Reference no: EM133046311

Question - (a) Saints Ltd issued 50,000 ordinary shares of £1 nominal value at an issue price of £1.85 each on 1 October 2020.

(i) Show how this transaction would be recorded in the ledger accounts of Saints Ltd.

(ii) Explain the term 'bonus issue' and explain how it is different form 'rights issue'.

(iii) Define equity.

(b) The cash book balance in Priya Hynes accounting records shoed an overdrawn balance of £2,540 as at 31 March 2021. Her bank statement showed a favourable balance of £16,580. She investigates and discovers the following:

1. Deposits awaiting clearance on 31 March 2021 were £5,200.

2. A credit transfer of £1,900 from Minjie Post, a customer, and bank charges of £16 have not been recorded in the cash book.

3. A payment to Josh Rory of £17,450 has been entered in the cash book twice.

4. Any further difference between the cash book balance and the bank statement balance is due to cheques having been drawn but not yet presented to the bank.

Required -

(i) Calculate the corrected cash book balance at 31 March 2021.

(ii) Prepare a bank reconciliation statement at 31 March 2021.

(iii) Explain the purposes of preparing regular bank reconciliation statements.