Question

REQUIRED 1.1 Complete the Cash Receipts Journal and Cash Payments Journal of ABC Stores for March 2018 after taking the information provided into account. Use only the columns illustrated below. In the details column write down the name of the contra account e.g. Rent income.

Cash Receipt Journal

Details		Bank
Total	b/f

Cash Payment Journal

Details		Bank
	b/f

1.2 Post to the Bank account in the General ledger of ABC Stores. Balance the account.

1.3 Prepare the Bank Reconciliation Statement as at 31 March 2018. Use the following format:

Bank Reconciliation Statement as at 31 March 2018

.......	Debit	Credit

INFORMATION

1.	The bank column of each of the cash journals showed the following totals before the March 2018 bank statement was received: Cash Receipts Journal Cash Payments Journal	300 000 350 000
2.	A comparison of the cash journals of ABC Stores for March 2018 and the Bank Reconciliation Statement for February 2018 with the bank statement from Key Bank for March 2018 revealed the following differences:
2.1	Entries that appeared on the bank statement but not in the cash journals:
2.1.1	A cheque previously received from the lessee for rent was dishonoured because of insufficient funds	6 800
2.1.2	A debit order in favour of Telkom for the personal telephone account of the proprietor	3 800
2.1.3	Charges levied by Key Bank: Service fees Cash deposit fee Interest on overdraft	1 500 1 000 100
2.1.4	A deposit by a debtor to settle his account of R6 200	6 000
2.1.5	A deposit by Key Bank for a successful loan application	50 000
2.2	Entries in the cash journals that did not appear in the bank statement:
2.2.1	A deposit made on 31 March 2018	102 400
2.2.2	The following cheque issued during March 2018: Cheque no. 520	8700
3.	Additional information
3.1	Cheque no. 490 (dated 23 February 2018) which appeared in the Bank Reconciliation Statement for February 2018 did not appear in the bank statement for March 2018.	16 140
3.2	Cheque no. 460 issued to Rix Soccer Club during January 2018 as a donation must be canceled as the club no longer exists.	4 800
3.3	A deposit made by Rika Stores was erroneously reflected on the bank statement of Mika Stores.	4 000
3.4	An entry was made in the Cash Payments Journal for a cheque to a creditor MS Suppliers for R10 000. The bank statement reflected the correct amount of the cheque, R11 000.
3.5	The bank account in the ledger of ABC Stores reflected a debit balance on 01 March 2018	38 800
3.6	The bank statement showed an unfavourable balance on 31 March 2018	?

Answer 1

Answer:

Cash balance in bank needs to be arrived at 31^st March 2018, hence the given entries are to be entered in cash receipts and cash payments journal to reflect the correct account balance.

Cash Receipts
Details			Bank
Opening balance	B/F		300000
Rent income	A cheque previously received from the lessee for rent was dishonoured because of insufficient funds		-6800
Debtor	A deposit by a debtor to settle his account of R6 200		6000
Loan	A deposit by Key Bank for a successful loan application		50000
Total			349200
Cash Payments
Details					Bank
Opening balance		B/F			350000
Personal expenses		A debit order in favour of Telkom for the personal telephone account of the proprietor			3800
Bank charges		Service fees			1500
Bank charges		Cash deposit fee			1000
Interest on overdraft		Interest on overdraft			100
Donation		Cheque no. 460 issued to Rix Soccer Club during January 2018 as a donation must be canceled as the club no longer exists.			-4800
MS Suppliers					1000
Total					352600

Bank Reconciliation Statement
	Debit	Credit
Bank balance in cash journal as on 31st march 2018		3400
A cheque previously received from the lessee for rent was dishonoured because of insufficient funds		6800
A debit order in favour of Telkom for the personal telephone account of the proprietor		3800
Service fees		1500
Cash deposit fee		1000
Interest on overdraft		100
A deposit by a debtor to settle his account of R6 200	6000
A deposit by Key Bank for a successful loan application	50000
A deposit made on 31 March 2018		102400
The following cheque issued during March 2018: Cheque no. 520	8700
Cheque no. 490 (dated 23 February 2018) which appeared in the Bank Reconciliation Statement for February 2018 did not appear in the bank statement for March 2018.	16140
Cheque no. 460 issued to Rix Soccer Club during January 2018 as a donation must be canceled as the club no longer exists.	4800
An entry was made in the Cash Payments Journal for a cheque to a creditor MS Suppliers for R10 000. The bank statement reflected the correct amount of the cheque, R11 000		1000
	85640	120000

Bank statement showed an unfavourable balance on 31 March 2018

Bank statement balance is 34360 debit balance(unfavourable)

Assumptions:

	In account books, cash in bank favourable balance will be depicted as debit balance, while in bank statement favourable balance will be shown as credit balance
1	A cheque previously received from the lessee for rent was dishonoured because of insufficient funds
	Wrongly debited in cash deposit as rent is now being reversed. Since the same is not reflected in bank a/c, in BRS it will be credited
2	A debit order in favour of Telkom for the personal telephone account of the proprietor
	3800 will be shown under cash payments and since it is not recorded in cash books, it will be credited in BRS to arrive at correct bank balance
3	Charges levied by Key Bank:
	The same are not reflected in cash books, entry will be passed in cash payments journal and credited in BRS
4	A deposit by a debtor to settle his account of R6 200 - 6000
	6000 must appear in cash receipts and debit side of BRS to enter the cash receipt, Remaining 200 will be shown as debtors and it will not have impact on cash
5	A deposit by Key Bank for a successful loan application - 50000
	50000 must appear in cash receipts and debit side of BRS to enter the cash receipt
	Entries in the cash journals that did not appear in the bank statement:
6	A deposit made on 31 March 2018 - 102400
	The amount will be credited, since the amount is not reflected in bank yet.
7	The following cheque issued during March 2018: Cheque no. 520 - 8700
	The cheque is not cleared, hence debit it in BRS.
	Additional information
8	Cheque no. 490 (dated 23 February 2018) which appeared in the Bank Reconciliation Statement for February 2018 did not appear in the bank statement for March 2018.
	The cheque is not cleared, hence debit it in BRS. It must be recorded under Cash payments journal for Feb, hence no need of relection in Mar journal
9	Cheque no. 460 issued to Rix Soccer Club during January 2018 as a donation must be canceled as the club no longer exists.
	Debit in BRS. Reverse the payment of donation
10	A deposit made by Rika Stores was erroneously reflected on the bank statement of Mika Stores.
	No entry in BRS. However, in cash receipt journal, correct entry for Rika stores needs to be made
11	An entry was made in the Cash Payments Journal for a cheque to a creditor MS Suppliers for R10 000. The bank statement reflected the correct amount of the cheque, R11 000.
	Entry needs to be made for 1000 in cash payment journal. Credit in BRS