Lecturer: Nguyen Thi Tuong Tam

Written by: Pham Huu Khai

ID number: B180032
nd
2 assignment of Human Resources Management
Assignment title: Bank Reconciliation Statement for
An Binh Ltd.

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 Table of content

Contents
Table of content .............................................................................................................................. 1
Introduction ................................................................................................................................... 3
Learning outcome 3: Perform bank reconciliations to ensure company and bank records
are correct ...................................................................................................................................... 4
I. Bank reconciliation statement .............................................................................................. 4
1. Concept of BRS .................................................................................................................. 4
2. Necessity of BRS ................................................................................................................. 4
3. Steps of prearing BRS ....................................................................................................... 5
4. BRS format ......................................................................................................................... 7
II. Compare the records in both the Bank statements/Pass Book and the Cash Book (bank
column only). ................................................................................................................................. 8
1. Tick the record(transaction) that both appeared in the Pass Book and the Cash Book
8
2. Write down/List the different records/transactions ( the transaction appeared in only
Pass Book or Cash book) and analyse the different transactions....................................... 11
3. Prepare the Bank reconciliation statement at 30 June 20X9. ...................................... 15
Learning outcome 4: Reconcile control accounts and shift recorded transactions from the
suspense accounts to the right accounts. ................................................................................... 16
I. Theory of Errors in accounting, control account and suspense account ........................ 16
1. Theory of Erros in accounting ........................................................................................ 16
2. Theory of suspense account ............................................................................................ 18
3. Theory of Control account .............................................................................................. 19
II. Re-prepare the extracted trial balance above accurately with the given information.
The only amended amount is the suspense's one. .................................................................... 20
III. Show the journal entries to correct the errors. ............................................................. 24
IV. Drawn up the suspense account for the difference between the trial balance totals
and show the correction to be made. Narratives are not required. ........................................ 27
V. Draw up a statement showing the adjusted net profit after correcting the above errors;
assumed that net profit had previously been calculated at £1,200 for the semi-annum
period ended at 30 June 20X9. ................................................................................................... 29
Conclusion ................................................................................................................................... 31
References .................................................................................................................................... 32
Bibliography ................................................................................................................................. 32

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 Introduction
The aim of this assignment is to show, identify and analyze how the accounting
transactions that banks perform, find errors and fix it. This report will show transactions
recorded by An Binh Ltd and the bank must be accurately recorded in bank
reconciliation statements. Besides, the assignment give theories to help student for
understading clearly how its importance and how it works such as Control account,
accounting errors and suspense account.

Furthermore, this report provide a lot of explanation, knowledge about the payments of
accounts and performance in transactions. It also shows how suspense account work in
unadjusted trial balance, find errors, adjust having errors and recalculate net profit when
transaction record incorrectly. Therefore, An Bình ltd is an particular example for
students do assignment for evaluating, analyzing and explaining the banking activities
as well as transactions in financial accounting.

This background knownledge, skills in this paper will assist student in analyzing,
evluating and explaning about the accounting transactions in financial accounting in
order to enhance one's professional career in the future.

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Learning outcome 3: Perform bank reconciliations to ensure company and bank
records are correct
I. Bank reconciliation statement
1. Concept of BRS
A bank reconciliation statement is a summary of banking and business activity
that reconciles an entity’s bank account with its financial records. The statement outlines
the deposits, withdrawals and other activities affecting a bank account for a specific
period. A bank reconciliation statement is a useful financial internal control tool used to
thwart fraud. (KAGAN, 2019)

2. Necessity of BRS
Bank reconciliation statement is an important technique by which the accuracy
of the bank balance shown by the pass book and cash book is ensured. The need and
importance of bank reconciliation statement can be summarized in the following points.
A Bank Reconciliation Statement is needed and is important because of the following
reasons: (Toppr, 2020)

• It helps in knowing the actual Bank balance.

• It helps in discouraging the staff from embezzlement.
• Helps in identifying the reason for differences in the Cash Book and the Pass
Book.
• It helps in identifying any undue delay in the clearance of cheques.
• Helps in detecting and preventing frauds and errors in recording the Banking
transactions.
• It helps in incorporating certain expenditures/income debited/credited by Bank
in the books of accounts.

