Reference no: EM132580595
At the end of each month, Sarah prepares a bank reconciliation statement for her business bank account. At 31st May 2020 her bank statement showed that she had funds of GH?393 at the bank. She has the following information:
(i) The bank debited Sarah's account with charges of GH?387 during May. Sarah has not recorded these charges.
(ii) Sarah arranged for GH?7,500 to be transferred from her personal bank account into the business bank account. The bank made the transfer on 30th May, but Sarah has not made any entry for it in her records
(iii) On 22nd May, Sarah withdrew GH?300 cash which she did not record.
(iv) Cheque Number 4562980, which Sarah issued to a supplier, appears on the bank statement as GH?1,950. Sarah incorrectly recorded the cheque as GH?1,680.
(v) On 31st May, Sarah lodged GH?1,371. On the bank statement, this amount is dated 3rd June.
(vi) Sarah was advised by the bank that she earned GH?156 interest for the period in May that her account was in credit. Sarah recorded this in May, but the bank did not credit her account until June.
(vii) Three of the cheques issued in May, with a total value of GH?2,826 were not debited on the bank statement until after 31st May.
(viii) A cheque for GH?828 issued to a supplier was cancelled but Sarah has not recorded the cancellation of the cheque.
Required:
Question (a) Show the bank account in Sarah's general ledger, including any adjusting entries required due to the information given
Question (b) Prepare reconciliation of the bank statement balance to the corrected balance on the bank account in Sarah's general ledger.
Question (c) Discuss five items that account for the differences between the cashbook balance and bank statement balance.
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