CASE 1
Christina balanced her cash book on 31 October 2004 and brought down a
debitbalance of $3280 on 1 November. Her bank statement for October 2004 showed
a closing credit balance of $208. When comparing the cash book with the bank statement, Christina found
thefollowing:
1.These items appreared only in the cash book:
Cheque $280, paid to Wilma, a creditor supplier
Cash sales $1643
2. These items appeared only on the bank statement:
Bank charges of $109
Insurance, $850, paid by standing order
3. The bank had debited Christina’s business bank account with a standing
order for $750, for a life insurance policy premium which should have
been paid from Christina’s personal bank account.
a) Make any additional entries required in Christina’s cash book. Calculatea new bank balance at 31 October
2004. Bring down the balance on 1
November 2004.
b) Prepare a bank reconciliation statement at 31 October 2004.
c) State the bank balance that should be shown in Christina’s statementof financial position on 31 October 2004
and state whether it is an assetor a liability.
CASE 2
•77_WendyLiisatrader.
(a) Stateandexplainlworeasonswhysheshould reconcilethebalance
onherbankstatementwiththatshownin hercashbook.
(b) Explainwhyitemsarerecordedontheoppositesideofacashbooktothatonwh
ichtheyappearonabankstatement.
WendyLi'scashbook(bankcolumns)showedthefollowingentr iesforSeptemb
er20-8.
CashBook(bankcolumnsonly)
Date
Det11jls
20-8
Sept1
8
14
29
Balance
Ea.I&W•st
0><1n&Co
ITan
30
Cashsales
Balance
Foliq
$
310
29(1
Date
Detn.il.s
20-8
Sept12
16
Chew1gLtd
Folio
$
1750
1300
WTong&Cu
1070
95
c/d
1020
265
--
:lQ5.Q
:lQ5.Q
20-ll
Oct
1
Balance
b/d
265