http://idianaconsultancy.blogspot.

com/
TOPIC FOUR : Bank Réconciliation Statement
QUESTIOS

QUESTION 1
Bank balances for Nana Chong’s business are as follows:
Balance as per bank statement, 31 July 2012 $12,345 (Cr)
Balance as per cash book (bank column), 31 July 2012 $38,086 (Dr)

The following events were not yet recorded in the cash book:
(i) A trade debtor’s cheque for $5,000 was returned because of insufficient funds.
(ii) Monthly bank charges amounted to $120.
(iii) During the month, the following sums were paid by standing orders:
Insurance premium $1,220
Rent $2,600
(iv) A customer deposited a cheque for $3,900 directly into Nana Chong’s business bank account on 20
July 2010.

Additional information:
(v) A cheque for $2,500 deposited into the bank account on 31 July 2012 did not appear on the bank
statement.
(vi) Post-dated cheques totalling $23,000 were held in the cash till on 31 July 2012, but had already been
recorded in the cash book as banked.
(vii) The following cheques issued by the business were not presented to the bank for payment:
Cheque No. Amount
445216 $991
445217 $1,371
445218 $2,635
(viii) A cheque payment of $4,321 was entered into the cash book as $4,123.

Required:
Prepare a bank reconciliation statement for the business as at 31 July 2012 without adjusting the cash book.
Start with the balance as per bank statement. (6 marks)

NSS BAFS: Frank Wood’s Financial Accounting 1 59 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
Answer:
Nana Chong
0.5
Bank Reconciliation Statement as at 31 July 2012
$ $
Balance as per bank statement 12,345 0.5
Add Dishonoured cheque (i) 5,000 0.5
Bank charges (ii) 120 0.5
Standing orders — Insurance premium (iii) 1,220 0.5
Rent (iii) 2,600 0.5
Uncredited cheque (v) 2,500 0.5
Post-dated cheques (vi) 23,000 0.5
Bookkeeping error ($4,321 – $4,123) (viii) 198 34,638 0.5
46,983
Less Direct credit (iv) 3,900 0.5
Unpresented cheques ($991 + $1,371 + $2,635) (vii) 4,997 (8,897 ) 0.5
Balance as per cash book 38,086 0.5

QUESTION 2
The bank account for Flora Lee’s business showed a credit balance of $33,220 as at 30 September 2011,
which did not agree with the debit balance of $19,997 shown on the bank statement as at the same date. The
following discrepancies were found upon investigation:

(i) Cheques for $350, $600 and $2,100 were issued by the business during the month but had not been
presented for payment.
(ii) On 30 September 2011, the bank paid the business office rent of $13,300 under a standing order. This
item had not been recorded in the cash book.
(iii) On 29 September 2011, the owner transferred $11,200 from her personal bank account to the business
bank account. This item had not been recorded in the cash book.
(iv) A trade debtor paid $340 directly into the business bank account. This item was shown on the bank
statement but had not been recorded in the cash book.
(v) An amount of $900 was paid into the bank account on 30 September 2011 but had not yet been
credited by the bank.
(vi) A cheque issued to Albert Au for $3,880 was correctly recorded in the bank statement but had been
recorded in the cash book as $3,180.
(vii) A cheque receipt of $7,122 was wrongly recorded on the credit side of the cash book as $7,211.
(viii) Due to a casting error, the total of the debit side of the cash book was overstated by $800.

Required:
(a) Update the cash book. (4 marks)
(b) Draw up a statement, under the correct heading, to account for the difference between the updated cash
book and the balance shown on the bank statement. (2 marks)

NSS BAFS: Frank Wood’s Financial Accounting 1 60 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
Answer:
(a)
Cash Book
Bank Bank
2011 $ 2011 $
Sept 30 Capital ⎯ Credit transfer (iii) 11,200 Sept 30 Balance b/d 33,220 0.5 0.5
" 30 Accounts receivable ⎯ " 30 Rent ⎯ Standing Order (ii) 13,300 0.5
Credit transfer (iv) 340 " 30 Albert Au ⎯ Incorrect amount 0.5
" 30 Cheque receipt wrongly recorded entered ($3,880 − $3,180) (vi) 700 0.5
on credit side with a wrong " 30 Debit side total of cash book
amount (vii) ($7,122 + $7,211) 14,333 overstated (viii) 800 0.5 0.5
" 30 Balance c/d 22,147 0.5
48,020 48,020

