Yevugah has provided you with the following bank statement and bank account details in respect of the month ended 31 January 2018.
The books and records of Yevugah show the followings transactions through the bank account for the month of January 2018:
Required:
a) Reconcile the opening balance as per the cash book to the balance as per the bank statement. (2 marks)
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b) Prepare the adjusted cash book for the month of January 2018. (10 marks)
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c) Prepare a statement on 31 January 2018, reconciling the adjusted cash book with the bank statement balance. (4 marks)
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d) Explain, with the aid of relevant examples, in report format, TWO (2) reasons for preparing bank reconciliation on a regular basis. (4 marks)
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Preparation of regular bank reconciliation will help to identify errors, such errors may have been made either by the bank, the sole trader or both. For example a business may have omitted to post receipts from customers.
Preparation of bank reconciliation will also highlight items such as bank interest, charges, standing orders, direct debits and dishonoured cheques. This will be known by the bank but not identified by a business until it receives the bank statement and prepares the bank reconciliation.