Read the following and answer the questions below.On 31 December 20X8 the bank column of C Tench’s cash book showed a debit balance of £1,500.The monthly bank statement written up to 31 December 20X8 showed a credit balance of£2,950.On checking the cash book with the bank statement it was discovered that the following transactions had not been entered in the cash book:Dividends of £240 had been paid directly to the bank.A credit transfer – Customs and Excise VAT refund of £260 – had been collected by the bank.Bank charges £30.A direct debit of £70 for the RAC subscription had been paid by the bank.A standing order of £200 for C Tench’s loan repayment had been paid by the bank.C Tench’s deposit account balance of £1,400 was transferred into his bank current account.A further check revealed the following items:Two cheques drawn in favour of T Cod £250 and F Haddock £290 had been entered in the cash book but had not been presented for payment.Cash and cheques amounting to £690 had been paid into the bank on 31 December 20X8 but were not credited by the bank until 2 January 20X9.(a) Starting with the debit balance of £1,500, bring the cash book (bank columns) up to date andthen balance the bank account.(b) Prepare a bank reconciliation statement as at 31 December 20X8.

A bank reconciliation statement is the statement that is prepared by the company in order to balance…

Answered: Read the following and answer the…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter8: Sarbanes-oxley, Internal Control, And Cash

Section: Chapter Questions

Problem 18E

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Read the following and answer the questions below.

On 31 December 20X8 the bank column of C Tench’s cash book showed a debit balance of £1,500.
The monthly bank statement written up to 31 December 20X8 showed a credit balance of
£2,950.
On checking the cash book with the bank statement it was discovered that the following transactions had not been entered in the cash book:
Dividends of £240 had been paid directly to the bank.
A credit transfer – Customs and Excise VAT refund of £260 – had been collected by the bank.
Bank charges £30.
A direct debit of £70 for the RAC subscription had been paid by the bank.
A standing order of £200 for C Tench’s loan repayment had been paid by the bank.
C Tench’s deposit account balance of £1,400 was transferred into his bank current account.
A further check revealed the following items:
Two cheques drawn in favour of T Cod £250 and F Haddock £290 had been entered in the cash book but had not been presented for payment.
Cash and cheques amounting to £690 had been paid into the bank on 31 December 20X8 but were not credited by the bank until 2 January 20X9.

(a) Starting with the debit balance of £1,500, bring the cash book (bank columns) up to date and

then balance the bank account.

(b) Prepare a bank reconciliation statement as at 31 December 20X8.

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