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3. Steps of prearing BRS
 Check for Uncleared Dues

Step 1: First of all, compare the opening balances of both the bank column of the
cash book as well as the bank statement. The two can be different in terms of
uncleared dues like un-presented or un-credited cheques from the previous month.
(Toppr, 2020)

 Compare Debit and Credit Sides

Step 2: Start by comparing the credit side of the bank statement to the debit side of
the bank statement. Also, compare the credit side of the cash book to the debit side
of the cash book. The two must be equal in both documents. Tick the columns if you
can’t find any error. (Toppr, 2020)

 Check for Missed Entries

Step 3: Analyse entries in the bank column of the cash book as well as in checkbook.
Look for records that have been missed to be posted in the bank column of the cash
book. Make a separate list of all such items and list them in cash book. (Toppr, 2020)

 Correct them

Step 4: Correct the errors present in the cash book, if any. (Toppr, 2020)

 Revise the Entries

Step 5: Calculate the balance after revising the updated cash book’s bank column.
(Toppr, 2020)

 Make BRS Accordingly

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Step 6: Prepare Bank Reconciliation Statement accordingly. Make sure to add the
updated version of records. (Toppr, 2020)

 Add Un-presented Cheques and Deduct Un-credited Cheques

Step 7: Banks are not aware of Un-presented cheques because the beneficiary
doesn’t get the cheque. It is the case when the business firm forgets to deliver the
signed cheque to the issued name. (Toppr, 2020)

This situation leads to the addition of the cheque amount in the bank statement.

On the other hand, cheques which beneficiary has not yet collected are called un-
credited cheques. These must be deducted.

 Make Final Changes

Step 8: Make all the final adjustments and check for bank errors in the bank
statement and the firm’s errors in the cash book. During heavy transaction days,
firms or banks may make mistakes in noting entries. (Toppr, 2020)

The process removes those errors. Although it consists of fine work, reconciliation
becomes a helping hand at hard times (large transaction days).

 Left-Hand Side Equal to the Right-Hand Side

Step 9: The results from both the documents i.e. bank statement and cash book
must match with each other. (Toppr, 2020)

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4. BRS format

Figure 1: BRS format (online)

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II. Compare the records in both the Bank statements/Pass Book and the Cash
Book (bank column only).
1. Tick the record(transaction) that both appeared in the Pass Book and the
Cash Book

BANK STATEMENT OF ACCOUNT WITH

ABC Bank
Accoun 22734
Name of account: An Binh Ltd. t No.: 5
Date of issue: 30 June 20X9

Payments Receipts
Withdrawals Deposits
Date Descriptions Debit Credit Balance
01-Thg 6 Balance 374,88
01-Thg 6 Cheque ✓ 6,18 368,70
01-Thg 6 Deposit-AA Co. 143,40 512,10
02-Thg 6 Cheque 67,20 444,90
03-Thg 6 B. Yang ✓ 366,94 811,84
05-Thg 6 Cheque 357,96 453,88
07-Thg 6 Direct debit-AB ✓ 30,60 423,28
Direct debit-Wages & ✓ 330,0
08-Thg 6 Salaries 0 93,28
10-Thg 6 Cheque ✓ 30,00 63,28
14-Thg 6 Deposit-C. Wang ✓ 72,00 135,28
15-Thg 6 Cheque-AC ✓ 59,02 76,26
EFG bank credit: An
15-Thg 6 Binh Ltd. ✓ 372,60 448,86
✓ 134,5
16-Thg 6 Cheque-AD Co. 8 314,28
Direct debit-Wages & ✓ 330,0
17-Thg 6 Salaries 0 -15,72
Credit transfer-HIK
17-Thg 6 Co. ✓ 470,34 454,62
Direct debit-
18-Thg 6 G.Supplies ✓ 18,00 436,62
19-Thg 6 H. Ltd. ✓ 36,90 399,72
Direct transfer: I.
19-Thg 6 Woods ✓ 133,38 533,10
20-Thg 6 BM ✓ 30,00 563,10

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20-Thg 6 AE Co. ✓ 39,36 523,74
✓ 112,9
20-Thg 6 Cheque-AF Fuel Ltd. 2 410,82
Direct debit-Wages & ✓ 330,0
21-Thg 6 Salaries 0 80,82
L. Traders: trader's
22-Thg 6 credit ✓ 336,00 416,82
24-Thg 6 Deposit-K Co. ✓ 318,82 735,64
Direct debit-Wages & ✓ 330,0
24-Thg 6 Salaries 0 405,64
26-Thg 6 Cheque ✓ 20,28 385,36
Returned dishonoured
27-Thg 6 cheque-BM 30,00 355,36
27-Thg 6 Cheque-M. Thomas ✓ 45,98 309,37
27-Thg 6 Transaction fees ✓ 13,20 296,17
28-Thg 6 K. Consultancy ✓ 51,12 245,05
30-Thg 6 Deposit-O. Frozen ✓ 245,27 490,32
30-Thg 6 Bank charges ✓ 11,40 478,92

CASH BOOK(bank column only extracted) - An Binh Ltd.

