Gr11 Ch3 Bank Reconciliation LB

Chapter 3
Reconciliations – Bank reconciliations

By the end of this chapter, you will be able to:
• reconcile the bank statements to Cash Journals
• prepare a Bank Reconciliation Statement
• integrate the following concepts into the bank reconciliation process:
■ outstanding cheques
■ EFT's not yet shown on the bank statement
■ deposits not yet shown on the bank statement
■ stop orders and debit orders
■ direct transfers and deposits
■ bank charges
■ interest received or charged
■ correction of errors or omissions
■ cheques referred to drawer (R/D) or cancelled
■ post-dated cheques received or issued.
Key concepts
• bank statements • bank reconciliation • mirror image • interest on current account
• interest on overdraft • direct deposits • Electronic Funds Transfer (EFT) • ATM withdrawal
slips • bank charges • stop order • debit order • dishonoured cheque • cancelled cheque
• post-dated cheque • stale cheque • favourable bank balance • unfavourable bank balance
What do I do with this

bank statement that
has just arrived?
File it in the file marked

‘For reconciliation’ so that Randall,
our bookkeeper, can check it against
the Cash Journals at the end of
the month.
R e c o n c i l i at i o n s – B a n k r e c o n c i l i at i o n s • c h a p t e r 3 37
1. Introduction
Bank reconciliation takes place when the business compares its records
(CRJ and CPJ) to the bank’s records (bank statement). The business
should do a bank reconciliation every month to make sure that they are
aware of all deposits into and withdrawals from their banking account.
1.1 What are bank reconciliations?

Bank reconciliation involves comparing the business’s record of
transactions and balances to the bank’s record of transactions and
balances. The bookkeeper must meticulously go through every
transaction in their CRJ and CPJ to make sure their transactions and
the bank’s transactions agree.
Some items, such as outstanding deposits, will not show up on
the statement because if they are not yet deposited at the bank, the
bank won’t know that it was received by the business. Likewise, there
may have been electronic payments and transfers at the bank of which
you were unaware. The bank reconciliation process will expose all of
these discrepancies.
1.2 Why are bank reconciliations important?

RISK!
It’s important to go through the process of bank reconciliation. If it is not
done, the business may be exposed to a several risks.
People or employees may be stealing from their bank account. If each
transaction is not reconciled, the business will never know about it. The
bank might have made a mistake on your account. With regular bank
reconciliation, problems can be picked up quickly and mistakes corrected.
Activity 3.1 (Case study)
Pule’s service centre, owned by Pule George, has been servicing cars for
ATM: Automated teller
machine three months. Pule is a qualified mechanic and knows very little about proper
accounting practice. although he has not been keeping proper records of his
Machine from which you can:
withdraw cash, find out an account transactions, he has kept all his bank deposit slips, cheque counterfoils, ATM
balance, transfer funds, make withdrawal slips and bank statements.
cash and cheque deposits, get Pule receives a bank statement from his bank every month which shows
provisional statements and pay all deposits into and withdrawals from the business’s account. it has become
certain accounts.
a habit for him to check the deposit slips, electronic fund transfers (EFT's) and
atM withdrawal slips against the bank statement. this process of checking,
among others, is called bank reconciliation. let us look at how Pule will
reconcile his account with the statement received from the bank at the end
June 2019, the first month of business.
38 c h a p t e r 3 • R e c o n c i l i at i o n s – B a n k r e c o n c i l i at i o n s
Pule deposited his capital contribution of R80 000 on 1 June 2019, the first day of
business via EFT. He only deposits money once a week thereafter.
look at the following source documents recording Pule’s transactions before
answering the questions that follow on page 42.
Deposit slip R c
Depositostrokie Notes/Note
First Bank Limited, Reg no 1985/336547/07
Credit Coins/Munte
Krediteer Sub-total/Subtotaal
Y J Y J M M D D Branch name/clearing code
Date/Datum: Taknaam/klaringskode
Name (PRINT)
Naam (DRUK)
Signature Total/Totaal R
Handtekening
Acc No/Rek No
Tel ( )
Dep ref/Dep verw
Deposit slip R c
Credit Coins/Munte
Name (PRINT)
Naam (DRUK)
Handtekening
Acc No/Rek No
Tel ( )
Dep ref/Dep verw
Deposit slip R c
Credit
Coins/Munte
Name (PRINT)
Naam (DRUK)
Handtekening
Acc No/Rek No
Tel ( )
Dep ref/Dep verw
Deposit slip R c
Credit
Coins/Munte
Name (PRINT)
Naam (DRUK)
Handtekening
Acc No/Rek No
Tel ( )
Dep ref/Dep verw
The following ATM withdrawals were made during June 2019:
The following EFT's were made during June 2019:
Date: Date: Date: 08/06/2019
Beneficiary: Beneficiary: Beneficiary:
Reference: Reference: Reference:
Amount Amount Amount

EFT nr: 001 EFT nr:
EFT nr: 002 003
15/06/2019 17/06/2019 18/06/2019

Date: Date: Date:
Beneficiary: Beneficiary: Beneficiary:
Reference: Reference: Reference:
Amount Amount Amount R129,62
EFT nr: 004 EFT nr: 005 EFT nr: 006
Date: According to Pule's notebook

Total receipts R98582,37
Beneficiary: ATM slips R5 930
Reference:
EFT's R37 426,78
Amount in bank = R55 225,59
Amount
EFT nr: 007
Pule’s Service Centre 1 Main Street, FIRST BANK
28 Howe Street, Rosebank, 8100
Observatory, 8000 For period: 01/06/2019–28/06/2019
Current Account Account Number 03 5469545 3 Bank Statement
Details Debit Credit Date Balance
Pule George capital 80 000 00 01/06 80 000 00
Notice fee 27 50 01/06 79 972 50
EFT 01: Unicity 1 500 00 02/06 70 772 50
EFT 02: City Spares 9 200 00 02/06 69 272 50
ATM 6250 750 00 06/06 68 522 50
Cash Deposit 3 437 12 07/06 71 959 62
EFT 03: Star Equipment 18 750 00 08/06 53 209 62
ATM 9650 1 000 00 08/06 52 209 62
ATM 3126 680 00 14/06 51 529 62
Cash Deposit 6 184 88 14/06 57 714 50
EFT 04 : City Spares 2 876 98 15/06 54 837 52
EFT 05: Unicity council 326 27 17/06 54 511 25
EFT 06: Telkom 129 62 18/06 54 381 63
Cash Deposit 3 085 62 21/06 57 467 25
ATM 6250 1 200 00 22/06 56 267 25
Debit order – to AM Garage for rent for June 1 900 00 27/06 54 367 25
Service fees 92 12 28/06 54 275 13
Cash handling fee 29 13 28/06 54 246 00
Interest 265 00 28/06 54 511 00
Questions
Compare the source documents with the bank statement. Tick the bank
statement if the document amount appears on the bank statement.
Now answer the following questions on your own.

1. With which column on the bank statement did you compare the
deposit slips?
2. With which column on the bank statement did you compare the atM
withdrawal slips and EFT's made?
3. list the additional items on the bank statement that were not ticked (✓).
4. Which EFT's and atM withdrawal slips were not on the bank statement?
5. Are all the deposits accounted for on the bank statement?
6. What is the final balance on the bank statement?
7. What is the final balance according to Pule’s records? Refer to cheque
counterfoil no. 007.
Discuss the following with a partner.

8. Why is there a difference between the balance according to Pule’s records
and the bank statement?
9. In your opinion, is Pule keeping proper control of his money? What advice
would you give him?
2. Internal control of money

The business’s current bank account is probably the most frequently used
account. This is because money is deposited, withdrawn and transferred
on a daily basis, and errors might occur. It is necessary to keep a check to
ensure that all the money is accounted for.
In order to comply with proper accounting controls, a business
must record all its cash receipts and cash payments. Pule kept all the
documentation of his transactions with the bank but failed to formally
record these transactions.
In addition to recording transactions, Pule should do the following in
order to comply with accounting control procedures:
• Ensure that all money received is supported by a source document.
• Check that money and cheques received agree with the deposit slip.
• Require cheques to be signed by at least two authorised signatories.
• Prefer to make all payments by cheque or EFT.
2.1 Accounting procedure for recording money received

When money is received, the business will issue a receipt, cash invoice
or till slip. The source document is then recorded in the Cash Receipts
Journal. At the end of the day, all the amounts in the Analysis of receipts
column in the CRJ are added together. This amount represents all the
money received on that particular day and will be entered into the Bank
column. The amount in the Bank column is deposited. This amount must
appear on the deposit slip.
Cash Receipts Journal of Pule’s Service Centre for June 2019 CRJ1
Doc. Day Details Fol. Analysis of Bank Current Sundry accounts
no. receipts income Amount Details
01 07 P George 80 000 00 80 000 00 80 000 00 Capital
The total received by Pule’s Service Centre on 1 June 2019 is R80 000.
A deposit slip, shown below, will be completed and the money deposited
into the current banking account.
2.2 Accounting procedure for recording money paid

When a payment is made it will be recorded in the Cash Payments Journal.
Some businesses might only make EFT payments and two people will have
to authorise the transaction. In small businesses, where there is only one
owner, the owner will make the EFT payments or cash withdrawals. This
is because the owner takes full responsibility for the money of the business.
Credit and debit card payments are also common. These methods of
payment have to be very strictly controlled by the owner, bookkeeper or
accountant. Payments via the Internet (EFTs) are also commonly used by
many businesses, and in this case, only one person will be given the
authority to make such payments. A password is given to the
bookkeeper in order for him to gain access to the bank’s Internet site.
In all of the above cases, source documents will be used in order to
record the transactions in the Cash Payments Journal.
2.3 Payments by means of cheque
A cheque is a negotiable document and is legal tender; in other words, it
represents the money you have in your bank account. When the cheque
is filled in correctly it becomes legal tender and will be exchanged for the
amount of money written on it. A cheque is valid for six months from
the date on the cheque and will be termed as a “stale cheque” if it is not
cashed within the six months.
Pule’s Service Centre made cheque payments on 2 June 2019. The
cheque counterfoils below remained in the cheque book and are the source
documents used to record the transactions in the Cash Payments Journal.
Date: Date:
To: To:
For: For:
Bal Bal
Dep Dep
Withdraw Withdraw
This chq This chq
Bal Bal
001 002
Cash Payments Journal of Pule’s Service Centre for June 2019 CPJ1
Doc. Day Name of Payee Fol. Bank Materials Wages Stationery Sundry accounts
no. Details
01 02 Unicity Council 1 500 00 1 500 00 Trading licence
02 City Spares 9 200 00 9 200 00
2.4 Cheque fraud

