with the
Bank Statement from Kekana Bank for July 2015, the following was
noted:
● Cheque number 44 donated to Rosebank Children’s Home did not appear in
the July Bank Statement.
● Cheque number 90 issued to Nchabeleng Traders dated 28 May 2015 has
been lost in the post, replacement cheque number 102 was not presented for
payment and no entries for this transaction were made.
● Cheque number 95 issued to ZZ2 Suppliers for trading stock appears on the
July Bank Statement as R615, upon investigation, it was found that the Bank
was correct.
● Cheque number 98 was issued to Fraser Builders for repairs on 24 July 2015.
Justina Retailers stopped the payment because the work done was
substandard. No entry has been made to show that the cheque was
cancelled.
● The outstanding deposit did appear on the July Bank Statement.
C. On comparing the July Cash Journals with the July Bank
Statement, the following was noted:
● The following deposits did not appear in the Bank Statement for July 2015:
- R3 000 received from a debtor K. Senne on 18 July 2015
- R5 600 for cash sales on 29 July 2015.
1.1. CONCEPTS
Indicate whether the following statements are TRUE or FALSE:
1.1.1.
Preparing a bank reconciliation statement is an important part of internal control in a
business. … TRUE
1.1.2.
A debit balance in the Bank ledger account indicates an unfavourable balance. …
FALSE
1.1.3.
A post-dated cheque issued must be recorded in the Cash Payments Journal on the
date issued. … TRUE
1.1.4.
Interest on overdraft is an operating expense. … FALSE
1.2. BANK RECONCILIATION
REQUIRED:
1.2.1.
Prepare the Cash Journals
1.2.2.
Calculate the correct Bank balance on 31 July 2015
1.2.3.
Prepare the Bank Reconciliation Statement as at 31 July 2015
1.2.4.
Suggest ONE reason why the deposit is not reflected on the Bank Statement and
give TWO internal control measures that must be applied to avoid this in the
foreseeable future.
The following financial information has been extracted from the books of Justina
Retailers on 31 July 2015:
INFORMATION:
A. Bank Reconciliation statement of Justina Traders as at 30 June
2015
, Credit balance as per the Bank Statement R5 040
Outstanding deposit R3 720
Outstanding cheques:
Number 44 (19 January 2015) R1 080
Number 90 R 168
Number 95 R 516
Number 97 R 240
Number 98 R 839
Balance as per the Bank Account ? R5 917
Provisional totals:
Cash Receipts Journal: R7 704
Cash Payments Journal: R6 204
B. On comparing the above Bank Reconciliation Statement with the
Bank Statement from Kekana Bank for July 2015, the following was
noted:
● Cheque number 44 donated to Rosebank Children’s Home did not appear in
the July Bank Statement.
● Cheque number 90 issued to Nchabeleng Traders dated 28 May 2015 has
been lost in the post, replacement cheque number 102 was not presented for
payment and no entries for this transaction were made.
● Cheque number 95 issued to ZZ2 Suppliers for trading stock appears on the
July Bank Statement as R615, upon investigation, it was found that the Bank
was correct.
● Cheque number 98 was issued to Fraser Builders for repairs on 24 July 2015.
Justina Retailers stopped the payment because the work done was
substandard. No entry has been made to show that the cheque was
cancelled.
● The outstanding deposit did appear on the July Bank Statement.
C. On comparing the July Cash Journals with the July Bank
Statement, the following was noted:
● The following deposits did not appear in the Bank Statement for July 2015:
- R3 000 received from a debtor K. Senne on 18 July 2015
- R5 600 for cash sales on 29 July 2015.