At 30 June 20X9
Date Descriptions Debit Credit Balance
01-Thg 6 Balance 374,88
01-Thg 6 Office Supplies ✓ 6,18 368,70
03-Thg 6 Sales-B. Yang ✓ 366,94 735,64
05-Thg 6 AA Co. ✓ 357,96 377,68
07-Thg 6 AB-Stationery expenses ✓ 30,60 347,08
08-Thg 6 Wages and Salary ✓ 330,00 17,08
10-Thg 6 Cheque ✓ 30,00 -12,92
14-Thg 6 Sales-C.-Wang ✓ 72,00 59,08
15-Thg 6 AC-Advertising fees ✓ 59,02 0,06
15-Thg 6 Sales-EFG ✓ 372,60 372,66
16-Thg 6 AD Co. ✓ 134,58 238,08
17-Thg 6 Wages and Salary ✓ 330,00 -91,92
17-Thg 6 HIK Co. ✓ 470,34 378,42
Supplies Expenses-G.
18-Thg 6 Supplies ✓ 18,00 360,42
19-Thg 6 Supplies Expenses-H. Ltd. ✓ 36,90 323,52
19-Thg 6 Sales-I.Woods ✓ 133,38 456,90

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20-Thg 6 Sales-BM ✓ 30,00 486,90
20-Thg 6 Fuel expenses-AE Ltd. ✓ 39,36 447,54
20-Thg 6 Fuel expense-AF ✓ 112,92 334,62
21-Thg 6 Wages and Salary ✓ 330,00 4,62
21-Thg 6 Sales-L. Traders ✓ 336,00 340,62
22-Thg 6 Sales-K.Co. ✓ 318,82 659,44
Wages and Salary direct
24-Thg 6 debit ✓ 330,00 329,44
25-Thg 6 Dishonoured cheque-BM -30,00 299,44
26-Thg 6 Gas expense ✓ 20,28 279,16
27-Thg 6 M. Thomas Co. ✓ 45,98 233,17
27-Thg 6 Transaction fees ✓ 13,20 219,97
Account fees-K.
28-Thg 6 Consultancy ✓ 51,12 168,85
28-Thg 6 Light and Heat Expense 12,00 156,85
29-Thg 6 AG Ltd. 92,88 63,97
29-Thg 6 Delivery cost-AH 26,46 37,51
29-Thg 6 Materials-AJ 99,07 -61,56
29-Thg 6 Sales-O. Frozen ✓ 245,27 183,71
30-Thg 6 Sales-M. Kings 263,28 446,99
30-Thg 6 Bank charges ✓ 11,40 435,59

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2. Write down/List the different records/transactions ( the transaction appeared in
only Pass Book or Cash book) and analyse the different transactions
01-Thg 6 Deposit -AA Co 143,4
02-Thg 6 Cheque 67,2
28-Thg 6 Light and heating Expense 12
29-Thg 6 AG Ltd 92,88
29-Thg 6 Delivery cost-AH 26,46
29-Thg 6 Materials-AJ 99,07
30-Thg 6 Sales-M.Kings 263,28

• Transaction on 1-June,20X9 in Passbook

01-Thg 6 Deposit -AA Co 143,4

Company AA Co deposit 143,4 to the account of An Bình Ltd with a debit balance in pass
book. However, this payment of A A Co has been recognized by ABC’s bank, but at the
present, An binh ltd has not recorded with a debit balance in cash book. Base on this,
increase cash was recorded in pass book but not in cash book (Pass Book > Cash Book).
That’s why the balance on Pass book and Cash book is defferent.

Way: Balance per Cash Book to Balance per Pass Book

Based on the above data, the pass book has a higher balance than the Cash Book, so to
balance the cash book, have add amounts (143,4) that involved to the transaction of cash
book

• Transaction on 2-June,20X9 in Passbook

02-Thg 6 Cheque 67,2

On This transaction, Cheque have already debited in pass book with the amount of 67.2
that means cash decrease. An Bình Ltd withdraws cash from the ABC’s bank and ABC's
Bank has finished payment with An Bình Ltd which means the bank has recorded this
transaction. However, An Bình ltd has omitted, not recorded this transaction in cash book,

11
so creating an imbalance between Cash Book and Pass book. Based on the above
analysis, cash increase in pass book so pass book has a higher balance (Pass Book <
Cash Book). It has the difference between cash book and pass book, so use the following
method:

Way: Balance per Cash Book to Balance per Pass Book

Based on investigation above, Cash book has more than Pass book, so start with pass
book balance, subtract out amounts (67,2) that involved the transaction to arrive at cash
book balance.

