Class Exercises – Internal Control & Accounting for Cash

Question 1
Brown Company's bank statement for September 30, showed a cash balance of RM1,350. the
company's Cash account in its general ledger showed a RM995 debit balance. The following
information was also available as of September 30.

a. a customer's check for RM100 marked NSF was returned to Brown Company by the bank.
The bank charged the company's account a RM25 processing fee.
b. The September 30 cash receipts, RM1,250 were placed in the bank's night depository after
banking hours on that date and this amount did not appear on the September 30 bank
statement.
c. A RM15 debit memorandum for checks printed by the bank was included with the cancelled
checks.
d. Outstanding checks amounted to RM1,145.
e. A customer's note for RM900 was collected by the bank. a collection fee of RM25 was
deducted by the bank.
f. Included with the canceled checks was a check for RM275, drawn on another company,
Browne, Inc.
Required:

1. Prepare a bank reconciliation as of September 30.

2. Prepare any necessary adjusting journal entries necessary as a result of the bank
reconciliation.

BROWN COMPANY
Bank Reconciliation
September 30
Bank Statement Balance 1,350 Book Cash Balance 995
Add:   Add: Bank collections 900
   Deposit in transit 1, 250    
   Bank error 275    
  2,875   1,895
Deduct:   Deduct:  
   Outstanding checks (1,145)    NSF (100)
check processing fee (25)
Collection fee (25)
       Bank service charge (15)
Adjusted Bank Balance 1,730 Adjusted Book Balance 1,730

Journal Entries:

1. Dr Cash/ Bank 875

Bank service charge 25
Cr Account Receivable 900
 2. Dr Account Receivable 100
Bank service charge 25
Cr Cash/Bank 125

3. Dr Bank service charge. 15

Cr Cash/Bank 15

Question 2

On 7 December 2020, Catz Zone Enterprise received the monthly bank

statement for the month of November 2020. The bank statement showed the
following information:

Union Bank
Berhad
Payments Receipts Balance
Date Description
(RM) (RM) (RM)
1 Nov Balance b/d 21,000
3 314566 500 20,500
4 Cheque Deposit- 203201 1,650 22,150
6 314567 650 21,500
8 314568 710 20,790
9 Cheque Deposit - 432512 1,080 19,710
15 314569 800 18,910
16 Cheque Deposit - 113998 800 19,710
20 Credit Transfer 500 20,210
23 Direct Debit 300 19,910
24 314570 300 19,610
26 Cheque Deposit - 145321 341 19,951
28 Bank Charges 100 19,851

The cash records prepared by Catz Zone Enterprise for the month of November
2020 were as follows:

Cash Receipts Journal (Bank column)

Date Particulars Cheque no. Amount(R
M)
3 Nov Sales 203201 1,650
8 Mariam 432512 1,800
13 Andy 754654 1,000
15 Svera 113998 800
24 Sales 145321 341
27 Sales 134523 200

Cash Payments Journal (Bank column)

Date Particulars Cheque no. Amount
(RM)
2 Purchases 314566 500
Nov
5 Amira 314567 560
 7 Haziq 314568 710
14 Purchases 314569 800
23 Water and electricity bill 314570 300
25 Emma 314571 800

Additional information:

1. Cheque no. 314567 issued to Amira amounting to RM650 was wrongly

recorded in the cash payments journal as RM560.

2. Cheque no. 432512 amounting to RM1,800 received from Mariam was

wrongly recorded as payment of RM1,080 in the bank statement.

3. The bank account of Catz House Enterprise on 1 November 2020 shows a

debit balance of RM21,000.

Required:
Prepare the bank reconciliation statement for Catz Home Enterprise as at 30
November 2020.

CATZ HOME ENTERPRISE

Bank Reconciliation
November 30
Bank Statement Balance 19,851 Book Cash Balance 23,121
Add:   Add: Bank credit transfer 5,00
   Deposit in transit 200    
   Bank error (1080+1800)
2,880    
(1080+1080+720)
  22,931   23,621
Deduct:   Deduct:  
   Outstanding checks (314571) 800    NSF (1,000)
Direct debit (300)
       Bank service charge (100)
Book error (90)
Adjusted Bank Balance 22,131 Adjusted Book Balance 22,131
Journal entries
Dr Cash/ Bank 500
Cr AR. 500

Dr AR 1,000
Cr Cash/ Bank 1,000

Dr AP 300
Cr Cash/ Bank 300

Dr Bank service charge 100

Cr cash/bank 100
Dr Amira 90
Cr Suspense 90

Dr Amira. 90
Cr Cash/Bank 90
Question 3

The Bank Account and Bank Statement of Ahmad Hardware Enterprise did not equal
in balance at 30 September 2020 as shown below:

Bank Account
Date Debit Credit Balance
September Particulars Cheque No. (RM) (RM) (RM)
1 Beginning balance 15,765 15,765
3 Purchases 060 5,400 10,365
5 Purchases 061 9,470 895
16 Stationery 062 900 (5)
19 Purchases 063 9,360 (9,365)
22 Rent 064 756 (10,121)
24 Sales 9,000 (1,121)
29 Sales 8,982 7,861
30 Salaries 065 23,994 (16,133)
30 Sales 36,000 19,867

BIMB
Bank Statement as at 30 September 2020
Debit Credit Balance
Date Particulars (RM) (RM) (RM)
1 Sept Bal b/f 15,765
5 Sept Cheque cleared - 061 7,470 8,295
13 Sept Cheque cleared - 060 5,400 2,895
16 Sept Cheque cleared - 062 900 1,995
20 Sept Credit transfer 2,160 4,155
22 Sept Standing order 1,800 2,355
23 Sept Dividend 18,000 20,355
23 Sept Cheque cleared - 063 9,360 10,995
24 Sept Cheque cleared - 064 7,560 3,435
24 Sept Cheque deposit 9,000 12,435
26 Sept Cheque returned 9,000 3,435
29 Sept Cheque cleared 100 3,335
29 Sept Cheque deposit 8,982 12,317
30 Sept Service charge 90 12,227
Additional information:

i. The bookkeeper of Ahmad Hardware Enterprise has made mistakes in

recording the cheques number 061 and 064.

ii. The bank has wrongly debited Ahmad Hardware's account instead of Ahmad
Trading's account for RM100 on 29 September 2020.

Required: Prepare a Bank Reconciliation Statement as at 30 September 2020.

AHMAD HARDWRE ENTERPRISE
Bank Reconciliation
September 30
Bank Statement Balance 12,227 Book Cash Balance 19,867
Add:   Add: Credit transfer 2,160
   Deposit in transit 36,000     Dividend received 18,000
   Bank error 100   Book error (061) 2,000 
   
Deduct:   Deduct:  
   Outstanding checks (23,994)    NSF (9,000)
Standing order (1,800)
       Bank service charge (90)
Book error (064) (6804)
Adjusted Bank Balance 24,333 Adjusted Book Balance 24,333