Question

On 31st December, 2016 the cash book of Alavanyo Ltd. showed a debit balance of    
GHS85,000 and was in disagreement with the bank statement balance. The Accountant of     Alavanyo Ltd. suddenly resigned his position after identifying the following causes of the
discrepancy.

i. Cheques issued for GHS60,000 were not presented at the bank by 31st December, 2016.

ii. Cheques for GHS80,000 were deposited in the bank but were not cleared.

iii. The proceeds of a Bill Receivable of GHS200,000 collected appeared in the bank statement but not in the cash book.

iv. A cheque for GHS10,000 received from X & Co. and deposited in the bank was dishonored. No advice of non – payment was received from bank till the 1st of January 2017.

v. The Bank has settled a Bill payable amounting to GHS45,000 but it has not been entered in the cash book.

vi. A Bill Receivable for GHS80,000 which was discounted with the bank and matured at month ended December 2016. It was dishonored by the drawee on due date.

vii. A cheque for GHS 51,000 was paid into the bank but the bank credited the account with GHS50,100 by mistake.

viii. A cheque for GHS 5,000 was deposited into the bank but the same was credited to a wrong account.

ix. GHS 20,000 was deposited by a customer directly into the bank.

x. The bank received interest of GHS 25,000 on debenture on behalf of the trader.

xi. A cheque for GHS15,000 received from a customer and deposited in the bank was not entered in the cash book.

xii. The bank paid GHS12,500 towards of insurance premium.

xiii. The bank charged GHS900 as their commission for collecting Cheques and allowed interest of GHS1,000 on the trader’s balance.

xiv. A cheque for GHS2,500 entered into the cash book was omitted to be banked.
    
Required
Prepare a Bank Reconciliation Statement to establish the validity of the Cash Book balance for inclusion in a management report to Directors.                

Answer 1