Reference no: EM132536222
Question - a) Bank Statement is a mirror of any entity's cash book and they are expected to have equal balances at any point in time. However, this is not usually the case. Based on the ongoing statement, explain five reasons that could cause the bank statement balance to differ from the cash book balance.
b) The Treasurer of Chui Social Club (CSC) did not keep proper records for receipts and payments for the month of December 2019 which is causing mistrust among members.
He has decided to seek for your assistance to prepare bank reconciliation statement before presenting the account to the club members.
The bank statement, receipts and payments cash book of the club on December 31, 2019 showed a credit balance of Sh.205,000 and Sh.2,078,000 respectively.
A comparison of the bank statement with the receipts and payment cash book of the club revealed the following:
(i) Cheque drawn but not presented Sh.3,160,000
(ii) Amount lodged in the bank but not credited Sh.725,000
(iii) Entries in bank statement not recorded in receipts and payments cash book are shown below:
Sh.
-Standing order for loan refund 35,000
- Interest received on deposit account 18,000
- Bank charges 15,000
- Cheque paid-in but returned with "refer to drawer" 120,000
Required -
(i) Prepare adjusted cash book as at December 31, 2019; and
(ii) Bank Reconciliation Statement showing the balance on December 31, 2019.
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