Bank reconciliations are an essential part of a business’s system of
internal control and play an important role in not only identifying
bank errors, but also in preventing and detecting fraud. Cheques are
commonly used as a means for committing such fraud and cheque fraud
is a major threat to most businesses. We have learnt that cheques are used
extensively in business for making and receiving payments, and although
they are very useful, they are also particularly vulnerable to unethical and
fraudulent behaviour. Thus it is critical that businesses perform regular
bank reconciliations and implement adequate control processes in order
to protect against the risk of cheque fraud. RISK!
Below are guidelines that could help to prevent and safeguard against
cheque fraud:
3. Services offered by a commercial bank
Commercial banks offer the business two main services:
• They look after the business’s money.
• They lend money to the business.
3.1 Looking after the business’s money

The business makes deposits into the banking account:
• The owner of the business opens an account at the commercial bank
in which to store money.
• Money received by the business is deposited into the current bank
account.
• The business makes payments against the banking account:
■ When the business needs to make payments, they can withdraw
money as cash either by going into a branch of their bank, by
doing an EFT (Internet payment), by withdrawing money from an
ATM machine, or by writing out a cheque.
■ The bank may give the business a plastic card called a debit card.
When the debit card is used to make a payment, the money is
deducted directly from the bank account.
■ The business can also arrange for their bank to pay accounts and
regular sums of money by debit order or stop order. This means
that the business gives the bank permission to make a number of
payments on their behalf in the future without the business having
to authorise each payment. Many businesses, such as cell phone
and insurance companies, prefer this form of payment.
■ Some businesses might opt for cell phone banking as an option. By
using a pin code, the business owners can access the bank account
via their cell phones. They can find out what their daily balance is
on a particular account or activate payments from their cell phone.
• The business pays for these services offered by commercial banks:
■ The term “bank charge” refers to all charges made by banks to bank charges
their customers. The business will pay for every transaction made, The amount paid to the bank for
whether a deposit, withdrawal or payment. The bank will also services they render to a business
charge for generating a bank statement every month and when
the business makes a balance enquiry. This is the price that the
business will pay to have the bank look after their money.
■ The bank is a business and generates its income by charging the
business bank charges on transactions. Bank charges will vary from
bank to bank and some businesses can opt to pay a flat fee per
month. These packages will allow the business to make a certain
number of deposits, withdrawals, debit/stop orders, balance
enquiries and drawing of bank statements every month.
4. Bank reconciliation
An essential control, which needs to be applied every month, is to
compare the business’s records of cash transactions (CRJ and CPJ) with
those of the bank. At the end of each month, the business will receive the
bank statement from its bank. The bank statement is a reflection of the
bank’s transactions with the business. As shown in the earlier case study,
Pule had not accounted for certain items that the bank had recorded on
the bank statement, and the bank had not accounted for certain items
that Pule had. Bank reconciliation reveals these discrepancies, and in the
end the business can keep track of its money.
4.1 The reconciliation process

Example
The bookkeeper of Shu-biz Stores received this bank statement from
First Bank on 31 August 2019.
Part 1: Starting the bank reconciliation process

Required
• Compare the credit column of the bank statement with the Bank
column of the CRJ.
• Compare the debit column of the bank statement with the Bank
column of the CPJ.
• Tick off items which appear in both the bank statement and
the journals.
• Circle all the items that have not been ticked off.
Example continued
Cash Receipts Journal of Shu-biz Stores for August 2019

Doc. Day Details Fol. Analysis of Bank Sales Cost of sales Sundry accounts
no. receipts Amount Details
01 01 S Nquay 50 000 00 50 000 00
Sales 19 876 00 19 876 00 10 280 00
02 M Morris 1 350 00 ✓71 226 00 1 350 00
07 Sales 5 250 00 ✓5 250 00 5 250 00 1 200 00
14 Sales 3 410 00 ✓3 410 00 3 410 00 828 00
21 Sales 7 220 00 ✓7 220 00 7 220 00 3 176 00
03 28 S Nquay 5 000 00 5 000 00
Sales 4 340 00 9 340 00 4 340 00 972 00
96 446 00 40 096 00 16 456 00 56 350 00
Cash Payments Journal of Shu-biz Stores for August 2019

Doc. Day Name of payee Fol. Bank Trading Wages Stationery Sundry accounts
no. Stock Amount Details
01 01 Mondew Stores ✓ 21 950 00 21 950 00
02 Bailey Stationers 1 250 00 1 250 00
BS 02 Cash ✓ 500 00 500 00 Cash float
03 City Council ✓ 3 500 00 3 500 00 Trading licence
04 03 Mondew Stores 10 820 00 10 820 00
05 07 Employees ✓ 750 00 750 00
06 09 Zebra Motors ✓ 25 000 00 25 000 00 Vehicles
07 14 Employees ✓ 750 00 750 00
08 15 Owner ✓ 1 000 00 1 000 00 Drawings
09 21 Employees ✓ 750 00 750 00
10 22 ABC Stores 6 450 00 6 100 00 350 00
11 27 Employees ✓ 750 00 750 00
12 31 Telkom 765 00 765 00 Telephone
13 City Council 265 00 265 00 Water and lights
74 500 00 38 870 00 3 000 00 1 600 00 31 030 00
Example continued
FIRST BANK
Shu-biz Stores 1 Main Street
9 Waterloo Street Rosebank
Middletown 8100
6500
For period: 01/08/2019–27/08/2019
Bank Statement
Current Account Account Number 51 287 636 1
Deposit ✓ 71 226 00 01/08 71 226 00
EFT 01 ✓ 21 950 00 01/08 49 276 00
EFO 02 ✓ 1 250 00 01/08 48 026 00
ATM Cash withdrawal ✓ 500 00 02/08 47 526 00
EFO 03 ✓ 3 500 00 02/08 44 026 00
EFO 04 ✓ 10 820 00 03/08 33 206 00
EFO 05 ✓ 750 00 07/08 32 456 00
Deposit ✓ 5 250 00 08/08 37 706 00
EFO 06 25 000 00 09/08 12 706 00
EFO 07 ✓ 750 00 14/08 11 956 00
Deposit ✓ 3 410 00 15/08 15 366 00
EFO 08 ✓ 1 000 00 15/08 14 366 00
EFO 09 ✓ 750 00 21/08 13 616 00
Deposit ✓ 7 220 00 22/08 20 836 00
EFO 10 6 450 00 22/08 14 386 00
Interest 240 00 27/08 14 626 00
EFO 11 ✓ 750 00 27/08 13 795 00
Stop order: to African Eagle for insurance premium 635 00 27/08 13 160 00
Direct deposit: from M Morris for rent for Aug and Sep 2 700 00 27/08 15 860 00
Example continued
Why did we circle some amounts?
1. The circled amounts in the Bank column of the CRJ could be for
the following:
• The outstanding deposit of R9 340 in the CRJ was deposited into
the banking account. Why does the deposit not appear on the
bank statement? The bank closed off their books on 27 August.
The deposit was made 28 August. The deposit will appear on the
bank statement for September.
2. The circled amounts in the Bank column of the CPJ could be for the
following:
• EFT's that were made after the bank statement was received via
email from the bank.
3. The circled amounts in the debit column of the bank statement
could be for the following:
• Bank charges: The fees for administering the bank account of
the business. These charges include:
Monthly service fee: a monthly payment for the management of
the account. This includes payment for the monthly statements
and any other correspondence received from the bank.
Cheque book fee: for printing a new cheque book
Cash handling fee: for over-the-counter cash deposits which are
labour intensive and carry a risk to the bank
Transaction charges: which include the deposit and withdrawal of
cash, credit and debit card purchase fees
• Stop orders: An instruction given to the bank to pay funds
across to a third party, at a fixed amount on a regular basis
• Debit-orders: An agreement between the business and a third
party in which business allows them to take money out of the
bank account. Debit orders may be fixed or variable amount.
• Interest on overdraft: When the business has an overdrawn
balance, it will pay interest on the amount that is overdrawn for
the period of time that it is overdrawn.
• Dishonoured cheques: Reasons why the bank will dishonour
cheques received are:
No money in the drawers account; the drawer is deceased
or insolvent; there is a problem on the cheque like signature
discrepancies or amounts in words not matching amounts in
figures, etc.
Example continued
4. The circled amounts in the credit column of the bank statement
could be for the following reasons:
• Direct deposits: Money can be directly deposited into the
business’s bank account by anyone owing money to the
business.
• Interest on current account: When the business has a
favourable bank balance, it will earn interest on the favourable
balance for the period of time that it is favourable.
Part 2: Completing the bank reconciliation process

(Do steps 1 to 4)
1. Enter the totals from the Bank column into the CRJ and CPJ.
2. Circled amounts in the credit (+) column of the bank statement
must be entered into the CRJ.
3. Circled amounts in the debit (–) column of the bank statement
must be entered into the CPJ.
4. Total the bank columns of the CRJ and CPJ and post these totals to
the Bank account.
Cash Receipts Journal of Shu-biz Stores for August 2019

Doc. Day Details Fol. Bank Sundry accounts
no. Amount Details
31 Totals b/d 96 446 00 56 350 00
b/s First Bank 240 00 240 00 Interest on current account
M Morris 2 700 00 2 700 00 Rent income
99 386 00
B6
Cash Payments Journal of Shu-biz Stores for August 2019

Doc. Day Name of payee Fol. Bank Sundry accounts
no. Amount Details
31 Totals b/d 74 500 00 31 030 00
BS First Bank 81 00 81 00 Bank charges *
African Eagle 635 00 635 00 Insurance
75 216 00
B6
Example continued
General Ledger of Shu-biz Stores

Balance Sheet account
Dr Bank Cr
Date Details Fol. Amount Date Details Fol. Amount
2019 2019
Aug 31 Total receipts CRJ 99 386 00 Aug 31 Total payments CPJ 75 216 00
Balance c/d 24 170 00
99 386 00 99 386 00
2019
Sep 01 Balance b/d 24 170 00
Part 3: Drawing up the Bank Reconciliation Statement

(Do steps 5 to 8)
The business cannot add entries onto the bank statement, so it will
reconcile the differences between the bank statement and the Cash
Journals in the Bank Reconciliation Statement. The BRS is found in
the books of the business and is a statement that reconciles amounts
that appear in the Cash Journals but not on the bank statement.
5. Enter the closing balance on the bank statement into the BRS.
6. Circled amounts in the CRJ must be entered into the credit column
of the BRS.
7. Circled amounts in the CPJ must be entered into the debit column
of the BRS.
8. Enter the closing balance in the bank account into the BRS.
Shu-Biz Stores
Bank Reconciliation Statement on 31 August 2019
Debit Credit
Credit balance as per bank statement 15 860 00
Credit outstanding deposits 9 340 00
Debit outstanding cheques:
no. 13 765 00
no. 14 265 00
Debit balance as per Bank account 24 170 00

25 200 00 25 200 00
Example continued
Alternative method
Shu-Biz Stores
Bank Reconciliation Statement on 31 August 2019
Balance according to bank statement (credit) 15 860 00
Outstanding deposits 9 340 00
Outstanding cheques:
no. 13 (765 00)
no. 14 (265 00)
Balance according to Bank account (debit) 24 170 00
Notes
• A credit balance according to the bank statement is a favourable
balance, which means that we have money in the bank account. This
amount must not be placed in brackets.
• A debit balance according to the bank statement will be placed in
brackets because it is unfavourable (overdrawn) which means that
we owe the bank money.
• Outstanding deposits are never in brackets and must always be
added.
• Outstanding cheques are always in brackets and must always be
subtracted.
• A debit balance according to the bank account is favourable, which
means that we have money in the bank account. This amount must
not be placed in brackets.
• A credit balance according to the bank account is unfavourable
(overdrawn) which means that we owe the bank money. This
amount must be placed in brackets.
We will deal with unfavourable (overdrawn) balances later.
Activity 3.2
Natasha Rose opened a fashion store in Port Elizabeth on 1 August 2019.