(b)
Flora Lee
Bank Reconciliation Statement as at 30 September 2011
$
Adjusted balance as per cash book (22,147 ) 0.5
Add Unpresented cheques ($350 + $600 + $2,100) (i) 3,050 0.5
(19,097 )
Less Uncredited item (v) (900 ) 0.5
Overdraft balance as per bank statement (19,997 ) 0.5

QUESTION 3
Jack Wong received a bank statement for the month of October 2012 which showed a debit balance of
$29,686 as at 31 October 2012.

On examining the cash book and the bank statement, the following additional information was found:
(i) A post-dated cheque for $6,000 received from a customer on 31 October 2012 had been entered in the
cash book.
(ii) A cheque for $440 received from a customer had been debited twice in the cash book.
(iii) Three cheques drawn by the business during October 2012 had not yet been presented for payment.
The amounts were as follows: $220, $460 and $1,380
(iv) A cheque payment of $2,677 made to a trade creditor had been entered in the cash book as $2,766.
(v) Share dividends of $800 were credited directly into the bank account but had not been entered in the
cash book.
(vi) During October 2012, the bank paid the following amounts on behalf of the business under standing
orders:
Subscription to a trade association $500
Office rent $4,000
(vii) Owing to a casting error, the total of the credit side of the cash book had been overstated by $500.
(viii) A cheque of $3,000 received and banked at 30 October 2012 was not credited by the bank until 2
November 2012.

NSS BAFS: Frank Wood’s Financial Accounting 1 61 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
Required:
Prepare a bank reconciliation statement as at 31 October 2012, starting with the unadjusted cash book
balance. (6 marks)

Answer:
Jack Wong
0.5
Bank Reconciliation Statement as at 31 October 2012
$ $
Unadjusted overdraft balance as per cash book (19,195 ) 0.5
Add Unpresented cheques ($220 + $460 + $1,380) (iii) 2,060 0.5
Accounts payable — Incorrect amount entered ($2,766 – $2,677) (iv) 89 0.5
Dividends — Credit transfer (v) 800 0.5
Overstatement of credit side total of cash book (vii) 500 3,449 0.5
(15,746 )
Less Post-dated cheque (i) 6,000 0.5
Cheque receipt debited twice in cash book (ii) 440 0.5
Standing orders — Subscription to a trade association (vi) 500 0.5
Office rent (vi) 4,000 0.5
Uncredited item (viii) 3,000 (13,940 ) 0.5
Overdraft balance as per bank statement (29,686 ) 0.5

QUESTION 4
The bank account and the bank statement of a business for the month of July 2011 are given below:
Bank
2011 $ 2011 $
Jul 2 M Ma 7,050 Jul 1 Balance b/d 900
" 5 Cash sales 310 " 8 Purchases 2,595
" 15 I Ip 375 " 12 H Hui 205
" 19 Cash sales 1,120 " 19 Furniture and fittings 110
" 30 C Chan 2,910 " 21 P Poon 7,955
" 31 Balance c/d 5,009 " 24 K Kwan 1,000
" 27 Petty cash 789
" 29 Drawings 2,570
" 30 Rent 650
16,774 16,774

Bank Statement
2011 Dr Cr Balance
$ $ $
Jul 1 Opening balance 900 Dr
" 3 Cheque 7,050 6,150 Cr
" 4 Returned cheque — M Ma 7,050 900 Dr
" 5 Deposit 310 590 Dr
" 9 XYZ Co 2,595 3,185 Dr
" 14 Cheque 205 3,390 Dr
" 15 Cheque 375 3,015 Dr
" 15 Standing order — Kowloon Ltd 1,500 4,515 Dr
" 18 Direct debit — Electricity 700 5,215 Dr
" 19 Better Furniture Co 110 5,325 Dr
" 21 Deposit 1,120 4,205 Dr
" 23 Cheque 7,955 12,160 Dr
" 23 Direct credit — Dividends 3,220 8,940 Dr
" 24 Cheque 1,000 9,940 Dr
" 28 ATM withdrawal 789 10,729 Dr
" 31 ABC Properties Ltd 650 11,379 Dr
" 31 Overdraft interest 18 11,397 Dr
" 31 Closing balance 11,397 Dr