• Transaction on 28-June,20X9 in Cashbook

28-Thg 6 Light and heating Expense 12

An Bình Ltd purchased Light and heating and used immediately and then appear two
accounts which are light and heating expense and cash. Expense are created by
depreciation of assets, so cash decreases. An Bình paid 12 for Light and heating
expense to the bank with a credit balance in cash book. This payment has been
recorded by An Bình Ltd., but the ABC's bank has not recorded with a debit in
passbook. Base on this, cash decrease in Cash book so cash book has less balance
(Cash Book < Pass Book). That is why the balance between Pass book and Cash book
is different.

Way: Balance per Cash Book to Balance per Pass Book

Based on the above analysis, Cash book has less balance than Pass book, so in order
to balance the passbook, add the amounts (12) that involved the transaction of cash book.

• Transaction on 29-June,20X9 in Cashbook

29-Thg 6 AG Ltd 92,88

An Binh Ltd paid 92,888 with a credit balance in cash book. That means this payment has
been recorded by An Bình Ltd but the ABC’s bank has yet to record it in pass book. Base

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on this information, the balance of cash book has lower than the balance of pass book so
(Cash Book <Pass Book). That’s why the balance on Pass book and Cash book is
defferent.

Way: Balance per Cash Book to Balance per Pass Book

Base on above data, the pass book has more balance than cash book, so to balance the
passbook, have to add amounts (92,88) that involved the transaction of cash book.

• Transaction on 29-June,20X9 in Cashbook

29-Thg 6 Delivery cost-AH 26,46

On this transaction, An Bình ltd has paid 26,46 with a credit balance for delivery cost-AH.
This payment has been recorded by the company but the ABC’s bank has not recorded
in pass book. Base on the explanation above, cash book has lower balance than pass
book so (Cash Book < Pass Book). Therefore, it has to be the difference between Cash
book and Pass book.

Way: Balance per Cash Book to Balance per Pass Book

Base on above, the cash book has lower than the pass book, so to balance the pass
book, add 26,46 to cash book for this transaction.

• Transaction on 29-June,20X9 in Cashbook

29-Thg 6 Materials-AJ 99,07

An Binh Ltd has paid 99.07 for Material-AJ. This payment has been recorded by An Bình
ltd with a credit balance, but the ABC’s bank has not been updated, so this bank account
has not been recorded in the pass book. Based on that, the cash in the cash book balance
decreases, so the Cash book has less balance than the Pass book (Cash book < Pass
Book). Therefore, it will create disagreements between the two balances.

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Way: Balance per Cash Book to Balance per Pass Book
Base on above, the cash book has lower than the pass book, so start with the cash book,
add 99,07 to arrive at pass book balance.

• Transaction on 30-June,20X9 in Cashbook

30-Thg 6 Sales-M.Kings 263,28

Sales-M.Kings have debited in Cashbook, it means cash increase. On this transaction,

M.Kings Sales sent cash to An Bình which means this payment An Bình ltd has recorded
in cash book with a debit balance. However, the ABC’s bank omitted this transaction, it
forgot and did not record this payment in the pass book. Base on this, cash increase in
cash book, so in cash book has more balance (Cash book> Pass Book). Therefore, it
appears the difference between Cash book and Pass book are not balance.

Way: Balance per Cash Book to Balance per Pass Book

Base on above, the cash book has higher than the pass book, so to balance the pass
book, subtract amount (26,46) that involved to this transaction to arrive at cash book
balance.

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3. Prepare the Bank reconciliation statement at 30 June 20X9.
Way: Balance per Cash Book to Balance per Pass
Book
Balance per Cash Book 435.59
Add
1-Jun Deposit -AA Co 143.40
28-Jun Light and heating Expense 12
29-Jun AG Ltd 92.88
29-Jun Delivery cost-AH 26.46
29-Jun Materials-AJ 99.07
Less
2-Jun Cheque 67.20
30-Jun Sales-M.Kings 263.28
Balance per Pass Book 478.92
Through adjustment and analysis above that it show which accounts are added or
subtracted in this transaction. Using the way which is Balance per Cash Book to Balance
per Pass Book and if balance per cash book in the bank reconcilliation is equal to pass
book (478.92) ,so the calculation is right.