She deposited all money received into a current bank account held with
Southern Bank and made all payments by issuing cheques. She uses Cash
Journals as the book of first entry. After a month of trading, she received the
bank statement from the bank. Natasha asks for your help in completing the
Bank Reconciliation Statement.
Required
Make sure you do the following before completing the BRS:
1. Compare the bank statement with the Cash Journals and make
supplementary entries in the CRJ and CPJ.
2. Post the CRJ and CPJ to the Bank account in the General Ledger.
3. Draw up the Bank Reconciliation Statement on 31 August 2019.
Information
Cash Receipts Journal of Natasha Rose Designs for August 2019
Doc. Day Details Analysis of Bank Debtors Discount Sales Cost of Sundry accounts
no. receipts Control allowed sales Amount Details
BS 01 N Rose 150 000 00 150 000 00 Capital
CRR 05 Sales 9 784 00 9 784 00 9 784 00 3 126 00
01 08 H Govender 1 000 00 1 000 00 Rent income
CRR Sales 4 643 00 5 643 00 4 643 00 875 00
CRR 15 Sales 2 705 00 2 705 00 2 705 00 650 00
BS 21 H Damons 674 00 700 00 26 00
CRR 30 Sales 8 210 00 8 210 00 2 784 00
02 C Jacobs 841 00 9 051 00 850 00 9 00
177 857 00 1 550 00 35 00 25 342 00 7 435 00 151 000 00
Cash Payments Journal of Natasha Rose Designs for August 2019

Doc. Day Name of payee Bank Trading stock Creditors Discount Stationery Sundry accounts
no. Control received Amount Details
01 02 SA Manufacturers 10 263 00 10 263 00
02 Unicity council 600 00 600 00 Trading licence
03 07 Sanders and Co 325 00 325 00
04 Compu-place 1 950 00 1 950 00 Equipment
05 08 N.Rose 850 00 850 00 Drawings
06 15 SA Manufacturers 4 120 00 4 120 00
08 30 Africa Fashions 6 150 00 6 300 00 150 00
25 058 00 14 383 00 6 300 00 150 00 325 00 4 200 00
SOUTHERN BANK
Natasha Rose Designs 24 Rickett Road
18 Mercury Road Port Elizabeth
Port Elizabeth 5600
5300
For period: 01/08/2019–28/08/2019
Bank Statement
Current Account Account Number 38 000 8721
Deposit: N.Rose 150 000 00 01/08 150 000 00
EFT 01 10 263 00 02/08 139 737 00
EFT 02 600 00 02/08 139 137 00
Cash Deposit 9 784 00 06/08 148 921 00
Stop order: to InSure for the insurance premium 475 00 06/08 148 446 00
EFT 03 325 00 07/08 148 121 00
EFT 04 1 950 00 07/08 146 171 00
EFT 05 850 00 08/08 145 321 00
Cash Deposit 5 643 00 09/08 150 964 00
EFT 06 4 120 00 15/08 146 844 00
Service fees 31 20 16/08 146 787 00
Cash Deposit 2 705 00 16/08 149 492 00
Deposit: H.Damons 674 00 21/08 150 166 00
Notice fee 18 00 24/08 150 148 00
Interest 375 00 27/08 150 523 00
Direct deposit: from H Govender for rent 1 000 00 27/08 151 523 00
Activity 3.3
The owner of Joe’s Wholesale Store, Joe Rwela, asks you to help him draw up his
Bank Reconciliation Statement on 30 September 2019. He provides you with his
bank statement received from Western Bank, as well as his Cash Journals.
Required
2. Post the CRJ and CPJ to the bank account in the General Ledger.
3. Draw up the Bank Reconciliation Statement on 30 September 2019.
Information
The opening balance in the bank account on 1 September 2019 is R64 185.
Cash Receipts Journal of Joe’s Wholesale Stores for September 2019

CRR 03 Sales 17 120 00 17 120 00 17 120 00 9 365 00
51 06 T Dlamini 1 650 00 1 650 00
CRR Sales 5 363 00 7 013 00 5 363 00 1 360 00
52 12 G Buntu 5 670 00 6 000 00 330 00
CRR Sales 9 672 00 15 342 00 9 672 00 3 836 00
CRR 22 Sales 8 435 00 8 435 00 8 435 00 3 121 00
CRR 26 Sales 7 551 00 7 551 00 7 551 00 2 866 00
53 30 M Naidoo 3 168 00 3 300 00 132 00
CRR Sales 4 026 00 7 194 00 4 026 00 989 00
62 655 00 10 950 00 462 00 52 167 00 21 537 00
Cash Payments Journal of Joe’s Wholesale Stores for September 2019

Doc. Day Name of payee Bank Trading Creditors Discount Stationery Sundry accounts
no. stock Control received Amount Details
112 01 J.Rwela 1 640 00 1 640 00 Drawings
113 05 Enviro-stuff Traders 16 872 00 16 872 00
114 09 Maxi-mum Stores 3 125 00 3 475 00 350 00
115 11 Unicity Municipality 1 103 00 1 103 00 Water and lights
116 13 J.Rwela 2 660 00 2 660 00 Drawings
BS 18 PP Traders 1 615 00 1 615 00
117 25 Z Stofile 7 120 00 7 120 00 Creditors for salaries
34 970 00 16 872 00 3 475 00 350 00 1 615 00 13 358 00
WESTERN BANK
Joe’s Wholesale Store 54 Oldale Road
Mew Way Goodwood
Langa 2000
2100
For period: 01/09/2019–28/09/2019
Bank Statement
Balance 01/09 64 185 00
Notice fee 32 50 01/09 64 152 50
EFT 112 1 640 00 01/09 62 512 50
Debit order: to Sanlam for insurance premium 645 00 02/09 61 867 50
Deposit 17 120 00 04/09 78 987 50
EFT 113 16 872 00 06/09 62 115 50
Deposit 7 013 00 07/09 69 128 50
EFT 114 3 125 00 09/09 66 003 50
EFT 115 1 103 00 11/09 64 900 50
Deposit 15 342 00 13/09 80 242 50
EFT 116 2 660 00 13/09 77 582 50
Debit card payment: PP Traders 1 615 00 18/09 75 967 50
Deposit 8 435 00 23/09 84 402 50
Interest 175 00 25/09 84 577 50
Deposit 7 551 00 27/09 92 128 50
Cash handling fees 16 30 27/09 92 112 20
Debit card payment: PP Traders Stationery 1 650 00 28/09 90 462 20
Service fees 62 20 28/09 90 400 00
4.2 Overdrawn bank balance

The bank allows businesses a facility where they can overdraw their
current bank account. This means that they are allowed to withdraw
more money than they have deposited. When this happens, the business
will owe the bank money and the bank will be a liability to the business.
Interest will be charged on the amount that is overdrawn. This interest is
known as interest on overdraft and is an expense to the business. The bank
will charge this interest directly to the business’s account and the amount
charged will appear on the bank statement at the end of the month.
The business’s point of view The business’s point of view
General Ledger of Shu-Biz Stores General Ledger of First Bank
– Bank (Liability) + + Shu-Biz Stores (Asset) –
All deposits will decrease the All withdrawals will increase the All withdrawals increase what the All deposits will decrease what the
overdraft. overdraft. business owes the bank. business owes the bank.
The bank account has a credit balance in the books of the business and the
bank shows the business’s bank overdraft as a debit balance in their books.
Activity 3.4
You are provided with the bank statement of Mega Shoe Stores.
Information
oval BANK
Mega Shoe Stores 9 Morris Street
Rachel Road Kimberley
Kimberley 9800
9800
For period: 01/07/2019–29/07/2019
Bank Statement
Balance 01/07 – 3 168 00
Notice fee 19 60 01/07
EFT 36 1 125 00 01/07
Debit order: to Secure for insurance premium 395 00 02/07
Deposit 5 123 00 04/07
EFT 37 910 00 06/07
Deposit 3 916 00 07/07
EFT 38 2 187 00 13/07
EFT 39 852 00 13/07
Deposit 1 254 00 13/07
Service fees 15 20 19/07
Direct deposit: from M Stofile for rent 650 00 23/07
Interest 52 20 25/07
Deposit 1 502 00 27/07
Cash handling fees 16 00 27/07
Debit card payment: GH Stores 1 500 00 28/07
EFT 40 3 781 00 29/07
Required
1. Recreate the bank statement in your Exercise Book.
2. Calculate the balance at the end of each entry on the bank statement. Bear
in mind that the business has an overdrawn (debit) balance of R3 168 at the
beginning of the month.
3. a. Will a debit entry on the bank statement increase or decrease the
bank overdraft?
b. Will a credit entry on the bank statement increase or decrease the
bank overdraft?
c. Why would there be an interest debit (see 25/07) and an interest
credit (see 28/07) on the bank statement?
d. The dishonoured cheque, received from debtor T Miles, had a negative
effect on the bank overdraft. What would you advise Mega Shoe Stores
do about this?
e. What advice would you give Mega Shoe Stores in order for them to
decrease their overdraft?
Activity 3.5
The information below was extracted from the records of Martin’s Bakery
Supply Store.
Required
3. Draw up the Bank Reconciliation Statement on 31 March 2019.
Information
The bank account in 1 March 2019 has an overdrawn (credit) balance of R21 863.
Cash Receipts Journal of Martin’s Bakery Supply Store for March 2019
CRR 01 Sales 6 545 00 6 545 00 6 545 00 2 633 00
16 05 N Desai 1 302 00 1 400 00 98 00
CRR Sales 5 124 00 6 426 00 5 124 00 1 912 00
BS 09 I West 3 127 00 3 400 00 273 00
CRR 15 Sales 8 819 00 8 819 00 8 819 00 3 654 00
CRR 17 Sales 6 126 00 6 126 00 6 126 00 2 330 00
CRR 20 Sales 4 331 00 4 331 00 4 331 00 1 038 00
BS 24 P Wallace 808 00 850 00 42 00
CRR 28 Sales 7 880 00 7 880 00 7 880 00 2 917 00
44 062 00 5 650 00 413 00 38 825 00 14 484 00
Cash Payments Journal of Martin’s Bakery Supply Store for March 2019
Doc. Day Name of payee Bank Trading Creditors Discount Stationery Sundry accounts
no. stock Control received Amount Details
20 01 Mkatsane Suppliers 7 633 00 7 633 00
21 05 D Mogatle 4 893 00 5 000 00 107 00
22 07 Martin 3 125 00 3 125 00
23 14 Sun Stationers 551 00 551 00
BS 17 Mbalu Stores 856 00 856 00
24 22 Martin 1 226 00 1 226 00
25 29 Snowflake Stores 15 162 00 15 162 00
33 446 00 22 795 00 5 000 00 107 00 856 00 4 902 00
east BANK
Martin’s Bakery Supply Store 15A Mondew Park
2 Inland Road Attwood Hill
Wetton 6421
6125
For period: 01/03/2019–28/03/2019
Bank Statement
Balance 01/03 –21 863 00
EFT 20 7 633 00 01/03 –29 496 00
Deposit 6 545 00 02/03 –22 951 00
EFT 21 4 893 00 05/03 –27 844 00
Deposit 6 426 00 06/03 –21 418 00
EFT 22 3 125 00 07/03 –24 543 00
Deposit 3 127 00 09/03 –21 416 00
EFT 23 551 00 14/03 –21 967 00
Service fees 8 00 16/03 –21 975 00
Deposit 8 819 00 16/03 –13 156 00
Debit card payment: Mbalu stores 856 00 17/03 –14 012 00
Cash handling fees 17 00 18/03 –14 029 00
Deposit 6 126 00 18/03 –7 903 00
Debit order: to Surance for insurance 344 00 18/03 –8 247 00
Deposit 4 331 00 21/03 –3 916 00
EFT 24 1 226 00 22/03 –5 142 00
Notice fee 24 00 23/03 –5 166 00
Deposit 808 00 24/03 –4358 00
Debit card payment: Mbalu stores (stationery) 1 302 00 28/03 –5660 00
Interest 102 00 28/03 –5 762 00
4.3 C
omparing the bank statement with the previous
month’s Bank Reconciliation Statement
In the months that follow, the business will have to compare not only
its current CRJ and CPJ with the bank statement received in that
particular month, but also with the previous month’s Bank Reconciliation
Statement. This is because the deposits on the previous month’s BRS will
appear on the current bank statement, and the EFT payments that was
still pending will also appear on the current bank statement.
4.4 Cancelled cheques
• If the business does not want a payment to go through, it can stop

