Question 5 Seraya Sdn Bhd uses a computer software to maintain its accounting records. A printout of its Cash Book for the month of May was extracted on 31 May and it is summarised below: RM RM Opening balance 546 Payments 335,966 Receipts 336,293 Closing balance 873 336,839 336,839 The company’s chief accountant provides you with the following information: The company’s Bank Statement for May was received next month on 1 June and showed an overdrawn balance of RM2,954 at the end of May. Cheques paid to various payables totalling RM7,470 have not yet been presented to the bank. Cheques received by Seraya Sdn Bhd totalling RM6,816 were paid into the bank on 31 May but not credited by the bank until 2 June. Bank charges of RM630 shown on the Bank Statement have not been entered in the company’s Cash Book. Three standing orders entered on the Bank Statement have not yet been recorded in the company’s Cash Book: a subscription for trade journals of RM52, an insurance premium of RM360 and a business rates payment of RM2,172. A cheque drawn by Seraya Sdn Bhd for RM693 and presented to the bank on 26 May has been incorrectly entered in the Cash Book as RM936. A cheque for RM510 has been charged to the company’s bank account in error by the bank. The cheque relates to Sedaya Sdn Bhd and should not have appeared on Seraya Sdn Bhd’s Bank Statement. A monthly direct debit payable to a leasing company for RM1,000 was wrongly paid twice by the bank. Required: Prepare the corrected Cash Book calculation for the month of May. Prepare a Bank Reconciliation Statement as at 31 May. There are three common explanations for the differences between the Cash Book and the Bank Statement. List the explanations and give an example for each. State briefly why organisations prepare Bank Reconciliation Statements on a regular basis.

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter5: Cash Control Systems

Section: Chapter Questions

Problem 2AP

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Question 5

Seraya Sdn Bhd uses a computer software to maintain its accounting records. A printout of its Cash Book for the month of May was extracted on 31 May and it is summarised below:

	RM		RM
Opening balance	546	Payments	335,966
Receipts	336,293	Closing balance	873
	336,839		336,839

The company’s chief accountant provides you with the following information:

The company’s Bank Statement for May was received next month on 1 June and showed an overdrawn balance of RM2,954 at the end of May.

Cheques paid to various payables totalling RM7,470 have not yet been presented to the bank.

Cheques received by Seraya Sdn Bhd totalling RM6,816 were paid into the bank on 31 May but not credited by the bank until 2 June.

Bank charges of RM630 shown on the Bank Statement have not been entered in the company’s Cash Book.

Three standing orders entered on the Bank Statement have not yet been recorded in the company’s Cash Book: a subscription for trade journals of RM52, an insurance premium of RM360 and a business rates payment of RM2,172.

A cheque drawn by Seraya Sdn Bhd for RM693 and presented to the bank on 26 May has been incorrectly entered in the Cash Book as RM936.

A cheque for RM510 has been charged to the company’s bank account in error by the bank. The cheque relates to Sedaya Sdn Bhd and should not have appeared on Seraya Sdn Bhd’s Bank Statement.

A monthly direct debit payable to a leasing company for RM1,000 was wrongly paid twice by the bank.

Required:

Prepare the corrected Cash Book calculation for the month of May.
Prepare a Bank Reconciliation Statement as at 31 May.
There are three common explanations for the differences between the Cash Book and the Bank Statement. List the explanations and give an example for each.
State briefly why organisations prepare Bank Reconciliation Statements on a regular basis.

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