NSS BAFS: Frank Wood’s Financial Accounting 1 62 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
Required:
(a) Update the cash book. (3.5 marks)
(b) Draw up a bank reconciliation statement as at 31 July 2011, starting with the bank statement balance
and ending with the updated cash book balance. (2.5 marks)

Answer:
(a)
Bank
2011 $ 2011 $
Jul 31 Dividends ⎯ Direct credit 3,220 Jul 31 Balance b/d 5,009 0.5 0.5
" 31 Balance c/d 11,057 " 31 M Ma — Dishonoured cheque 7,050 0.5 0.5
" 31 Kowloon Ltd — Standing order 1,500 0.5
" 31 Electricity — Direct debit 700 0.5
" 31 Overdraft interest 18 0.5
14,277 14,277

(b)
Bank Reconciliation Statement as at 31 July 2011 0.5
$
Overdraft balance as per bank statement (11,397 ) 0.5
Add Uncredited cheque 2,910 0.5
(8,487 )
Less Unpresented cheque (2,570 ) 0.5
Overdraft balance as per cash book (11,057 ) 0.5

QUESTION 5
Mr Lee received a bank statement for his business on 2 December 2011, showing a credit balance of $36,326
as at 30 November 2011, which did not agree with the cash book balance.

Upon investigation, he found that:

(i) An autopay item of $360 for a telephone bill had not been recorded in the cash book.
(ii) A cheque for $4,100 received and recorded in the cash book had not been credited by the bank.
(iii) A cheque for $3,300 received from a customer, Vicky Leung, had been entered in the cash book but the
cheque was subsequently dishonoured by the bank. The returned cheque had not been recorded in the
cash book.
(iv) Mr Lee found that a standing order of $1,230 for the payment of subscriptions to a trade journal had
been recorded on the bank statement but not in the cash book.
(v) Bank charges of $1,400 were wrongly listed as a credit item on the bank statement. This item had been
correctly recorded in the cash book.
(vi) A cheque from a debtor for $12,200 deposited in the bank in November 2010 had been entered in the
cash book as $21,200.
(vii) The bank failed to follow the cancellation notice of a standing order for rent payment, which amounted
to $38,000.

NSS BAFS: Frank Wood’s Financial Accounting 1 63 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
(viii) Mr Lee found that the following cheques issued during November 2011 had not been presented for
payment:
Cheque No. Amount
212234 $5,220
212235 $2,380
212236 $1,040
212237 $876

Required:
(a) Show the necessary adjustments in the cash book. (3 marks)
(b) Prepare a bank reconciliation statement as at 30 November 2011, beginning with the updated cash
book balance. (3 marks)
(c) State three possible reasons as to why the cheque from Vicky Leung was dishonoured by the bank.
(3 marks)

Answer:
(a)
Bank
2011 $ 2011 $
Nov 30 Balance b/d (balancing figure) 80,000 Nov 30 Telephone — Direct debit (i) 360 0.5 0.5
" 30 Vicky Leung — Dishonoured
cheque (iii) 3,300 0.5
" 30 Subscriptions — Standing order (iv) 1,230 0.5
" 30 Accounts receivable — Incorrect
amount entered (vi)
($21,200 – $12,200) 9,000 0.5
" 30 Balance c/d (from (b)) 66,110 0.5
80,000 80,000

(b)
Mr Lee
Bank Reconciliation Statement as at 30 November 2010
$ $
Adjusted balance as per cash book (balancing figure) 66,110 0.5
Add Bank charges wrongly credited ($1,400  2) (v) 2,800 0.5
Unpresented cheques ($5,220 + $2,380 + $1,040 + $876) (viii) 9,516 12,316 0.5
78,426
Less Uncredited cheque (ii) 4,100 0.5
Bank error — Standing order cancellation not made (vii) 38,000 (42,100 ) 0.5
Balance as per bank statement 36,326 0.5