payment on cheques issued. This must be done at the bank by signing
the necessary documentation.
• Cheques are valid for six months from date of issue. After the six
months they expire (become stale). A stale cheque must be cancelled stale cheque
in the books and the bank needs not be notified as the payee will not A cheque that has expired because it
be able to present this cheque for payment. was issue more than 6 months ago
• When a new cheque is issued in place of the cancelled cheque, then
the new cheque must be entered into the CPJ and the BRS.
Example
Required
1. Compare the bank statement (the books of Stereo Stores) with the
Bank Reconciliation Statement on 31 May 2019, the Cash Journals
for June 2019 and make supplementary entries in the CRJ and CPJ.
3. Draw up the Bank Reconciliation Statement on 30 June 2019.
Information
Stereo Stores
Bank Reconciliation Statement on 31 May 2019
Debit Credit
Debit balance as per bank statement 5 000 00
Credit outstanding deposits ✓3 960 00
Debit outstanding EFT's:
no. 129 ✓2 240 00

no. 130 ✓3 900 00
Credit balance as per Bank account 7 180 00
11 140 00 1 140 00
Example continued
Cash Receipts Journal of Stereo Stores for June 2019

01 Sales 3 480 00 3 480 00 1 260 00
07 N Baqwa 3 520 00 ✓ 7 000 00 3 600 00 80 00
08 15 K Kitz 1 420 00 1 420 00
Sales 3 460 00 ✓ 4 880 00 3 460 00 1 120 00
22 Sales 6 500 00 6 500 00 3 090 00
09 M Mkefa 600 00 ✓ 7 100 00 625 00 25 00
30 Sales 4 600 00 4 600 00 4 600 00 1 860 00
23 580 00 5 645 00 105 00 18 040 00 7 330 00
Cash Payments Journal of Stereo Stores for June 2019

Doc. Day Name of payee Bank Trading stock Creditors Discount Sundry accounts
no. Control received Amount Details
131 02 Walton’s Stationery ✓ 2 400 00 2 400 00 Stationery
132 08 Oscar’s Transport ✓ 600 00 600 00
133 08 BB Suppliers ✓ 13 000 00 13 000 00
134 14 Telkom ✓ 740 00 740 00 Telephone
135 18 M Omar ✓ 2 440 00 2 500 00 60 00
136 22 M Tswala ✓ 2 240 00 2 240 00
BS 27 Cash ✓ 400 00 400 00 Drawings
137 29 D Onthong 2 650 00 2 780 00 130 00
24 470 00 13 600 00 7 520 00 190 00 3 540 00
Example continued
WEST BANK
Shu-biz Stores 1 Main Street
9 Waterloo Street Rosebank
Middletown 8100
6500
For period27/05/2019–27/06/2019
Bank Statement

Balance 27/05 –5 000 00
Deposit ✓ 3 960 00 28/05 –1 040 00
EFT 129 ✓ 2 240 00 31/05 –3 280 00
EFT 130 ✓ 3 900 00 31/05 –7180 00
Deposit ✓ 7 000 00 02/06 –180 00
EFT 131 ✓ 2 400 00 02/06 –2 580 00
EFT 132 ✓ 600 00 08/06 –3 180 00
EFT 133 ✓ 13 000 00 08/06 –16 180 00
EFT134 ✓ 740 00 14/06 –16 920 00
Deposit ✓ 4 880 00 16/06 –12 040 00
EFT 135 ✓ 2 440 00 18/06 –14 480 00
Direct deposit: from A Brown, settlement of account 4 200 00 21/06 –10 280 00
EFT 136 ✓ 2 240 00 22/06 - 12 520 00
Interest 19 00 23/06 –12 539 00
Deposit ✓ 7 100 00 23/06 –5 439 00
Debit order: to Insure for insurance premium 850 00 26/06 –6 289 00
Debit order: to Lifegro for owner’s personal insurance 475 00 26/06 –6 764 00
Interest 24 00 26/06 –6 740 00
Stop order: to West Bank for loan repayment 2 500 00 26/06 –9 240 00
ATM: Cash withdrawal ✓ 400 00 27/06 –9 640 00
Service fees 180 00 27/06 –9 820 00
Cash handling fees 28 00 2706 –9 848 00
Direct deposit: from K Kitz, settlement account 1 420 00 27/06 –8 428 00
Example continued
Solution
Cash Receipts Journal of Stereo Stores for June 2019

Doc. Day Details Fol. Bank Debtors Sundry accounts
no. Control Amount Details
30 Totals b/d 23 580 00
BS A Brown 4 200 00 4 200 00
West Bank 24 00 24 00 Interest on current account
K Kitz 1 420 00 1 420 00
29 224 00
Cash Payments Journal of Stereo Stores for June 2019

no. Amount Details
30 Total b/d 24 470 00
BS West Bank 19 00 19 00 Interest on overdraft
Insure 850 00 850 00 Insurance

Lifegro 475 00 475 00 Drawings
West Bank 2 500 00 2 500 00 Loan: West Bank
West Bank 208 00 208 00 Bank charges
28522 00
General Ledger of Stereo Stores

Dr Bank Cr
2019 2019
Jun 30 Total receipts CRJ 29 224 00 Jun 01 Balance b/d 7 180 00
Balance c/d 6 478 00 30 Total payments CPJ 28 522 00
35 702 00 35702 00
2019
Jul 01 Balance b/d 6 478 00
Example continued
Stereo Stores
Bank Reconciliation Statement on 30 June 2019
Debit Credit
Debit balance as per the bank statement 8 428 00
Credit outstanding deposits 4 600 00
Debit outstanding EFT'S
no. 137 2 650 00
Credit balance as per the Bank account 6 478 00

11 078 00 11 078 00
Comments
• Cheque no. 130 for R3 900 which appears in the Bank Reconciliation
Statement for May must be re-entered in the BRS for June because it
is still outstanding.
• The credit balance as per the Bank account of R7 180 on the Bank
Reconciliation Statement as on 31 May 2019, is used as the opening
balance for the Bank account for June 2019.
Activity 3.6
The information that follows was extracted from the books of Allied Traders for
November 2019.
Required
1. Compare the bank statement, received from Eastern Bank for November
2019, with the Bank Reconciliation Statement on 31 October 2019 and with
the extracts from the Cash Receipts Journal and Cash Payments Journal for
November 2019. Make the supplementary entries in both journals.
2. Prepare the Bank Reconciliation Statement on 30 November 2019.
Information
Allied Traders
Bank Reconciliation Statement on 31 October 2019
Debit Credit
Debit balance according to the bank statement 3 246 07
Credit outstanding deposit 2 780 65
Debit cheques not yet presented for payment: no. 1721 524 42
no. 1724 99 40
no. 1725 58 26
Credit balance according to the Bank account 1 147 50
3 928 15 3 928 15
Totals for deposit slips from Cash Receipts Journal for November 2019
November
03 4 560 72
08 3 420 18
11 3 740 50
18 5 822 77
25 7 073 39
30 4 860 20
29 477 76
Cheques entered in the Cash Payments Journal for November 2019

Number
1730 268 50
1731 178 37
1732 220 80
1733 2 949 00
1734 368 68
1735 325 00
1736 724 42
1737 400 00
1738 17 352 95
1739 2 000 00
1740 54 35
1741 6 870 00
31 712 07
EASTERN BANK
Allied Traders Faulty Towers
345 Hanbury Road Pietermaritzburg
Pietermaritzburg 3000
3000
For period: 01/11/2019–29/11/2019
Bank Statement

Balance 01/11 –3 246 07
Deposit 2 780 65 02/11 –465 42
Cheque 1721 524 42 02/11 –989 84
Cheque 1725 58 26 02/11 –1 048 10
Cheque 1730 268 50 03/11 –1 316 60
Deposit 4 560 72 03/11 3 244 12
Dishonoured cheque: F Stein (debtor) 175 60 04/11 3 068 52
Cheque 1732 220 80 04/11 2 847 72
Interest 16 70 05/11 2 831 02
Deposit 3 420 18 08/11 6 251 20
Cheque 1733 2 949 00 09/11 3 302 20
Cheque book fee 20 00 09/11 3 282 20
Cheque 1735 325 00 09/11 2 957 20
Deposit 3 740 50 11/11 6 697 70
Service fees 26 30 13/11 6 671 40
Cheque 1736 724 42 13/11 5 946 98
Cheque 1737 400 00 14/11 5 546 98
Direct deposit: from B Hunter for rent 1 000 00 15/11 6 546 98
Cheque 1731 178 37 16/11 6 368 61
Deposit 5 822 77 18/11 12 191 38
Cash handling fees 1 60 19/11 12 189 89
Stop order: to Anti-crime for insurance 450 00 23/11 11 739 78
Deposit 7 073 39 25/11 18 813 17
Cheque 1738 17 352 95 26/11 1 460 22
Cheque 1739 2 000 00 29/11 –539 78
Cheque 1740 54 35 29/11 –594 13
4.5 Errors on the bank statement and in journals
This happens when money belonging to other businesses or individuals is
incorrectly debited (deducted) from or credited (added) to your account.
When this happens, your bank will correct the error. In order to reconcile
your Cash Journals with the bank statement, you will have to make an
entry in the Bank Reconciliation Statement. You will credit the incorrect
debit as on the bank statement and debit the incorrect credit as on the
bank statement. This entry will cancel with the bank statement in the
next month because the bank would have corrected the error by then.
It can also happen that a debit order of stoporder is incorrectly

deducted from the business' bank account twice. The bank will then
have to rectify their mistake by making a credit. In the meantime this
entry will be made on the bank reconciliation statement. The business
will check whether this correction was made when they receive the
next bank statement.
4.5 Errors on the bank statement and in journals

