Reference no: EM132166931

FINANCIAL ACCOUNTING ASSIGNMENT -

(a) Explain the term "bank reconciliation" and state the reasons for its preparation.

(b) Ssemakula, a sole trader received his bank statement for the month of June 2001. At that date the bank balance was Sh. 706,500 whereas his cash book balance was Sh.2,366,500. His accountant investigated the matter and discovered the following discrepancies:

1. Bank charges of Sh.3, 000 had not been entered in the cashbook.

2. Cheques drawn by Ssemakula totaling Sh.22, 500 had not yet been presented to the bank.

3. He had not entered receipts of Sh.26, 500 in his cashbook.

4. The bank had not credited Mr Ssemakula with receipts of Sh.98, 500 paid into the bank on 30 June 2001.

5. Standing order payments amounting to Sh.62, 000 had not been entered into the cashbook.

6. In the cashbook Ssemakula had entered a payment of Sh.74, 900 as Sh.79, 400.

7. A cheque for Sh.15, 000 from a debtor had been returned by the bank marked "refer to drawer" but had not been written back into the cashbook.

8. Ssemakula had brought forward the opening cash balance of Sh.329, 250 as a debit balance instead of a credit balance.

9. An old cheque payment amounting to Sh.44, 000 had been written back in the cashbook but the bank had already honored it.

10. Some of Ssemakula's customers had agreed to settle their debts by paying directly into his bank account. Unfortunately, the bank had credited some deposits amounting to Sh.832, 500 to another customer's account. However acting on information from his customers Ssemakula had actually entered the expected receipts from the debtors in is cashbook.

Required:

i. A statement showing Ssemakula's adjusted cashbook balance as at 30 June 2001.

ii. A bank reconciliation statement as at 30 June 2001.