NSS BAFS: Frank Wood’s Financial Accounting 1 64 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
(c) Possible reasons include:
(i) The drawer does not have enough money in the current account for payment.
(ii) There is no signature on the cheque, or the signature does not match that on record at the bank.
(iii) The amount in words differs from the amount in figures.
(iv) The cheque is not dated.
(v) The cheque is a stale cheque.
(vi) The cheque is a post-dated cheque, that is, the date of the cheque has not yet been reached.
(vii) The drawer’s account has been closed.
(viii) Alterations to the cheque have not been countersigned by the drawer.
(Any three of the above, 1 mark each)

QUESTION 6
The following details concern the cash book (bank columns) of Jessica Kong’s business for October 2010:
2010
Oct 1 Balance b/d: $5,660 (overdraft)
" 6 Jessica Kong settled the account of $1,900 with a supplier, Dinnie Chung, by cheque. A cash
discount of 5% was received.
" 8 Paid wages of $2,300 by cheque.
" 15 Paid $2,520 by cheque to settle the account of Minnie Man, a supplier.
" 22 Banked cash sale proceeds of $46,173.
" 29 Withdrew $12,000 cash from the bank for business use.

Required:
(a) Write up the cash book for the month of October 2010. (3 12 marks)

The bank statement showed a credit balance of $19,538 as at 31 October 2010. Also, the following
information was found:
(i) A standing order made on 15 October 2010 to pay insurance of $3,500 had not been entered in the cash
book.
(ii) A trade debtor, Norman Ko, paid $5,000 by credit transfer. This had not been recorded in the cash
book.
(iii) An autopay of $2,000 for rent appeared on the bank statement but had not been recorded in the cash
book.
(iv) A cheque payment of $1,440 to a trade creditor, Raymond Tam, had been entered in the cash book as
$4,140.
(v) The bank had not credited a cheque for $4,466 received from a trade creditor. This had been debited in
the cash book and deposited into the bank on 30 October 2010.
(vi) Bank charges of $99 had not been recorded in the cash book.

NSS BAFS: Frank Wood’s Financial Accounting 1 65 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
(vii) The following cheques had not been presented to the bank:
Cheque No. Payee Amount
113162 Susan Au $1,206
113163 Besa Cheung $2,110
113164 Cathy To $499
(vii) A cheque for $3,800 received from Lisa Mok was dishonoured and returned by the bank. This had not
been recorded in the books.

Required:
(b) Update the cash book of Jessica Kong, showing the adjusted balance as at 31 October 2010. (4 marks)
(c) Prepare a bank reconciliation statement as at that date, commencing with the adjusted cash book
balance. (2 12 marks)

Answer:
(a)
Cash Book
Bank Bank
2010 $ 2010 $
Oct 22 Cash sales 46,173 Oct 1 Balance b/d 5,660 0.5 0.5
" 6 Dinnie Chung ($1,900  95%) 1,805 0.5
" 8 Wages 2,300 0.5
" 15 Minnie Man 2,520 0.5
" 29 Cash 12,000 0.5
" 31 Balance c/d 21,888 0.5
46,173 46,173

(b)
Cash Book
Bank Bank
2010 $ 2010 $
Oct 31 Balance b/d 21,888 Oct 31 Insurance — Standing order (i) 3,500 0.5 0.5
" 31 Norman Ko — Credit transfer (ii) 5,000 " 31 Rent — Direct debit (iii) 2,000 0.5 0.5
" 31 Raymond Tam — Incorrect " 31 Bank charges (vi) 99 0.5
amount entered (iv) " 31 Lisa Mok — Dishonoured cheque
($4,140 – $1,440) 2,700 (viii) 3,800 0.5 0.5
" 31 Balance c/d 20,189 0.5
29,588 29,588

(c)
Jessica Kong
0.5
Bank Reconciliation Statement as at 31 October 2010
$
Adjusted balance as per cash book 20,189 0.5
Add Unpresented cheques ($1,206 + $2,110 + $499) (vii) 3,815 0.5
24,004
Less Uncredited cheque (v) (4,466 ) 0.5
Balance as per bank statement 19,538 0.5

NSS BAFS: Frank Wood’s Financial Accounting 1 66 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
QUESTION 7
The following cash book summary was extracted from the books of Peter Pang for the month of January
2012:
Cash Book (Bank Column)
2012 $ 2012 $
Jan 1 Balance b/d 2,355 Jan Payments 42,300
" Receipts 32,660
" 31 Balance c/d 7,285
42,300 42,300

