ACT 2112 – INTRODUCTORY ACCOUNTING

Accounting for Cash, Bank & Bank Reconciliation

1. The following information is available to reconcile Branch Company’s book balance of

cash with its bank statement cash balance as of July 31.

a. On July 31, the company’s Cash account has a $27,497 debit balance, but its July
bank statement shows a $27,233 cash balance.
b. Check No. 3031 for $1,482, Check No. 3065 for $382, and Check No. 3069 for
$2,281 are outstanding checks as of July 31.
c. Check No. 3056 for July rent expense was correctly written and drawn for $1,270 but
was erroneously entered in the accounting records as $1,250.
d. The July bank statement shows the bank collected $7,955 cash on a note for Branch.
Branch had not recorded this event before receiving the statement.
e. The bank statement shows an $805 NSF check. The check had been received from
a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
f. The July statement shows a $25 bank service charge. It has not yet been recorded in
miscellaneous expenses because no previous notification had been received.
g. Branch’s July 31 daily cash receipts of $11,514 were placed in the bank’s night
depository on that date but do not appear on the July 31 bank statement.
Required
i. Prepare the bank reconciliation for this company as of July 31.
ii. Prepare the journal entries necessary to make the company’s book balance of cash
equal to the reconciled cash balance as of July 31.

2. The following information is available to reconcile Forerunner Sdn Bhd’s book balance of
cash with its bank statement balance as of 31 December 2019.

a. The December 31 cash balance according to the accounting records is

RM63,487.40, and the bank statement balance for that date is RM90,183.60.
b. Check No. 2546 for RM2,168.40 and Check No. 2550 for RM780, both written and
entered in the accounting records in December, are not among the cleared cheques.
Two cheques, No. 2510 for RM4,578 and No. 2499 for RM741, were outstanding on
the most recent 30 November 2019 reconciliation. Check No. 2510 is listed with the
December cleared cheques, but Check No. 2499 is not.
c. When the December cheques are compared with entries in the accounting records, it
is found that Check No. 2567 had been correctly drawn for RM4,870 to pay for office
supplies but was erroneously entered in the accounting records as RM4,906.
d. Two debit memoranda are enclosed with the statement and are unrecorded at the
time of the reconciliation. One debit memorandum is for RM1,499 and dealt with as
an NSF check for RM1,464 received from a customer, Fire Industries, in payment of
its account. The bank assessed a RM35 fee for processing it. The second debit
memorandum is a RM158 charge for cheque printing. Forerunner did not record
these transactions before receiving the statement.
e. A credit memorandum indicates that the bank collected RM40,000 cash on a note
receivable for the company, deducted a RM40 collection fee, and credited the

Neil@2021 FKPS
 balance to the Company’s Cash account. Forerunner did not record this transaction
before receiving the statement.
f. Forerunner’s 31 December daily cash receipts of RM15,332.20 were placed in the
bank’s night depository on that date, but do not appear on December 31 bank
statement.

Required:

i. Prepare the bank reconciliation statement for Forerunner Sdn Bhd as at 31

December 2019.
ii. Prepare the journal entries necessary to bring the company’s book balance of cash
into conformity with the reconciled cash balance as of 31 December 2019.

3. As at 1 January 2019, the unadjusted cash balance for AWFA Sdn Bhd was RM 5,167
while the cash balance in the unadjusted bank statements reflected the balance of RM
5,100 as at 31 December 2019.

a. Cash receipts of RM 1,300 were deposited two days ago not recorded in the bank
statement.
b. Check number 880 paid to Siang Heng's creditors, amounting to RM 750, was not
recorded in the bank statement.
c. The check number 891 paid to the creditor Flight, amounting to RM 300 has not
been forwarded to the bank for payment.
d. Payment of check number 868 to the supplier amounting to RM 205 was
incorrectly recorded in the cashbook as RM 223. The error are not recorded in the
bank statement.
e. Bank service charge of RM 55.
f. A total of RM100 has been debited directly to the AWFA Sdn. Bhd for a number of
interests received.
g. Checks received from JayaRasa debtors totaling RM 210 were returned due to
insufficient balance.
Required:
i. Prepare Bank Adjustment Statement for AWFA Sdn. Bhd as of December 31, 2019.
ii. Prepare adjustment entries as of December 31, 2019. (details omitted)

Neil@2021 FKPS