Reference no: EM131335765

FINANCIAL OF ACCOUNTING ASSIGNMENT

1. a) Explain the term "bank reconciliation" and state the reasons for its preparation (6mks)

b) Jalash, a sole trader received his bank statement for the month of June 2016. At that date the bank balance was sh 706,500 whereas his cash book balance was sh. 2,366,500 his accountant investigated the matter and discovered the following discrepancies:

a. Bank charges of sh 3,000 had not entered in the cash book

b. Cheque drawn by Jalash totaling sh. 22,500 had not yet been presented to the bank

c. He had not entered receipts of sh 26,500 in his cash book

d. The bank had not credited Mr. Jalash with receipt of sh. 98,500 paid into the bank on 30th June 2016

e. Standing order payments amounting to sh 62,000 had not been entered into the cash book

f. In the cash book Jalash had entered a payment of sh as sh 79,400

g. A cheque for sh 15,000 from a debtor had been returned by the bank marked "refer drawer" but had not been written back into cash book

h. Jalash had brough forward the opening cash balance of sh 329,250 as a debit balance instead of a credit balance

i. An old cheque payment amounting to sh 44,000 had been written back in the cash book but the bank had already honoured it

j. Some of Jalash's customer had agreed to settle their debts by paying into his bank account. Unfortunately, the bank had credited some deposits amounting to sh. 832,500 to another customer's account. However, acting on information from his customers, Jalash had actually entered the expected receipts from the debtors in his cash book

Required:

i) A statement showing Jalash's adjusted cash book balance as at 30 June 2016.
ii) A bank reconciliation statement as at 30 June 2016.

2. The following information relating to debtors and creditors is available from the records of Manyaka Traders.

	Sh.
July 1, 2015: Debit balances b/d	'000'
Debtors	12,000
Creditors	600
Credit balances b/d
Debtors	300
Creditors	18,000
During the year
Sales on credit	24,000
Purchases on credit	30,000
Receipts from debtors	22,000
Discount allowed	800
Discounts received	600
Bad debts written off	100
Return Outwards	2,000
Return Inwards	1,800
Payment to creditors	20,000
Sales ledger credit balances transferred to purchases ledger	200
Bills payable	1,000
Bills receivable	1,200
Interest charged to customers on overdue accounts	400
June 30, 2016: Debit balances in purchases ledger	300
Credit balances in sales ledger	400

Required:

Prepare

a) Sales ledger control account
b) Purchases ledger account

3. The following details were extracted from the trial balance of Msafi for the year ended 31/12/2015.

	DR.	CR.
	Sh. "000"	Sh. "000"
Plant and Machinery	5,000
Motor Vehicle	4,000
Furniture and fittings	3,000
Sales		12,000
Stock: Jan 1, 2015	1,000
Purchases	6,000
Discounts	500	1,100
Provision for bad debts		500
Debtors	3,000
Creditors		2,000
Cash and Bank	2,000
Rent and rates	500
Electricity and water	500
Provision for depreciation:
Motor Vehicle		1,000
Plant and Machinery		2,000
Furniture and fittings		1,000
Bad debts	400
Returns	500	1,000
Salaries and wages	1,000
Drawings	1,600
General Expenses	1,000
Capital		9,300
	29,900	29,900

Additional information:

i. Stock as at 31/12/2015 amount to Sh. 1,500,000
ii. Accrued expenses are:

Salaries and wages Sh. 150,000
Electricity and Water Sh. 200,000

iii. Expenses prepaid are:

General expenses Sh. 250,000
Rent and rates Sh. 100,000

iv. Provision for bad and doubtful debts is to 10% of debtors

v. Depreciation is charged as follows:

Plant and machinery 10% on cost p.a
Motor vehicle 20% on cost p.a
Furniture and fittings 15% on cost p.a

Required:

a. Trading and profit and loss account for the year ended 31 December 2015.
b. Balance sheet as at 31st December 2015.