The following information was found after investigation:

(i) The receipt side of the above cash book was overstated by $3,800 due to casting errors.
(ii) Three cheques drawn by the business in January 2012 were not yet presented for payment. The
relevant amounts were: $2,320, $960 and $670.
(iii) On 10 January 2012, Peter deposited into the business bank account a cheque for $3,353 received from
a trade debtor. Appropriate entries had been made in both the cash book and the bank statement. On
13 January 2012, however, the cheque was returned unpaid by the payer’s bank. The entry in respect of
the returned cheque was shown on the bank statement, but an entry was not yet made in the cash book.
(iv) During the month, bank interest revenue of $378 was not recorded in the cash book.
(v) At the end of the month, a trade debtor, Mr Wong, paid $1,900 directly into the business bank account
but this amount did not appear in the cash book.
(vi) Dividend income of $3,456 was credited directly into the bank account but the amount has been
wrongly credited in the cash book as bank charges.
(vii) The following items were shown in the bank statement, but had not yet been entered in the cash book:
(a) Bank loan interest of $2,000 charged by the bank
(b) An autopay of $2,210 for rent in January 2010
(viii) Rental income amounting to $800 was deposited directly into the bank but was not yet been entered in
the cash book.
(ix) The following cheque receipts were recorded in the cash book for the month of January 2012:
Date deposited Date credited by the bank Amount
Jan 29 Feb 1 $1,200
" 30 Jan 31 $2,400
" 31 Feb 2 $2,350

Required:
(a) Update the cash book for Peter Pang and show the adjusted bank balance as at 31 January 2012.
(5.5 marks)
(b) Prepare a bank reconciliation statement as at 31 January 2012, starting with the bank statement
balance. (2 marks)
(c) State the amount of the bank balance that should be shown in the balance sheet of Peter Pang’s
business as at 31 January 2012. (0.5 marks)

NSS BAFS: Frank Wood’s Financial Accounting 1 67 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
Answer:
(a)
Cash Book (Bank Column)
2012 $ 2012 $
Jan 31 Bank interest revenue (iv) 378 Jan 31 Balance b/d 7,285 0.5 0.5
" 31 Mr Wong — Direct credit (v) 1,900 " 31 Overstatement of receipt side 0.5
" 31 Dividend income (vi) 3,456 of cash book (i) 3,800 0.5 0.5
" 31 Bank charges wrongly credited (vi) 3,456 " 31 Accounts receivable — 0.5
" 31 Rental income — Credit transfer (viii) 800 Dishonoured cheque (iii) 3,353 0.5 0.5
" 31 Balance c/d 8,658 " 31 Bank loan interest (vii) 2,000 0.5 0.5
" 31 Rent — Standing order (vii) 2,210 0.5
18,648 18,648

(b)
Peter Pang
Bank Reconciliation Statement as at 31 January 2012
$
Overdraft balance as per bank statement (balancing figure) (8,258 ) 0.5
Add Uncredited cheques ($1,200 + $2,350) (ix) 3,550 0.5
(4,708 )
Less Unpresented cheques ($2,320 + $960 + $670) (ii) (3,950 ) 0.5
Adjusted overdraft balance as per cash book (8,658 ) 0.5

(c) The bank balance shown in the balance sheet as at 31 January 2012 should be $8,658 (overdraft).
(0.5 marks)

QUESTION 8
Danny Ma, a wholesaler, received a bank statement for the month of March 2010. The statement shown on
the bank statement did not agree with the credit bank balance of $34,766 shown in the cash book.

The difference was accounted for by the following items:

(i) An amount of $2,180 was paid directly into the bank by a trade debtor, Elle Or, but this did not appear
in Danny’s books.
(ii) A bank interest charge of $771 appeared in the bank statement but was not recorded in the cash book.
(iii) During the month, the bank returned a cheque for $690, drawn by a trade debtor, Besa Chan. This
cheque was marked ‘insufficient funds’ by the bank. Danny had not yet dealt with the dishonoured
cheque in the books.
(iv) A standing order of $6,600 for the payment of office rent was not recorded in the cash book.
(v) The bank statement showed that a rates refund of $2,100 was credited directly to the bank account, but
this was not reflected in the books of the business.
(vi) A cheque for $4,000 drawn on 1 March 2009 to settle a trade creditor’s account had not been presented
to the bank. The cheque was dated 1 March 2009.
(vii) A debt of $3,320 that was written off as bad was recovered and a cheque dated 2 May 2010 was
received. This cheque had been recorded in the cash book (bank column) but was not yet banked.

