ABC Ltd has prepared its October 2018 bank reconciliation for auditors to review. As at 31 October 2018 the ledger balance was GH¢ 2,450 (Credit) but the bank statement showed that the company has funds amounting to GH¢3,743.
The following are useful information:
The company arranged for the bank to transfer the dollar equivalent of GH¢ 500,000 to a supplier in the United States. Charges on the transfer of 0.5% have not been recorded in the books of ABC Ltd.
The CEO of ABC Ltd arranged for an amount of GH¢3,000 to be transferred from his personal bank account into the company’s account. The bank made the transfer on 31st October 2018, but ABC Ltd has not made any entry in its books.
A Cheque for Electricity Company amounting to GH¢5,600 issued and recorded correctly in the bank statements appeared in ABC ledger as GH¢6,500.
The following cheques issued by ABC Ltd in October 2018 did not appear on the bank statement:
Cheque # 00450 – GH¢2,000
Cheque # 00456 – GH¢ 4,800
Cheque # 00500 – GH¢ 5,250
Three cheques received and booked by ABC Ltd amounting to GH¢ 4,800 were not credited by the bank
Income earned on investment with an advice by the bank of GH¢2,457 was not recorded by the bank until 3 November 2018.
Required:
i) Prepare the bank account in ABC Ltd nominal ledger including any adjusting entries based on the information above. (5 marks)
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ii) Prepare a reconciliation of the bank statement balance to the corrected balance on the bank account in ABC Ltd nominal ledger. (5 marks)
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