Bank Reconciliation Questions

Strathmore University FACULTY OF COMMERCE Bachelor of Commerce/ Bachelor of Business Information Technology

BCM 1101: FUNDAMENTALS OF ACCOUNTING 1 Bank Reconciliation Example 1 The following information relate to the transactions and balances for Mumo with his bank, CFC Bank for the Month July 2008: Cash book balance on 31st July 2008 was Shs 130,000.On the same date, balance as per the bank statement was Shs 244,500 (credit) i)

The bank had not yet credited a cheque of Shs 80,000 deposited by the Mumo Cashier on 31 July 2008

ii)

The July bank statement revealed that service fees of Shs 1500 were charged by the bank for the month Bank had collected on behalf of Mumo a dividend amounting to Shs 62,000. A standing order to KPLC of Shs 3000 had been paid by the bank but not entered in the cashbook. Cheques paid to suppliers but not presented for payment to bank amounted to Shs 60,000 A cheque of Shs 11,000 from a debtor had been dishonoured. Bank charges of Shs 2000 had not been in the cash book. Some of Mumo’s customers had settled their debts amounting to Shs 90,000 by paying directly into his bank account. Mumo had not recorded the receipts from the debtors in his cashbook.

iii) iv) v) vi) vii) viii)

Required: (i) Adjusted cash book as at 31 July 2008 (ii)Bank reconciliation statement.

(10 marks) (4 marks)

Homework JJ cashbook bank column for the month of December 2009 was as follows: Date 1/12 4/12 6/12 12/12 18/12

Amt. 020 039 026 186

Details Balance b/d Musa Kimani Otieno Juma

Amt. 50,000 15,000 13,000 16,000 20,000

Date 3/12 5/12 8/12 26/12 22/12 31/12

Inv. no 121 122 123 124 125

Details Furniture Salaries KKK Jogoo Okumu Balance c/d

Amt. 15,000 16,000 15,000 12,000 10,000 46,000

114,000

114,000

His bank statement as at that date was as follows

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Bank statement 31/12/09 Date Details 1/12 Balance 3/12 121 4/12 020 5/12 122 6/12 Ledger fees 6/12 039 7/12 Interest 15/12 Telcom 25/12 CIC Insurance 31/12 Balance

Debit

Credit 50,000

15,000 15,000 16,000 1,000 13,000 3,000 2,000 4,000 -

-

Balance 50,000 35,000 50,000 34,000 33,000 46,000 49,000 47,000 43,000 43,000

Required: (i) Adjusted cash book balance (ii) Bank reconciliation statements Assignment (a) Define the term bank reconciliation statement and indicate its three main functions. (b)

Juhudi Ltd. has two accounts "A" and "B" with different banks. On 31 March 2005 the cashbook showed a balance of Sh.200, 000 in account “A" and an overdraft of Sh.90, 000 in account "B". However the bank statements obtained on the same day showed different balances for the two accounts.

Further investigation reveals the following information: I A deposit of Sh.60, 000 made into account "A" on 1 March 2005 has been entered in the cash book in account "B". 2. A withdrawal of Sh.20, 000 from account "A" on 3 March 2005 has been debited in the cashbook in account "B". 3. Cheques of Sh.25, 000 and Sh.30,000 deposited in account "A" on 9 March 2005 were entered in the cash book in account "B". The second cheque has been dishonoured by the bankers. The entry for this dishonoured cheque has been entered in the cash book in account "B". 4. Cheques for Sh.40,000 and Sh.50,000 drawn on accounts "A" and "B" respectively on 30 March 2005 were not paid by the banks until 5 April 2005. 5. Incidental charges of Sh.400 and Sh.1, 000 charged in the accounts "A" and "B" respectively have not been entered in the cashbook. 6. The bank has credited an interest of Sh.2.000 for account "A" and has debited bank charges of Sh.1,500.for account "B". These transactions have not been entered in the cashbook. 7. Deposits of Sh.200,000 and Sh.140,000 made into the accounts "A" and "B" respectively have not yet been credited by the banks. 8. Dividends amounting to Sh.8.000 had been paid direct to the bank in account "B". 9. A cheque for Sh.3,500 drawn on account "A" on 30 March 2005 in payment of an electricity bill had been entered in the cash book as Sh.5,300. Required: (i) The necessary adjustments in both cash books in order to correct the errors. (ii) Bank reconciliation statements for both cashbooks.

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