NSS BAFS: Frank Wood’s Financial Accounting 1 68 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
(viii) A cheque for $2,100 issued to pay for office equipment was mistakenly recorded as $1,200 in the cash
book.
(ix) The debit side of the cash book (bank column) was understated by $700 due to a casting error.
(x) A cheque for $2,793, after deducting a cash discount of 5%, was received from a trade debtor on
13 March 2010. The cashier recorded the gross amount in the cash book.

Required:
(a) Update the cash book. (6 marks)
(b) Show the journal entries for items (i) to (vii). (No narrations are required.) (7 marks)

Additional information:
(xi) On 30 March 2010, a cheque for $1,260 received from Grace Lam, a trade debtor, was banked. This
had not been credited in the bank statement.
(xii) Cheques for $330, $1,940 and $100, respectively, were issued and entered in the cash book. None of
these cheques had been presented for payment.
(xiii) An amount of $8,300 was credited on the bank statement by mistake.
(xiv) Danny Ma instructed the bank to transfer $2,910 from his personal savings account to the business
bank account. The bank made the transfer in reverse.

Required:
(c) Draw up the bank reconciliation statement by starting with the bank statement balance, and reconcile
this balance with the adjusted balance of the bank column in the cash book. (3 marks)

Answer:
(a)
Bank
2010 $ 2010 $
Mar 31 Elle Or — Credit transfer (i) 2,180 Mar 31 Balance b/d 34,766 0.5 0.5
" 31 Rates refund — Credit transfer (v) 2,100 " 31 Bank charges (ii) 771 0.5 0.5
" 31 Accounts payable — Stale cheque " 31 Besa Chan — Dishonoured
(vi) 4,000 cheque (iii) 690 0.5 0.5
" 31 Understatement of debit side " 31 Rent — Standing order (iv) 6,600 0.5
of cash book (ix) 700 " 31 Accounts receivable — 0.5
" 31 Balance c/d 38,214 Post-dated cheque (vii) 3,320 0.5 0.5
" 31 Office equipment — Incorrect
amount entered (viii)
($2,100 – $1,200) 900 0.5
" 31 Bookkeeping error (x)
[($2,793  95%) – $2,793] 147 0.5
47,194 47,194

NSS BAFS: Frank Wood’s Financial Accounting 1 69 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
(b)
The Journal
Details Dr Cr
$ $
(i) Bank 2,180 0.5
Elle Or 2,180 0.5
(ii) Bank charges 771 0.5
Bank 771 0.5
(iii) Besa Chan 690 0.5
Bank 690 0.5
(iv) Rent 6,600 0.5
Bank 6,600 0.5
(v) Bank 2,100 0.5
Rates 2,100 0.5
(vi) Bank 4,000 0.5
Accounts payable 4,000 0.5
(vii) Accounts receivable 3,320 0.5
Bank 3,320 0.5

(c)
Danny Ma
Bank Reconciliation Statement as at 31 March 2010
$ $
Overdraft balance as per bank statement (balancing figure) (34,624 ) 0.5
Add Uncredited cheque (xi) 1,260 0.5
Bank transfer error ($2,910 × 2) (xiv) 5,820 7,080 0.5
(27,544 )
Less Unpresented cheques ($330 + $1,940 + $100) (xii) 2,370 0.5
Bank error (xiii) 8,300 (10,670 ) 0.5
Adjusted overdraft balance as per cash book (38,214 ) 0.5

QUESTION 9
The bank column of Angie Lam’s cash book showed a debit balance of $23,080 as at 31 December 2010. On
the same date, the bank statement showed a credit balance of $13,648.