Equation: Balance per Cash Book = Balance per Cash Book + total account to be added – total
account to be deducted = 435.59 + ( 143.40 + 12 + 92.88 + 26.46 + 99.07) – ( 67.20 + 263.28) =
478.92

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Learning outcome 4: Reconcile control accounts and shift recorded transactions
from the suspense accounts to the right accounts.
I. Theory of Errors in accounting, control account and suspense account
1. Theory of Erros in accounting
❖ Concepts of errors in accounting
An accounting error is an error in an accounting entry that was not intentional.
When spotted, the error is often immediately fixed. If there is no immediate resolution, an
investigation into the error is conducted. An accounting error should not be confused with
fraud, which is an intentional act to hide or alter entries for the benefit of the firm. (kenton,
2018)

❖ Types of errors in accounting (Source: Take from teacher’s lesson)

- Errors not affecting trial balance agreement
➔ Corrected by using journal entry
- Errors affecting trial balance agreement
➔ Corrected by the use of suspense account (The trial is not balance)

 Errors not affecting trial balance agreement (Source: Take from teacher’s
lesson)
1. Errors of omission – A transaction is completely omitted from the books.
2. Errors of commission – An entry posted at the correct amount but to the wrong person’s
account.
3. Errors of principle – An entry is made in the wrong class of account.
4. Complete reversal of entries – An account that should be debited is credited and vice
versa.
5. Compensating errors – where errors cancel each other out.
6. Errors of original entry – The original figure incorrectly entered although the correct
double- entry principle has been observed.

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  Errors affecting trial balance agreement may occur when (Source: Take
from teacher’s lesson)
(i) recording transactions in the accounts:
– (1) omitting a debit or credit entry
– (2) posting a wrong amount to one of the accounts
– (3) recording an entry on the wrong side
E.g. a debit entry entered as a credit or a credit entry as a debit

(ii) Balancing of accounts: Incorrect calculation of a balance

– E.g. overcast or undercast

(iii) Drawing up a trial balance

– (1) omitting a balance from the trial balance
– (2) an amount to the trial balance
– (3) incorrectly posting a balance to the wrong side of trial balance

 Steps in Analyzing and Correcting Errors (Source: Take from teacher’s

lesson)
1. Determine the correct journal entry and the appropriate debits and credits.

2. Analyze the original errors journal entry and determine all the debits and credits that
were recorded.

3. Preparing the correcting entries.

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 2. Theory of suspense account
❖ Concepts of suspense account
Suspense accounts, as well as being used to correct some errors, are also
opened when it is not known immediately where to post an amount. When the mystery is
solved, the suspense account is closed and the amount correctly posted using a journal
entry. (Source: Take from teacher’s lesson)
When they are discovered, they have to be corrected by a double-entry, one
in the Suspense Account and the other in the account concerned. (Source: Take from
teacher’s lesson)

❖ Process of suspense account

Analyze each transaction and event

from source documents

Record relevant transactions and

events in a journal

Post journal information to ledger

accounts

Prepare and analyze the trial balance

DISCOVER
ERROR!!!

Figure 2: Process of suspense account

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 3. Theory of Control account
❖ Concept of Control account
The general ledger account that summarizes subsidiary ledger data is called a
control account.
Each general ledger control account balance must equal the composite balance
of the individual accounts in the subsidiary ledger.

❖ Purpose of Control account

- Localizing errors Help locate errors, as the control account balance should equal the
total of balances from schedule of debtors or creditors, therefore easier to locate.
Control accounts allow errors to be confined to relatively small areas in the books and
accounts.

- Helps prevent fraud They provide an independent check: control accounts are
completed by a different member of staff than the individual ledger accounts

- Calculating debtors’ and creditors’ totals the total amount owed by debtors and owed
to creditors, can be determined relatively quickly if control accounts are used.

- Provide totals for compiling final accounts Control accounts can be used to compile
the profit and loss account and balance sheet.

