Understanding Bookkeeping

The Cash Book Of Jim Co. showed a Bank Overdraft at 31 Jan 2007 of $1,800

When you checked the Bank Statement as at that date with the Cash Book , you discovered the following:

(a) the following items appearing in the Cash Book do not appear in the Bank Statement:-

Jan

16 Cheque No 123 John $350

18 Cheque No 145 Tim $185

23 Cheque No 156 Sean $215

31 Lodgement at bank $400

(b) the following items appear in the Bank Statement but NOT ENTERED in the Cash Book:-

Jan

15 Raymond’s cheque dishonoured $120

24 Interest on overdraft $10

25 Cheque book charge $20

26 Dividends collected $110

27 Credit transfer - Ronald $810

31 Roy’s cheque dishonored $45

Question:

You are required to:-

( i) make the necessary entries in the Cash Book and bring down the adjusted balance

(ii) prepare a Bank Reconciliation Statement to show the balance as per Bank Statement.

[Answer: ADJUSTD CASH BOOK BALANCE-$1,075 OVERDRAFT & BALANCE AS PER BANK STATEMENT $725 OVERDRAFT]

On 30 April 2007, the Cash Book Of Jim showed a balance at bank amount to $812

You found that:

(a) a cheque for $360 received by Jim and entered in his Cash Book on 30 April 2007 was not credIted by the bank until 3 May 2007

(b) Cheques issued by Jim on 27 April amounting to $289 were not paid by the bank until 2 May 2007

(c)On 30 April, the bank debited Jim’s account with $15 bank charges. No entry has been made in Jim’s Cash Book

(d) A customer settled his debt by credit transfer. The amount $394 was credited by the bank to Jim’s account on 20 April . but not entry has been made in Jim’s Cash Book.

Question:

Prepare:

( i) the adjusted Cash Book showing the balance in Jim’s account at 30 April 2007

(ii) a reconciliation of the balance shown by the Bank Statement with the adjusted Cash Book balance as at 30 Apri 2007

[ANSWER: ADJUSTED CASH BOOK BALANCE-$1,191 AND BANK STATEMENT BALANCE-$1,120]