The following information was obtained:

(i) A standing order of $2,390 for electricity payment appeared on the bank statement but no entry was
made in the cash book.
(ii) A cheque of $3,210 issued to Mr Lai was dishonoured by the bank as the amount in words differed
from the amount in figures.
(iii) A cheque received from a trade debtor of $6,020 was returned from the bank. No entry was made in
the cash book.
(iv) A cheque for $2,960 was issued to settle credit purchases and was recorded in the cash book, but had
not yet been presented for payment.
(v) A cheque was issued to settle a trade creditor’s account of $34,500. A discount of 2% was received but
the gross amount had been entered in the cash book.
(vi) A cheque for $6,402 representing disposal proceeds of a van was entered in the cash book but had not
yet been banked.

NSS BAFS: Frank Wood’s Financial Accounting 1 70 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
(vii) Charges of $100 were made by the bank.
(viii) A cheque for $1,380 was deposited into the bank account at the end of December 2010, but was not
shown on the bank statement.

Required:
(a) Update the cash book, showing all the necessary adjustments. (3.5 marks)
(b) Prepare a bank reconciliation statement as at 31 December 2010. (2.5 marks)

Answer:
(a)
Bank
2010 $ 2010 $
Dec 31 Balance b/d 23,080 Dec 31 Electricity — Standing order (i) 2,390 0.5 0.5
" 31 Mr Lai — Dishonoured cheque (ii) 3,210 " 31 Accounts receivable — 0.5
" 31 Discounts received ($34,500 × 2%) (v) 690 Dishonoured cheque (iii) 6,020 0.5 0.5
" 31 Bank charges (vii) 100 0.5
" 31 Balance c/d 18,470 0.5
26,980 26,980

(b)
Angie Lam
Bank Reconciliation Statement as at 31 December 2010
$ $
Balance as per cash book 18,470 0.5
Add Unpresented cheques (iv) 2,960 0.5
21,430
Less Proceeds from disposal of a van (vi) 6,402 0.5
Uncredited cheque (viii) 1,380 (7,782 ) 0.5
Balance as per bank statement 13,648 0.5

QUESTION 10
Terence Hung is a sole trader. He received his bank statement dated 30 April 2012, but the balance shown on
the bank statement did not agree with the credit balance of $2,670 shown in the bank column of the cash
book.

The following items were then discovered:

(i) A direct debit of $500 for electricity charges for the month of April 2012 had not been entered in the
cash book.
(ii) A credit transfer of $5,500 from Mr Lee on 20 April 2012 had not been recorded in the cash book.
(iii) Terence Hung took out $590 in cash from the bank account for his private use. This had been not
recorded in the cash book but appeared on the bank statement.
(iv) A cheque for $1,500 was received from Mr Ho on 24 April 2012. Terence Hung duly recorded the
amount in the cash book and deposited the cheque. On 29 April 2012, Terence Hung’s bank returned
the cheque marked ‘refer to drawer’. The returned cheque had not been recorded in the cash book.

NSS BAFS: Frank Wood’s Financial Accounting 1 71 © Pearson Education Asia Limited 2010
Question Bank
http://idianaconsultancy.blogspot.com/
(v) Cheques issued by the business totalling $3,800 had not been presented to the bank for payment.
(vi) A cheque donation of $200 to a charity appeared in the bank statement on 22 April 2012, but no entry
had been made in the cash book.
(vii) A cheque for $2,050 was received from Mr Chan on 30 April 2012. This had been recorded in the cash
book but did not appear in the bank statement until 2 May 2012.

Required:
(a) Update the cash book. (3.5 marks)
(b) Prepare a bank reconciliation statement as at 30 April 2012. (2.5 marks)

Answer:
(a)
Bank
2012 $ 2012 $
Apr 30 Mr Lee — Credit transfer (ii) 5,500 Apr 30 Balance b/d 2,670 0.5 0.5
" 30 Water — Direct debit (i) 500 0.5
" 30 Drawings (iii) 590 0.5
" 30 Mr Ho — Dishonoured cheque (iv) 1,500 0.5
" 30 Donation (vi) 200 0.5
" 30 Balance c/d 40 0.5
5,500 5,500

(b)
Terence Hung
0.5
Bank Reconciliation Statement as at 30 April 2012
$
Balance as per cash book 40 0.5
Add Unpresented cheques (v) 3,800 0.5
3,840
Less Uncredited cheque (vii) (2,050 ) 0.5
Balance as per bank statement 1,790 0.5

NSS BAFS: Frank Wood’s Financial Accounting 1 72 © Pearson Education Asia Limited 2010
Question Bank