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II. Re-prepare the extracted trial balance above accurately with the given
information. The only amended amount is the suspense's one.
Nguyen Anh – an account at An Bình Ltd- had extracted an inaccurate trial balance at 30
June 20X9 as follows:
TRIAL BALANCE - An Binh Ltd.
At 30 June 20X9
Account Debit Credit
Fixed assets at cost 27450
Accumulated Depreciation 4200 (1)
Inventory
* 1 June 20X9 5550
* 30 June 20X9 4440 (2)
Account Receivables (Dr) 2737,5 (3)
Account Payable (Cr) 1296 (4)
Salaries Payable 573 (5)
Share capital 40290
Prepaid Office Rent 11610
Sales 39120 (6)
Purchases 27490,5 (7)
Operating expenses 10356
Provision for doubtful debts 135 (8)
Suspense 25332 (9)
Total 100290 100290

(1) Accumulated Depreciation is a contra-account so it opposite of the associated

account which means it belongs to the credit balance. However, Nguyen Anh
has recorded incorrectly this provision with a debit balance. Therefore, in order
to normal balance, accumulated depreciation account with the amount of 4200
is recorded in credit balance side.

(2) Nguyen Anh recorded wrong account of June 30, 20X9 because this account
must be recorded in adjusted trial balance. The period from the beginning of
the month to the end of the month of that account will be incurred some things
so it's not in trial balance. Therefore, June 30 20X9 will not have data in trial
balance.

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(3) Accounts receivables are listed on the balance sheet as a current asset.
However, Nguyen Anh recorded incorrectly this account instead of it must be
belonged to the debit balance. Therefore, according to rule of debit and credit,
Account Receivables with the amount of 2373,5 is recorded in the credit
balance side.

(4) According to rule of debit and credit balance, account payable which belongs
to liabilities and besides, liabilities should be recorded in credit balance in trial
balance. But Nguyen Anh recorded incorrectly the account payable in debit
balance. Therefore, to normal balance, account payable with the amount of
1296 should be recorded in credit balance side.

(5) According to rule of debit and credit balance, salary payable which belongs to
liabilities. That’s why in trial balance, liabilities should be recorded in credit
balance. But Nguyen Anh recorded incorrectly the account payable in debit
balance. Therefore, to normal balance, Account payable with the amount of
1296 should be recorded in credit balance.

(6) Nguyen Anh recorded incorrectly the account of sales with the amount of
39120 in debit balance. Moreover, the account of sales is revenue of the
business, so follow the rule of debit and credit balance, sales belongs to
revenue and it should be recorded with a credit balance in trial balance.
Therefore, in order to normal balance, the account of sales with the amount of
39120 is recorded in the credit balance.

(7) Purchase is an assets account (Rule of debit and credit balance) so it will be
recorded on debit balance in trial balance. However, Nguyen Anh recorded
incorrectly this account in credit balance. Therefore, to recorded correctly the
account of purchase and to normal balance as well, the account of purchase
with the amount of 27490,5 should be recorded with a debit balance in trial
balance.

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 (8) Nguyen Anh recorded incorrectly the account of provision for doubtful debts.
Besides, it is a contra account, its normal balance must be on credit balance
so that it is not in debit balance. Therefore, to record correctly, provision for
doubtful debts with the amount of 135 is recorded in credit balance.

(9) In the trial balance, if the total credit balance and total debit balance are not
equal, suspense account will appear and it will be right with the condition that
the above data is arranged and the right data. Moreover, to calculate the
suspense account, largest sum minus total remaining and it will be on the
smaller column to balance the two values. In this case of suspense account,
because the above data is in the wrong position, the wrong column should
lead to two different balances that are wrong. Therefore, total debit and credit
balance are both wrong values will lead to suspense account will also be
wrong with two elements which are wrong column arrangement and wrong
value.

TRIAL BALANCE - An Binh Ltd.

At 30 June 20X9
Account Debit Credit
Fixed assets at cost 27450
Accumulated Depreciation 4200
Inventory
* 1 June 20X9 5550
* 30 June 20X9
Account Receivables (Dr) 2737.5
Account Payable (Cr) 1296
Salaries Payable 573
Share capital 40290
Prepaid Office Rent 11610
Sales 39120
Purchases 27490.5
Operating expenses 10356
Provision for doubtful debts 135
Suspense 420

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 Total 85614 85614

In this table, the accounts have been arranged in the right columns, the right numbers
and the right values. Based on the table above, the total debit and credit balance are
correct, which leads to a suspense account being recorded properly to balance the
credit and debit balance because suspense is arranged in the right column and in the
right value. Therefore, trial balance has properly recorded all accounts.

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III. Show the journal entries to correct the errors.