• An incorrect entry made in the CRJ. This happens when the
bookkeeper incorrectly enters an amount in the CRJ. The amount
must be corrected as follows:
■ If R500 received is entered in error as R50 in the CRJ, then R450
must be entered into the CRJ to correct the error.
Incorrect + Correction = Correct

R50 + R450 = R500
■ If R500 received is entered in error as R5 000 in the CRJ, then

R4 500 must be entered into the CPJ to correct the error.
Incorrect – Correction = Correct

Remember R5 000 – R4 500 = R500
If too little is entered in error,
correct in same journal. If too • An incorrect entry made in the CPJ
much is entered in error, correct in If an EFT made for R300 is entered in error as R30 in the CPJ,
opposite journal.
then R270 must be entered in the CPJ to correct the error.
Incorrect + Correction = Correct
30 – R290 = R300
If an EFT made for R300 is entered in error as R3 000 in the CPJ,

then R2 700 must be entered in the CRJ to correct the error.
Incorrect – Correction = Correct

R3 000 – R2 700 = R300
Activity 3.7
Information from the books of Africa Traders is provided.
Required
1. Compare the bank statement for April 2019 with the BRS as on 31 March
2019 and the CRJ and CPJ for April 2019. Make supplementary entries in the
CRJ and CPJ.
3. Prepare the Bank Reconciliation Statement on 30 April 2019.
Information
Africa Traders
Bank Reconciliation Statement on 31 March 2019
Debit Credit
Credit balance as per the bank statement 3 030 30
Correction to be made by bank 205 00
Debit outstanding cheques: no. 417 844 80
no. 418 765 65
Debit balance as per the Bank account 7 935 45
9 750 90 9 750 90
Extract from Cash Receipts Journal of Africa Traders for April 2019
Day Details Bank
02 Deposit ......... 6 651 30
09 Deposit ......... 6 140 50
16 Deposit ......... 6 230 40
23 Deposit ......... 7 155 80
30 Deposit ......... 7 878 78
34 056 78
Extract from Cash Payments Journal of Africa Traders for April 2019
Doc. Day Name of payee Bank
no.
419 01 Earthcoat Stores 320 30
420 04 Murray & Company 5 400 00
421 06 Mad-Dog Stores 4 850 50
422 11 Buzzy Best 2 002 00
423 12 Hyperspace Suppliers 5 150 80
424 14 Suban Motors 760 60
425 16 Ntuli Wholesalers 1 600 00
426 20 Cash and Carry 2 300 00
427 30 PCP Ltd 450 00
428 30 Coty CC 3 850 00
429 30 Dube Manufacturers 4 440 00
31 124 20
QUAZI BANK
Africa Traders Reagan Way
Prime Business Park Cape Town
Cape Town 8000
8000
For period: 29/032019–29/04/2019
Bank Statement

Balance 29/03 3 030 30
Deposit 6 720 60 30/03
EFT 417 844 80 30/03
EFT 418 765 65 30/03
Correction - incorrect credit 205 00 30/03
EFT 419 320 30 01/04
Deposit 6 651 30 02/04
EFT 420 5 400 00 04/04
EFT 421 4 850 50 06/04
Deposit 6 140 50 09/04
Debit order: to City Municipality for water and rates 223 80 10/04
Debit order: Multi insurers 220 00 10/04
Service fees 115 70 10/04
EFT 422 2 200 00 11/04
EFT 423 5 150 80 12/04
EFT 424 760 60 14/04
EFT 425 1 600 00 16/04
Deposit 6 230 40 16/04
EFT 426 2 300 00 20/04
Deposit 7 115 80 23/04
Transaction charges 17 00 27/04
Debit order: to Multi Insurers for insurance premium 220 00 28/04
Direct deposit: from Safety Day Care for rent 1 500 00 29/04
Cash handling fees 88 00 29/04
ATM cash withdrawal 500 00 29/04 11 668 95
Additional information
• The correction for R205 on 30 March is due to a mistake that was made by
the bank during March 2019.
• The debit order of R220 made on 10 April 2019 is a mistake by the bank.
This debit order should only be deducted from the account on the 28th of
each month. The bank was informed and they will correct the error.
• the deposit on the 23rd is correct on the bank statement. it was entered as
R7 155,80 in the cRJ instead of R7 115,80 and was for sales for the day.
correct the error.
• EFT no. 422 made to Buzzy Best for equipment on the 9th for R2 200 was
entered into the cPJ as R2 002 instead of R2 200. the amount as on the
bank statement is correct. correct the error.
• The cash withdrawal of R500 was made by the owner for personal use. No
entry has yet been made of this transaction.
4.7 C
omparing the Salaries Journal with the bank
statement
If the business makes payments to employees by means of a cheque,
then the Salaries Journal must also be compared with the bank statement.
Employees will present their cheques for payment at the bank or deposit
these cheques into their bank accounts. In this case, there might be a time
delays between the business issuing the cheque and the bank actually
making the payment. All outstanding salary cheques must be entered
into the BRS as ordinary outstanding cheques.
Activity 3.8 (challenge)
The following information was taken from the books of Nieuwoudt Traders.
Required
1. Complete the Cash Receipts Journal and Cash Payments Journal for
April 2015. Start off by bringing down the totals of the bank column only.
Then make the additional entries.
2. Draw up the Bank account (properly balanced) for April 2015.
3. Draw up the Bank Reconciliation Statement on 30 April 2015.
Information
Nieuwoudt Traders
Bank Reconciliation Statement on 31 March 2015
Debit Credit
Debit balance according to bank statement 28 970 00
Debit cheques not yet cashed: no. 624 500 00
no. 835 7 140 00
no. 842 1 840 00
no. 843 330 00
no. 844 1 664 00
Credit according to the Bank account 17 344 00
40 444 00 40 444 00
Extract from Cash Receipts Journal of Nieuwoudt Traders for April 2015 CRJ4
Doc. Day Details Analysis of Bank Sundry accounts
344 04 T Munro 680 00
CRR 05 Sales 11 740 00
345 C van der Merwe 1 100 00 13 520 00 1 100 00 Rent income
346 12 L Nortier 220 00 220 00 Bad debts collected
347 13 N van der Spuy 532 00
CRR Sales 8 972 00 9 724 00
348 21 J Basson 784 00
CRR Sales 3 466 00 4 230 00
349 30 M Nieuwoudt 20 000 00 20 000 00 Capital
CRR Sales 14 221 00 34 221 00
61 695 00
Extract from Cash Payments Journal of Nieuwoudt Traders for April 2015 CPJ4
Doc. Day Name of payee Bank Trading Sundry accounts
no. stock Amount Details
845 01 Cash 14 700 00 14 700 00 Creditors for wages
846 06 Nel Suppliers 6 442 00 6 442 00
847 08 SARS 2 041 00 2 041 00 SARS (PAYE)
848 10 AS Suppliers 8 772 00 8 772 00
849 22 Cash 14 700 00 14 700 00 Creditors for wages
850 25 M Nieuwoudt 1 100 00 1 100 00 Drawings
851 26 Marais Traders 1 440 00
852 27 Waltons 368 00 368 00 Stationery
853– 30 Employees 16 666 00 16 666 00 Creditors for salaries
855
856 Hugo Ltd 2 556 00
68 785 00
Note
Compare the Net Salary column with the debit column of the
bank statement.
Salaries Journal of Nieuwoudt Traders for April 2015 SJ4

Employer’s
Gross Deductions
contribution
Employee Salary PAYE Pension Medical Total Net salary Cheque Medical
fund fund fund
J McKay 7 740 00 1 142 00 890 00 520 00 2 552 00 5 188 00 853 520 00
F Olivier 8 630 00 1 522 00 910 00 520 00 2 952 00 5 678 00 854 520 00
J Maartens 9 040 00 1 640 00 1 000 00 600 00 3 240 00 5 800 00 855 600 00
25 410 00 4 304 00 2 800 00 1 640 00 8 744 00 16 666 00 1 640 00
ABC Bank
Bank Statement of Nieuwoudt Traders for April 2015
Details of transaction Amount Date Balance
Opening balance – 28 970
Debit order: Allsure Insurance (for owner) – 500 2019-04-01
Deposit + 23 100 2019-04-01
Cheque 845 – 14 700 2019-04-02
Cheque dishonoured: P Malherbe (debtor) – 1 520 2019-04-03
Cheque 842 – 1 930 2019-04-03
Deposit + 13 520 2019-04-05
Cheque 847 – 2 014 2019-04-10
Cheque 835 – 7 140 2019-04-11
Cheque 843 – 330 2019-04-11
Cheque 846 – 6 442 2019-04-11
Cheque 848 – 8 772 2019-04-12
Debit order: Getogether Insurance (for insurance) – 600 2019-04-12
Deposit + 9 724 2019-04-13
Service fees – 435 2019-04-14
Cash handling fee – 114 2019-04-14
Deposit + 4 230 2019-04-21
Cheque 849 – 14 700 2019-04-22
Debit order: Paarl Primary School
(owner’s daughter’s school fees) – 480 2019-04-22
Direct deposit: from A Bester (debtor) + 350 2019-04-23
Cheque 852 – 368 2019-04-29
Cheque 855 – 5 800 2019-04-30
Cheque 853 – 5 188 2019-04-30
Interest charged on debit balance – 247 2019-04-30
Cheque book fees – 35 2019-04-30
Stop order: Telkom for business telephone – 524 2019-04-30
Cheque 851 – 1 440 2019-04-30
Cheque 103 – 998 2019-04-30
Direct deposit: XY Bank + 12 640 2019-04-30 – 39 683
• Where there are differences between the amounts in the bank statement
and the subsidiary books, the amounts on the bank statement are correct.
Cheque no. 842 was issued to Jooste Wholesalers for packing material, R500,
and trading stock, R1 430. The amounts were entered in the respective
columns as packing material, R500, and trading stock, R1 340.
• Cheque no. 624 was issued to the Paarl Cycling Club as a donation and
dated 2 October 2014. The cheque has expired and must be cancelled.
Cheque no. 857 was already issued to replace it, but no entries have
been made.
• The deposit on 30 April 2015 is for an investment made for eight months at
XY Bank, which has now expired together with R640 interest.
• Cheque no. 858 for the payment of the PP Medical Fund for April 2015 has
been issued, but not yet recorded. The amount owed to the medical fund,
according to the Wages Journal, is R1 090.
• The cheque on 30 April 2015 of R998 has been incorrectly deducted from
the business’s account. It was a cheque from Nieuwoudt Stores.
4.8 Post-dated cheques

