Question

Question 3 The following information is available to reconcile Tariq Enterprise book balance of cash with its bank statement cash balance as of September 30. The September 30 cash balance according to the accounting records is RM78,356 and the bank statement cash balance for that date is RM83,525. a. The bank incorrectly cleared a RM480 cheque against the account in September that was not issued by Tariq. The cheque documentation included with the bank statement indicates the cheque was actually issued by Tahir Co. b. On September 30, the bank issued a credit memorandum for RM53 interest earned on Tariq's account. c. When the September cheques are compared with entries in the accounting records, it is found that Cheque No. 1828 had been correctly drawn for RM1,530 to pay for advertising but was incorrectly entered in the accounting records as RM1,350. d. A credit memorandum indicates that the bank collected RM10,000 cash on a note receivable for Tariq, deducted a RM30 collection fee, and credited the balance to the company's Cash account. Tariq did not record this transaction before receiving the statement. A debit memorandum of RM895 is enclosed with the bank statement for a non sufficient fund (NSF) cheque for RM870 received from a customer. The bank charged a RM25 fee for processing it. f. Tariq's September 30 cheque of RM5,102 was deposited in the bank on that date, but do not appear on the September 30 bank statement. g. Tariq's September 30 cash disbursements journal indicates that Cheque No. 1837 for RM584 and Cheque No. 1840 for RM1,219 were both written and entered in the accounting records as payments to suppliers, but do not appear on the September bank statement. Required: i. Prepare updated cash account of the business. ii. Prepare bank reconciliation statement as at September 30, 2013

Answer 1

Answer A

Cash Account
Transaction	Debit	Transaction	Credit
Unadjusted Balance	78,356
b	53	d	30
d	10,000	e	895
		c (1530-1350)	180
Updated Balance	87,304

Answer B

Tariq Enterprise
Bank Reconciliation Statement
September 30, 2013
Balance as per bank statement		83,525
Add:
Deposit in transit	5,102
Error in checks	480	5,582
Deduct: outstanding checks
Check # 1837	584
Check # 1840	1,219	(1,803)
Adjusted bank balance		87,304
Balance as per accounting records		78,356
Add:
Interest earned on bank account	53
Collection of Note by Bank	10,000	10,053
Deduct:
Collection charge of notes	30
NSF Check	870
Bank charges on NSF Check	25
Error in check # 1828 (1530-1350)	180	(1,105)
Adjusted book balance		87,304