(i) The total of the sales day book for June 20X9 had been overstated by £160,
relevant accounts had been recorded correctly.
Explanation: The total of the sales day book for June 20X9 had been overstated by
£ 160, relevant accounts had been recorded correctly which means it affect only the
account of sales. The accounting error here recorded the sales account was overstated
by £160, so this was affected trial balance agreement. Because of that, in order to balance
the total credit and debit balance, suspense account must be used for that adjustment.
Therefore, this adjustment of sales is recorded by £160 with a debit balance. Besides, to
balance it, the suspense account is recorded the amounts of £160 with a credit balance.

Dr Sales 160
Cr Suspense account 160

(ii) In January 20X9 some new office equipment had been purchased for £270;
this had been debited to the purchases account; and the relevant account had
been recorded correctly.
Explanation: This is affected to office equipment and purchase account because the
relevant account had been recorded correctly. Purchase account has been recorded the
wrong type of account name in debit balance. Besides, this error does not affect the total
in trial balance so do not use suspense account. In addition, office equipment is an asset
so it will increase the amount of 270 with the debit balance and the purchase will be
decrease the amount of 270 with a credit balance.

Dr Office equipment 270

Cr Purchases 270

(iii) A payment of £340 correctly entered in the cash account, but not debited in
the office expense.

Explanation: This transaction only recorded correctly in the cash account.

Moreover, office expense account was missing recorded so it affected to trial balance

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agreement. Because of that, suspense account must be used for adjustment. Therefore,
office equipment increase (340) with a debit balance and to balance it, suspense
account will decrease the amount of 340 with a credit balance.

Dr office expense 340

Cr Suspense account 340

(iv) A purchase of inventory of £200 was recorded in the inventory purchase

account at £350; and the relevant account had been recorded correctly.
Explanation: This transaction only affected to inventory purchase account and the
relevant account had been recorded correctly. However, A purchase of inventory of £ 200
was recorded in the inventory purchase account at £ 350 which means it was excessively
recorded by £ 150 (£350 - £150) this affects the total balance value of total credit and
debit balance so suspense account appears to be used for balance adjustments. Besides,
inventory purchase account is asset and it also decreases with the amount of £150 so it
belongs to the credit balance. Therefore, inventory purchase account is recorded with the
amount of £ 150 in credit side and to balance it, suspense account is recorded with the
same amount of £ 150 in debit side.

Dr Suspense account 150

Cr Inventory Purchases 150

(v) Rent expense account had been understated by £70; and the relevant account
had been recorded correctly.
Explanation: Rent expense account had been understated by £70 and relevant account
had been recorded correctly which means the transaction only affected to rent expense
account. This error is one of the causes lead trial balance to be out of balance, so
suspense account must be used. In addition, rent expense increase the amount of 70
with a debit balance and to balance it, suspense account decrease the amount of 70 with
a credit balance.

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 Dr Rent expense 70
Cr Suspense account 70

(vi) A sales of £450 on credit had been omitted from the accounting books.
Explanation: These errors is not affected to trial balance so suspense account will not be
used for this transaction. However, this transactional had been omitted from the
accounting books which means this was not recorded any transactions. Therefore, there
are two accounts appeared which are cash/account receivables and Sales account in
journal entries. Account receivables increase the amount of 450 with a debit balance and
to balance it, Sales will decrease amount of 450 with a credit balance.

Dr Cash/Account receivables 450

Cr Sales 450

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 IV. Drawn up the suspense account for the difference between the trial balance
totals and show the correction to be made. Narratives are not required.
This report will explain two things which involved in this part.
Firstly, the reason why the opening balance of suspense account with a debit balance is
the total credit balance higher than total debit balance and it also unbalance in trial
balance, so suspense account will be used for adjustment and is recorded with a debit
balance which this report mentioned above.

Secondly, in order to put value into the ledger table, based on the above analysis, which
each transactions appear suspense account then put in the ledger with the same
amount and the same debit or credit side. If closing balance is equal 0 so the
adjustments are correct. Therefore, the opening balance of suspense account record
with a debit balance, the equation to calculate closing balance of suspense account is:
- Closing balance of suspense account = Closing balance of suspense account +
total debits - total credits.

SUSPENSE ACCOUNT
Transaction Description Debit Credit Balance
Opening balance 420 420
(i) This adjustment of sales is recorded by 160 260
£160 with a debit balance. To balance
through journal entries so it needs a credit
in balance. Suspense account is recorded
the amounts of £160 with a credit
balance.
(iii) Office equipment increase (340) with a 340 (80)
debit balance. To balance through journal
entries so it needs a credit in balance.
Suspense account will decrease the
amount of 340 with a credit balance.