Post-dated cheques refer to cheques which have been issued and
signed by the drawer for a date in the future. For example, a cheque is
issued and signed on 12 September 2019 but the date on the cheque is
20 October 2019.
When a post-dated cheque is issued, the entry must be made in
the CPJ on the day that it is issued, for example 12 September 2019. The
payee (person receiving the cheque) will only be able to present this
cheque on the day that it is dated (20 October 2019) as the cheque only
becomes legal tender on that date. The bank will not “cash” a post-dated
cheque. The cheque is valid for six months after the 20 October 2019.
When a post-dated cheque is received from a debtor, the post-dated
cheque will not be entered in the CRJ on the day that it was received.
For example, a cheque is received on 20 September 2019 but is dated for
30 September. This cheque will be written up in the Post-dated Cheques
Register and will only be entered in the CRJ when it becomes legal tender
on 30 September 2019. The reason for this is that all receipts in the CRJ
must be deposited and a post-dated cheque cannot be deposited until the
day that it is dated.
5. Completing the bank reconciliation when

comparisons are already done
Sometimes you will be asked to complete the bank reconciliation process
from information where the comparisons between the CRJ, CPJ and
bank statement have already been done. In this case, only the errors
and omissions are given. All you have to do is make the supplementary
entries in the CRJ and CPJ, draw up the Bank account and prepare the
Bank Reconciliation Statement.
Example
The inexperienced bookkeeper of Gimme Traders totalled the Cash
Journals before the bank statement had been received.
Required
Use the information below to complete the following:
1. The Cash Journals for June 2019 and total only the Bank columns
2. The Bank account and balance it on 30 June 2019
3. The Bank Reconciliation Statement on 30 June 2019.
Note: It is the business’s policy to correct mistakes and omissions that
occur in the Cash Journals by means of an entry in the Cash Journals
if possible.
Information
Extract from the Bank Reconciliation Statement as on 31 May 2019:
Outstanding EFT's:
no. 499 5 432 00
no. 500 3 600 00
The Bank account shows a favourable (debit) balance on 1 June

2019 of R7 375.
The following totals appeared in the bank column of the:
• Cash Receipts Journal R25 600
• Cash Payments Journal R33 650
A comparison with the bank statement for June 2019 received from
Africa Bank and the Salaries Journal, Cash Receipts Journal, Cash
Payments Journal for June 2019 as well as the Bank Reconciliation
Statement for May 2019, revealed the following differences:
• The bank statement shows an overdrawn (debit) balance of R9 381
on 30 June 2019.
• EFT no. 499 appears correctly on the bank statement as R2 345.
This EFT was made on 31 May for equipment bought from All
Equipment but was recorded in the CPJ as R5 432 in error. Correct
the error.
• EFT no. 500 for R3 600 does appear on the bank statement on 31
May 2019.
• The following charges appear on the bank statement only:
■ Interest on overdraft R144
■ Credit card charges R46
■ Service fees R89
Example continued
• A debit order to Africa Bank for R4 180 to pay the instalment on
the loan of R3 800 as well as interest of R380 appears on the bank
statement only.
• A stop order in favour of Alsure Insurers for R2 150, for the
owner’s personal insurance premium, appears on the bank
statement twice. The bank was informed and they will correct
the error.
• A deposit of R6 784 made on 30 June 2019 appears in the CRJ but
not on the bank statement.
• The following EFT's appear in the CPJ only:
No. 544 for R1 800
■
No. 545 for R1 950

■
Solution
Cash Receipts Journal of Gimme Traders for June 2019 CRJ6

Doc. Day Details Fol. Bank Sundry accounts
no. Amount Details
30 Totals b/d 25 600 00
B/S All Equipment 3 087 00 3 087 00 Equipment
28 687 00
Example continued
Cash Payments Journal of Gimme Traders for June 2019 CPJ6

no. Amount Details
30 Totals b/d 33 650 00
B/S Africa Bank 144 00 144 00 Interest on overdraft
Africa Bank 135 00 135 00 Bank charges
Africa Bank 4 180 00 3 800 00 Loan: AA Bank
380 00 Interest on loan
Alsure Insurers 2 150 00 2 150 00 Drawings
40 259 00
General Ledger of Gimme Traders

Dr Bank Cr
2019 2019
Jun 01 Balance b/d 7375 00 Jun 30 Total payment CPJ6 40 259 00
30 Total receipts CRJ6 28 687 00
Balance c/d 4 197 00
40 259 00 40 259 00
2019
Jul 01 Balance b/d 4 197 00
Gimme Traders
Bank Reconciliation Statement on 30 June 2019
Debit Credit
Overdrawn balance according to bank statement 9 381 00
Credit correction to be made by bank 2 150 00
Debit EFT's pending:
no. 544 1 800 00
no. 545 1 950 00
Credit balance according to Bank account 4 197 00
13 131 00 13 131 00
Activity 3.9
Use the information provided to do the following in the books of Freddie Stores.
Required
1. complete the cash Receipts Journal for June 2019. Use analysis columns
for Bank and sundry accounts, with sub-totals of R60 407,00 and R5 393,00
respectively.
2. complete the cash Payments Journal for June 2019. Use analysis columns
for Bank and sundry accounts, with sub-totals of R65 215,50 and R8 005,60
respectively.
3. Prepare the Bank account and balance it.
4. Prepare the Bank Reconciliation statement on 30 June 2019.
Information
Freddie Stores
Bank Reconciliation Statement on 31 May 2019
Debit Credit
Debit balance according to bank statement 10 316 90
Deposit not yet credited 9 428 38
EFT's pending:
no. 6401 1 854 00
no. 6402 899 00
Correction to be made by bank 1 350 00
Credit balance according to Bank account 2 291 52

13 069 90 13 069 90
Note: The correction of R1350 was credited by the bank on the June 2019
statement.
• the bank statement for June was received on 30 June 2019 and showed a
debit balance of R16 742.
• a comparison of the bank statement for June with the Bank Reconciliation
statement on 31 May and with the cash Receipts and cash Payments
Journals for June indicated the following differences:
■ entries on the bank statement not appearing in the cRJ for June 2019.
– Deposit, R9 428,38 (dated 31 May 2019)
– Direct deposit, R4 000 (this amount was deposited by the tenant, e
Prins, into the bank account.)
– correction of error: interest on overdraft, R71,20 (the bank calculated
the interest on overdraft at an incorrect rate the previous month and
made a credit to the business' bank account).
■ entries on the Bs not appearing in the cPJ:
– stop order, R818,10 (this stop order is in favour of ca insurance
company for an insurance premium.)
– EFT no. 6401, R1 854,00
– EFT no. 6402, R999,00 EFT no. 6402 was issued on 26 May 2019 in
favour of Basson Motors, in payment of repairs. the amount on the
bank statement is correct.)
– tax levy, R41,40
– service fees, R265,80
– interest on overdraft, R145,98
■ entries in the cRJ not appearing on the bank statement:
– Deposit, R14 563,80
■ entries in the cPJ not appearing on the bank statement:
– EFT no. 6440, R2 166,00
– EFT no. 6441, R874,00
■ The bank deducted the stop order of R818,10 for insurance twice on the
businsess' account. they will rectify the error.
Activity 3.10
Use the information given to complete the following in the books of

Indaba Traders.
Required
1. Complete the Cash Receipts Journal and the Cash Payments Journal for
October 2019. Total the Bank column only. Start the journals with the
following totals (inter alia):
Cash Receipts Journal Cash Payments Journal

Bank 30 061 Bank 34 244
Debtors Control 7 920 Debtors Control 330
Sundry accounts 3 795 Sundry accounts 8 135
2. Draw up the Bank account and balance the account on 31 October 2019.
3. Prepare the Bank Reconciliation Statement on 31 October 2019.
Information
From the Bank Reconciliation Statement on 30 September 2019:
Debit balance according to bank statement (15 667)
Outstanding deposits: 10 335
8 700
Pending EFT's:
no. 2485 (29 September 2019) (1 071)
no. 2486 (30 September 2019) (1 564)
Debit balance according to Bank account 733
Note: The outstanding deposit of R8 700 on the bank statement was in

respect of sales. An investigation revealed that the bookkeeper, who resigned
during the previous month, never deposited the money. It was decided to
write off the amount.
• the bank statement for october was received on 29 october 2019 and
showed an overdraft of R5 957.
• entries on the bank statement for october which did not appear in the cash
Journals for october:
Deposit, R10 335
■
EFT no. 2485, R1 071

■
EFT no. 2486, R1 546 (this cheque was issued in favour of oW suppliers
■
on 29 september 2019 for advertising: the amount on the bank

statement is correct.)
stop order, R1 056 (this stop order, in favour of africa Motors, is for the
■
instalment on the delivery scooter purchased during January 2019.)

Debit order, R618 (this debit order gives the city council the right to
■
withdraw the amount due for water and electricity on a monthly basis
from our account.)
Direct deposit, R12 996 (this amount represented a fixed deposit of
■
R11 400 at kM Bank that matured, plus a year’s interest.)

