Question

1.         The following is a summary from the cash book of the Hozy Company Limited for October 20X8.

                                                     £                                                                      £

Opening balance b/f                1,407 Payments                               15,520

Receipts                                  15,073 Closing balance c/f                      960

                                                16,480                                                 16,480

On investigation you discover that:

1)         Bank charges of £35 shown on the bank statement have not been entered in the cash book.

2)         A cheque drawn for £47 has been entered in error as a receipt.

3)         A cheque for £18 has been returned by the bank marked 'refer to drawer', but it has not been written back in the cash book.

4)         An error of transposition has occurred in the opening balance in that the cash book should have been carried down at £1,470.

5)         Three cheques paid to suppliers for £214, £370 and £30 have not yet been presented to the bank.

6)         The last page of the paying-in book shows a deposit of £1,542 which has not yet been credited to the account by the bank.

7)         The bank has debited a cheque for £72 in error to the company's account.

8)         The bank statement shows an overdrawn balance of £124.

REQUIRED:

a)         Show what adjustments you would make in the cash book;

b)         Prepare a bank reconciliation statement as at 31 October 20X8.

Answer 1

Answer :

(a)   

	Cash book
Balance b/f	960	Bank charges	35
Transposition of opening balance	63	Cheque entered as a receipt (£47x2)	94
		Refer to drawer	18
		Balance c/d	876
	1,023		1,023
Balance b/d	876

(b) Hozy Co. Ltd

Bank reconciliation statement as at 31 October 20X8

       £       £

Balance per cash book    876

Add: cheques not yet presented    614

      1,490

Less: amount not yet credited 1,542

  bank error 72    1,614

         _____

Balance per bank statement (overdrawn)           124