Question

Question: Sunny Light House operates in Petaling Jaya. The company sells lights for interior decorations for offices. The company has a business account with MyBank Bhd. On 31 March 2019, the bank column for Sunny Light House cash book showed a debit balance of RM7,350. The bank statement from MyBank Bhd however was showed a credit balance of RM9,388. The following was discovered: i ii. iii. iv. V. vi. Dividends of RM118 were credited directly to the bank. A direct debit of RM435 was paid to Maxus, the telephone and communication provider. Tax refund via direct credit from Inland Revenue Board (IRB) due to excess tax deduction amounting RM3,640. Bank charge of RM70 was incurred due to late settlement of loan Cheque of RM640 issued to Accounts Payable Jamal was inaccurately recorded as RM604 in the cashbook. Standing order of RM250 for fire insurance premium was made to Prodential Insurance. The following cheques had been issued to Accounts Payable but not presented yet. Pay to Cheque Number Amount (RM) Abraham Electrics Sdn Bhd 250780-1007 420 David Appliance 250780-1028 370 Noah Supplies 250780-1017 190 vii.

Answer 1

(b)	Sunny Light House
	Bank Reconciliation
	March 31, 2019
	Ending Balance per Books		7,350
	Additions:
	Dividend Received	118
	Tax Refund	3,640
			3,758
			11,108
	Deductions:
	Telephone and Communication Exp.	435
	Bank Charges	70
	Error in Recording	36
	Insurance Expense	250
	NSF Cheque	610	1,401
	Adjusted balance		9,707
	Ending Balance per Bank		9,388
	Additions:
	Deposits in transit		1,299
			10,687
	Deductions:
	Outstanding checks		980
	Adjusted balance		9,707
(c)	For accounting perspective, the internal control procedures which are important
	in managing cash and bank items for the company are -
	1. Account for all cash transactions accurately so that correct information is available
	regarding cash flows and balances.
	2. The entire process of cash and bank related transactions or activities must be
	reviewed by upper level management to ensure that every person is complying
	with their responsibilities.
(d)	This cheque should be not be considered as uncleared cheque, because this cheque yet
	not presneted in bank for clearance as it have post date of 15 May. In the accounting books
	of both the issuer and the recipient, the transaction will not be recorded until the date provided
	on the cheque.