■ cash handling fee, R41
■ Notification fee, R27
■ service charges, R109
■ interest on overdraft, R95
• entries in the cash Journals for october which did not appear on the bank
statement for october:
■ EFT no. 2989, R812 (dated 30 october 2019)
■ EFT no. 2990, R1 639 (dated 31 October 2019)
■ Deposit R7 326
6. E
ntering information directly into the
Bank account
Often reconciliation is done directly into the Bank account in the General
Ledger. This is done if the CRJ and CPJ are already closed off. Entries will
be made directly into the Bank account and the double-entry principle
is applied.
Activity 3.11
Use the information provided to do the following in the books of Southern

Cross Stores.
Required
1. Complete the Bank account in the General Ledger by making the necessary
entries directly into the bank account. Balance the account.
2. Prepare the Bank Reconciliation Statement on 31 May 2019.
Information
• Debit bank balance in General ledger on 31 May 2019, R6 520.
• the bank statement shows a debit balance of R18 726 on the same
date.
Southern Cross Stores compared their bank statement for May with the Cash
Journals for May and found the following differences.
• a deposit of R19 560 made on 31 May 2019 does not appear on the bank
statement.
• a deposit of R17 082 appears on the bank statement. it was incorrectly
recorded in the cash Receipts Journal as R18 702. this was for sales.
correct the error.
• Debtor V Venus made an EFT for R3 000 into the bank account of
southern cross stores. No entry was made of this.
• annual debit order payment for the short-term insurance premiums on
behalf of:
■ the business, R3 206
■ the owner, R1 654
appears on the bank statement.
• the following EFT's are entered in the CPJ but not not yet show
on the bank statemen received from the bank:
■ no. 3880, R474 (dated 31 May 2019)
■ no. 3881, R4 260 (dated 31 May 2019)
• the following appear on the bank statement: service fees, R163, cash
handling fee, R89 and interest on debit balance, R168.
• a deposit of R100 on the bank statement. it was discovered that the money
was accidently credited to the wrong account by the bank. the bank will
correct the error on the next bank statement.
• EFT no. 3852 in payment for the purchase of equipment for R9 590 appears
correctly on the bank statement but was entered in the cash Payments
Journal as R7 970.
• an EFT for R5 000 from P Pointer was received for rent income, but has not
yet been recorded.
Activity 3.12
the following information was taken from the books of shuttle stores. Mark
shuttle posted his cash Journals to the ledger before the bank statement
for February was received. He balanced the Bank account and it shows an
overdrawn balance of R3 107.
Required
1. Show any additional entries directly in the Bank account. Your entry should
show the correct contra account. Balance the Bank account.
2. Draw up a Bank Reconciliation Statement as on 29 February 2019.
Information
Shuttle Stores
Bank Reconciliation Statement on 31 January 2019
Debit Credit
Credit balance according to bank statement 4 560 00
Debit outstanding EFT's:
no. 375 869 00
no. 376 250 00
Debit balance according to Bank account 5 426 00
6 545 00 6 545 00
Entries in the bank statement which did not appear in the Cash Journals for
February 2019
• service fees, R268
ash deposit fee, R56
C Interest on credit balance, R38
I
• Deposit, R2 500 (deposited by the tenant in payment of his outstanding rent
for January)
• stop order in favour of s.a. insurance co., R540. it is for insurance of the
business, (R400), and for an educational policy for Mark shuttle’s son, (R140).
• stop order in favour of the municipality, R287, in payment of the electricity
account for February.
• Unfortunately the bookkeeper spilt his coffee all over the bank statement.
the balance is impossible to read. You have to calculate the balance
according to the bank statement.
Additional information with regard the above Bank Reconciliation Statement

• Deposit, R1 985 and EFT no.376 for R250 appears on the bank statement on
31 January 2019.
• EFT no. 375 was issued to Packmar for packing material bought. it appears
on the bank statement on 31 January 2019 as R689. after investigating the
matter, the amount on the bank statement was found to be correct.
Entries in the Cash Payments Journal that do not appear on the bank
statement for February 2019
• EFT no. 464 for R340. this cheque was issued to Die Burger for an
advertisement on 28 February 2019.
• EFT no. 465 for R750. this EFT is as part payment of shuttle stores’
loan from aB Bank.
Entries in the Cash Receipts Journal which did not appear on the bank
statement for February 2019
• a deposit of R3 150 made on 28 February.
7. Effect on the financial statements
The bank reconciliation process reconciles the balance in the Bank
account of the business with the balance on the bank statement. If a post-
dated cheque is issued to a creditor, the entry is made in the CPJ and the
Bank account is decreased, so we can say that the business has less money
in their banking account. The Creditors account is also decreased, showing
that we owe them less. This cheque is, however, post-dated and cannot
be presented for payment so the money will remain in the Bank account
and we still owe the creditor that amount. This payment is called a future
payment because it was intended for the next financial year.
Because the business wants to show accurate information in their
financial reports, we will reverse that entry for financial statement
purpose so as to show the correct amount in the Bank account and the
correct amount owed to the creditor.
The procedure will be to add back the amount of the cheque to the
favourable balance in Bank account and to add back the amount to the
Creditors Control account. In the case of a bank overdraft, the amount
must be added to the negative amount in order to decrease it.
Example
A post-dated cheque for R10 000 was issued to Monopoly Stores a
creditor and was credited to the Bank account and debited to the
Creditors Control account. At the end of the financial year, the Bank
account had a debit balance of R96 000 and Creditors Control a credit
balance of R51 200.
Solution
Procedure: Bank account R96 000 + 10 000
= R106 000
Creditors Control account R51 200 + 10 000
= R61 200
If the bank account has an overdraft of R12 300, then the procedure is
as follows:
Procedure: Bank account – R12 300 + R10 000
= – R2 300 (overdraft is less)
Activity 3.13
You are presented with the Bank Reconciliation Statement of Onthong Traders
on 28 February 2019. Their financial year ends on this date.
Required
Study the BRS provided and answer the questions below.
1. Calculate the balance as per the Bank account in the ledger of Onthong
Traders on 28 February 2019.
2. Explain what should have happened to cheque no. 241 and why it should
not appear in the BRS on 28 February 2019.
3. How will you treat cheque no. 269 which was issued to Parrot Products, a
creditor, when preparing the financial statements?
4. Show the balance in the Bank account after Question 3 was considered.
5. A post-dated cheque was received from Molly Smith, a debtor. Why does it
not appear in the BRS?
6. Why should businesses prepare monthly Bank Reconciliation Statements?
Information
Debit balance according to bank statement from MyBank R13 260 00
Outstanding deposit 19 320 00
Outstanding cheques: no. 241 (dated 21 August 2018) 975 00
no. 269 (dated 31 March 2019) 2 300 00
no. 274 (dated 23 February 2019) 1 820 00
Balance as per Bank account in the General Ledger of Onthong Traders ?
7.1 Summary of where to record transactions involved in bank reconciliations
Bank Reconciliation
No
Transaction CRJ CPJ Statement
entry
Dr Cr
Direct deposit into bank account (on BS) ✓
Interest on favourable bank balance (on BS) ✓
Cancelled cheques (stale, stop payment, stolen or

✓
altered cheques)
error in the cPJ: where the amount in the cPJ
✓
is more than the original EFT
Error in the CRJ: where the amount in the CRJ is
✓
less than the original receipt
Debit orders, stop orders, electronic payments
✓
(on BS)
Bank charges, interest on overdraft (on BS) ✓
Dishonoured cheques (on BS) ✓
error in the cPJ: where the amount in the cPJ

✓
is less than the original EFT
Error in the CRJ: where that amount in the CRJ is
✓
more than the original receipt
S ✓
Cheques outstanding on previous BRS and still

✓
not appearing on current BS
Post-dated cheques issued ✓
Amount incorrectly credited on BS ✓
Outstanding deposits ✓
Amount incorrectly debited on BS ✓
EFT outstanding on previous BRs, but

✓
appearing on current Bs
Deposit outstanding on previous BRS, but
✓
appearing on current BS
Post-dated cheques received ✓
Activity 3.14
The information below was taken from the books of Smart and Casual on
31 August 2019.
Required
Use the information provided and complete the columns according to the
given transaction.
Example
Transaction
The bank statement was debited with interest on overdraft, R50.
No. Bank account Bank Reconciliation No entry
Statement
Contra/Details Debit Credit Debit Credit
e.g. Interest on overdraft R50
Transactions (31 August 2019)

1. EFT no. 186 for R75 appears on the bank statement. This EFT was
made on 27 July to Wrap ‘n Carry for packing material, but was
accidentally entered as R57 in the Cash Journal. The bank statement
is correct.
2. The dishonoured cheque from P Zuma, a debtor, was received with the
bank statement, R250. Investigation confirmed that the year was
accidentally entered as 2020 on the cheque. Cancel the cheque.
3. The bank accidently debited our account twice with a debit order of R
1600 and will correct the error in September.
4. The total bank charges amounted to R60 and do not appear in the Cash
Journal.
5. A deposit of R3 425, made on 30 August 2019, appears in the Cash
Journal but not on the bank statement.
6. A stop order for R950 in favour of Super Bank appears on the bank
statement. This stop order is in payment of the monthly instalment on
the personal loan of the owner.
7. A cheque for R650 was received from V Solly in payment of her account
of R700. The cheque was dated 2 September 2019. No entry was made
for this cheque.
8. Interest earned on the credit bank balance amounts to R95 and has not
yet been entered in the Cash Journal.
9. No entry was made of EFT no. 299 for R425, post-dated for
8 September 2019, and issued to Quipco Ltd in payment of their
account of R445.
10. A cheque for R850 from a debtor, B Zulu, in payment of his account was
dishonoured. It appears on the bank statement only.
11. An EFT for R960 issued to Malan Repairs for repairs done to equipment,
appears in the CPJ only.
12. The tenant paid the rent of R5 000 for August directly into the bank
account. It appears in the bank statement only.
13. A cheque for R630 issued to the local newspaper for an advertisement
was lost. This cheque must be cancelled and replaced with a new cheque
for the same amount.
Informal assessment 3.1
Marks: 45 Time: 30 minutes
The information provided was taken from the books of Hugo Traders.
Required
1. Complete the Cash Receipts and Cash Payments Journals for March 2019,
after comparing the journals with the Bank Reconciliation Statement of
the previous month and the bank statement of the current month. Start
by bringing down the totals of the Bank column only, and then do the
additional entries. [26]
2. Draw up the Bank account (properly balanced) for March 2019. [8]
3. Draw up the Bank Reconciliation Statement on 31 March 2019. [11]
Information
Hugo Traders
Bank Reconciliation Statement on 28 February 2019
Favourable balance on the bank statement 3 244 00
Outstanding deposit 1 790 00
Debit incorrect entry by bank (660 00
Outstanding EFT's
no. 1958 (460 00)
no. 1959 (220 00)
Balance in the Bank account ?
Extract from Cash Receipts Journal of Hugo Traders for March 2019 CRJ3
Doc. Day Details Fol. Analysis of Bank Sundry accounts
03 Sales 5 181 00
214 C Christiaansen 1 000 00 6 181 00
07 Sales 4 600 00
215 R de Jager 62 00 4 662 00 62 00 Bad debts recovered
12 Sales 2 184 00 2 184 00
216 17 H Ferreira 550 00 550 00
17 Sales 1 453 00 1 453 00
30 Sales 4 200 00 4 200 00
19 230 00
Extract from Cash Payments Journal of Hugo Traders for March 2019 CPJ3
Doc. Day Name of payee Fol. Bank Trading Sundry accounts
no. stock Amount Details
1961 06 D Dakar 120 00 120 00 Creditors Control
1962 06 R Muller 500 00 500 00
1963 10 Rio Wholesalers 480 00 480 00 Creditors Control
1964 16 Alfie Stores 8 400 00 8 400 00
1965 16 Cloete Ltd 600 00 600 00 Creditors Control
BS 21 P&P Stationers 300 00 300 00 Stationery
BS 26 Cash 1 200 00 1 200 00 Creditors for wages
1966 – 1968 29 Employees 3 090 00 3 090 00 Creditors for salaries
1969 30 Nietbegin Pension Fund 600 00 600 00 Pension fund
1970 SARS 700 00 700 00 SA Revenue Services: PAYE
15 990 00
XAT Bank
Bank Statement of Hugo Traders for March 2019
Details of transaction Amount Date Balance
Opening balance 3 244
Deposit + 1 790 2019-03-01
1958 – 460 2019-03-01
1959 – 220 2019-03-01
Regstelling -660 2019-03-03
Deposit + 6 181 2019-03-03
1961 – 120 2019-03-06
1962 – 500 2019-03-06
Deposit + 4 662 2019-03-07
Handling fees – 14 2019-03-07
1963 – 480 2019-03-10
Stop order: B Sure Insurers for owner’s insurance – 87 2019-03-12
Deposit + 2 184 2019-03-14
1964 – 4 800 2019-03-17
Deposit + 550 2019-03-17
1965 – 600 2019-03-17
Deposit + 1 453 2019-03-18
Debit card payment: P&P Stationers – 300 2019-03-27
ATM cash withdrawal – 1 200 2019-03-27
Stop order: to Unicity Computers for instalment on
computers – 452 2019-03-30
1966 – 840 2019-03-30
1967 – 1 250 2019-03-30
1868 – 1 000 2019-03-30
Interest + 121 2019-03-30
Service fees – 71 2019-03-30 7 131
• cheque no. 1964 is correctly shown in the bank statement.
Time: 25 minutes
Use the information provided to do the following in the books of Singh Traders.
1. Complete the Cash Receipts and Cash Payments Journal for December
2019. Add only the bank column total in each Cash Journal. Start the Cash
Journals with the following sub-totals on 31 December 2019:
Cash Receipts Journal