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(iv) inventory purchase account is recorded 150 70
with the amount of £ 150 in credit side. To
balance through journal entries so it
needs a debit in balance. Therefore,
suspense account is recorded with the
same amount of £ 150 in debit side
(v) rent expense increase the amount of 70 70 0
with a debit balance. To balance through
journal entries so it needs a credit in
balance. Suspense account decrease the
amount of 70 with a credit balance.

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V. Draw up a statement showing the adjusted net profit after correcting the
above errors; assumed that net profit had previously been calculated at £1,200 for
the semi-annum period ended at 30 June 20X9.

(i) The total of the sales day book for June 20X9 had been overstated by
£160, relevant accounts had been recorded correctly.
In this transaction, sales had been overstated by £160 and adjusted sales
account to reduce £160 so profit also reduced.
➔ This transaction affect to net profit. Therefore, it subtracts out £160

(ii) In January 20X9 some new office equipment had been purchased for
£270; this had been debited to the purchases account; and the relevant
account had been recorded correctly.
For this transaction, office equipment and purchases account are not
involved to expense or profit.
➔ This transaction is not affected to net profit.

(iii) A payment of £340 correctly entered in the cash account, but not
debited in the office expense.
In this transaction, a payment of £340 correctly entered in the cash account
so office expense increased £340 with a debit balance and it reduced profit.
➔ This transaction affect to net profit. Therefore, it subtract out £340.

(iv) A purchase of inventory of £200 was recorded in the inventory

purchase account at £350; and the relevant account had been recorded correctly.
For this transaction, inventory purchase is considered an expense.
Therefore, inventory purchase decrease £150 with a credit balance and beside, profit
decrease £150.
➔ This transaction is affected to net profit. Therefore, it adds in £150.

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 (v) Rent expense account had been understated by £70; and the relevant
account had been recorded correctly.
In this transaction, rent expense account had been understated by £70.
Beside, rent expense increase £70 with a debit balance so profit decrease £70.
➔ This transaction is affected to net profit. Therefore, it adds in £70.

(vi) A sales of £450 on credit had been omitted from the accounting books.
In this transaction, A sales of £450 on credit had been omitted from the
accounting books. Therefore, sales increase £450 with a debit balance so profit also
increase.
➔ This transaction is affected to net profit. Therefore, it adds in £450.

Net profit 1.200

Sale omitted 450 (vi)
Inventory purchase overstated 150 (iv)
Sale overstated -160 (i)
Office expense omitted -340 (iii)
Rent expense understated -70 (v)
Corrected/Adjusted net profit 1.230

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 Conclusion
This assignment is to help student in order to analyze, evaluate and it also provide
practical knowledge about the processing of transactions between banks and
businesses, find the errors and adjust them properly. This report support writer to find
out the reasons for the disagreement between the bank statement balance and the cash
book balance of the bank

Besides, using the full ledger format helps students understand the values in the ledger
account, the appearance of suspense accounts and how to put values into the ledger. In
addition, students will gain the skills of checking how adjustments to entries must be
record correctly or to record any changes that have affected the Business Cash
Account.

Finally, this background of knowledge, practical example, skills that it assists student a
lot of in analyzing, finding out errors accounting in bank reconciliation for adjusting.
Moreover, this report support student to enhance person's understanding and
professional career.

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References

Bibliography
KAGAN, J., 2019. BRS concept. [Online]
Available at: https://www.investopedia.com/terms/b/bankreconciliation.asp
[Accessed 11 april 2020].
Toppr, 2020. necessity of BRS. [Online]
Available at: https://www.toppr.com/guides/fundamentals-of-accounting/bank-reconciliation-
statements/preparation-of-brs/
[Accessed 11 april 2020].
Toppr, 2020. Steps of BRS. [Online]
Available at: https://www.toppr.com/guides/principles-and-practices-of-accounting/bank-
reconciliation-statement/preparation-of-bank-reconciliation-statement/
[Accessed 11 april 2020].
kenton, W., 2018. Concepts of errors in accounting. [Online]
Available at: https://www.investopedia.com/terms/a/accounting-error.asp
[Accessed 13 april 2020].
Bragg, S., 2019. Concepts of suspense account. [Online]
Available at: https://www.accountingtools.com/articles/what-is-a-suspense-account.html
[Accessed 13 april 2020].

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