Bank R55 105
Sundry accounts R12 400
Cash Payments Journal

Bank R78 980
Sundry accounts R14 360 [18]
2. Draw up the Bank account on and balance the account on

31 December 2019. [5]
3. Draw up the Bank Reconciliation Statement on 31 December 2019. [7]
Information
Singh Traders
Bank Reconciliation Statement on 30 November 2019
Debit Credit
Overdrawn balance as per bank statement 16 965 00
Credit correction to be made by bank 1 340 00
Debit outstanding EFT:
no. 2650 2 080 00
no. 2651 2 880 00
no. 2652 1 000 00
Credit balance as per Bank account 2 085 00
21 585 00 21 585 00
Additional information with regard to the Bank Reconciliation Statement for

November 2019:
• The credit of R1 340 was for a debit order for water and electricity that was
entered twice by the bank in November. This correction by the bank does
appear on the December 2019 bank statement as a credit.
the bank statement for December 2019 was received on 31 December
and showed a debit balance of R20 420.
While comparing the cash Journals for December 2019 and the Bank
Reconciliation statement for november 2019 with the bank statement of
December 2019, the following discrepancies were found:
• entries in the bank statement for December 2019 not appearing in the cash
Journals for December:
Deposit R19 500
■
EFT no. 2650, R2 080

■
EFT no. 2651, in favour of Mermaid advertisers for advertisements, was

■
correct on the bank statement for R2 680

EFT no.2652, R1 000
■
Deposit, R17 250 (this amount represents a fixed deposit at kZn Bank,
■
which has expired, plus a year’s interest at 15% per annum. the amount
was deposited directly in singh traders’ current bank account.)
a stop order in favour of Durbs auto, as an instalment on a vehicle,
■
R1 500. the vehicle was bought on credit.

The owner, Vijay singh, withdrew cash from the ATM. It appears in the
■
bank statement, R500, but not in the business' books.

other items in the bank statement:
■
– cash handling fee R60

– tax levy R32
– service fees R218
– interest on overdraft R250
• Entries in the Cash Journals that do not appear on the bank statement:
■ EFT no. 2758 R1 540 (dated 31 December 2019)
■ EFT no. 2759 R2 810 (31 December 2019)
■ Deposit R13 500
Marks: 30 Time: 25 minutes
Required
Analyse the following transactions of Thames Stores under the column
headings as below. Show the procedure (if any) to be followed for each
transaction to reconcile the cash journals with the bank statement that was
received from the bank on 31 March 2019.
Example
1. An amount of R50 for bank charges appears only on the bank
statement.
2. An EFT for R200 appears in the Cash Payments Journal, but not on
the bank statement.
3. A deposit of R900 made on the last day of the previous month and
recorded in the previous month’s Bank Reconciliation Statement,
appears on the bank statement of the current month.
No. Details of entry in the journal General Ledger Bank Bank Reconciliation No entry
account Statement
Name of Name of account in the Amount Account Account Debit Credit
journal General Journal/ Ledger Debit Credit
1. CPJ Bank charges 50 50
2. 200
3. 900
Transactions
1. The bank statement shows a deposit of R1 000 for rent. The tenant,
K Donald, deposited this amount directly into the bank account.
2. Information from the Salaries Journal:
Name of employee Gross salary Net salary EFT no.

A Mlongo R6 000 R4 000 223
B Diamini R9 000 R5 500 224
C Ndlovu R5 000 R3 500 225
Notes
• Show the payment of the salaries.
• All the EFT payments appear on the bank statement.
3. The bank deducted the debit order for telephone and internet from the
business account twice. They were informed and will rectify the error.
4. Cash drawings for R500 from the ATM, as a donation to the local soccer
club, was not entered in the business books at all.
5. A debit order for insurance, R400, appears on the bank statement, but
not in the relevant journal.
6. EFT no. 243 for R1 150, issued to ES Wholesale for goods purchased,
was correctly shown on the bank statement, but appears in the Cash
Journal as R151. Correct the error.
7. Received an EFT from debtor A Nel for R399 in settlement of his account
of R420.
8. A deposit for R1 760 was made into our account on 25 March 2019.
Upon investigation it was discovered that the deposit was intended for
Thames Services. The bank will correct the error.
Bank reconciliations transactions summary

This is a summary of all the bank reconciliation transactions you have
dealt with so far. Use this as a reference point when you do the next
few activities.
Items appearing in the Why? What should you do?

1. debit column of the bank
statement but not in the CPJ
Interest on overdraft The bank calculates these These are entered in the
Interest on loan amounts and debits our CPJ.
Bank charges account automatically. We
only become aware of these
amounts when we receive
the bank statement.
Debit orders These are direct authorised
Stop orders payments debited to our
banking account.
Dishonoured cheques These are cheques that were
not honoured by the bank
because the debtor had no
money in their account. The
bank therefore debits our
account.
Items appearing in the Why? What should you do?
credit column of the
2.
Bank Statement but not
in the CRJ
Interest on current account The bank calculates these These are entered in the
Interest on fixed deposit amounts and credits our CRJ.
account automatically. We
only become aware of the
amounts when we receive
the bank statement.
Direct deposit from a tenant Deposits are made into our
for Rent income banking account and the
Direct deposit from a debtor bank credits these to our
banking account.
Late deposits Deposits that were made the No entry because this
end of the previous month, deposit would have
after the previous bank appeared in the previous
statement was closed off. month’s CRJ and BRS.
Items appearing in the CPJ Why? What should you do?

3. but not in the debit column
of the Bank statement.
outstanding EFT's these EFT's were entered in enter outstanding EFT's in
the CPJ but does not appear the debit column of the
on bank statement yet. BRs.
Items appearing in the CRJ Why? What should you do?

4. but not in the credit column
of the Bank statement.
Outstanding deposits Deposits that were made the Enter outstanding deposits
end of the current month in the credit column of the
after the bank statement was BRS.
closed off.
5. Additional items Why? What should you do
Errors made by the business A mistake was made and Make the correction in the
where the correct amount where the wrong amount journal:
will appear on the Bank was entered in the CPJ. If too little entered in CPJ
statement. enter difference in CPJ.
If too much entered in CPJ
enter difference in CRJ.
Cancelled cheques and Cheques issued by the Cancel a cheque issued in
stale cheques (older than six business have become lost, the CRJ.
months) stolen or have expired. If a new cheque must be
issued in its place, an entry
must be made in the CPJ
and then entered into the
BRS until it is presented for
payment.
Post-dated cheques issued These cheques are issued Enter these cheques in the
and dated for a date in the BRS.
future. These cheques are
not legal tender yet.
Post-dated cheques received These cheques are received NO ENTRY
and are dated for a date in
the future. These cheques
cannot be deposited.

Gr11 Ch3 Bank Reconciliation LB

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Gr11 Ch3 Bank Reconciliation LB

Uploaded by

Copyright:

Available Formats

Chapter 3

Reconciliations – Bank reconciliations

What do I do with this

File it in the file marked

1.1 What are bank reconciliations?

1.2 Why are bank reconciliations important?

Activity 3.1 (Case study)

The following ATM withdrawals were made during June 2019:

Date: Date: Date: 08/06/2019

Beneficiary: Beneficiary: Beneficiary:

Reference: Reference: Reference:

Amount Amount Amount

15/06/2019 17/06/2019 18/06/2019

Beneficiary: Beneficiary: Beneficiary:

Reference: Reference: Reference:

Amount Amount Amount R129,62

EFT nr: 004 EFT nr: 005 EFT nr: 006

Date: According to Pule's notebook

EFT nr: 007

Now answer the following questions on your own.

Discuss the following with a partner.

2. Internal control of money

2.1 Accounting procedure for recording money received

2.2 Accounting procedure for recording money paid

This chq This chq

2.4 Cheque fraud

3.1 Looking after the business’s money

4.1 The reconciliation process

Part 1: Starting the bank reconciliation process

Cash Receipts Journal of Shu-biz Stores for August 2019

Cash Payments Journal of Shu-biz Stores for August 2019

Part 2: Completing the bank reconciliation process

Cash Receipts Journal of Shu-biz Stores for August 2019

Cash Payments Journal of Shu-biz Stores for August 2019

General Ledger of Shu-biz Stores

Part 3: Drawing up the Bank Reconciliation Statement

Debit balance as per Bank account 24 170 00

Balance according to Bank account (debit) 24 170 00

Natasha Rose opened a fashion store in Port Elizabeth on 1 August 2019.

Cash Payments Journal of Natasha Rose Designs for August 2019

Cash Receipts Journal of Joe’s Wholesale Stores for September 2019

Cash Payments Journal of Joe’s Wholesale Stores for September 2019

4.2 Overdrawn bank balance

4.4 Cancelled cheques

• If the business does not want a payment to go through, it can stop

no. 129 ✓2 240 00

Cash Receipts Journal of Stereo Stores for June 2019

Cash Payments Journal of Stereo Stores for June 2019

Details Debit Credit Date Balance

Cash Receipts Journal of Stereo Stores for June 2019

Cash Payments Journal of Stereo Stores for June 2019

Insure 850 00 850 00 Insurance

General Ledger of Stereo Stores

Credit balance as per the Bank account 6 478 00

Cheques entered in the Cash Payments Journal for November 2019

Details Debit Credit Date Balance

It can also happen that a debit order of stoporder is incorrectly

4.5 Errors on the bank statement and in journals

Incorrect + Correction = Correct

■ If R500 received is entered in error as R5 000 in the CRJ, then

Incorrect – Correction = Correct

If an EFT made for R300 is entered in error as R3 000 in the CPJ,

Part 2: Completing the bank reconciliation process

Part 3: Drawing up the Bank Reconciliation Statement

5. Completing the bank reconciliation when

Marks: 45 Time: 30 minutes

Marks: 30 Time: 25 minutes