ACCG611 Topic 7

Internal Control and Reconciliations

1
Lecture Objectives

• Identify the basic principles of accounting information systems

• Explain the major phases in the development of an accounting system
• Define internal control and appreciate management’s responsibility in relation to
internal control.
• Describe the sales and receivables cycle and the purchases and payments cycle.
• Apply internal control principles to the sales and receivables cycle and purchases and
payments cycle for transforming data.
• Describe the nature and purpose of control accounts and subsidiary ledgers
• Explain the term cash as it is defined in accounting.
• Understand and describe ‘what can go wrong’ with cash in a business
• Explain the concept and prepare of a bank reconciliation.

2
Principles of accounting
information systems
• The system that collects and processes transaction data and disseminates financial
information to interested parties is known as the accounting information system.
o An accounting information system may be either manual or computerized.

• Efficient and effective accounting information systems are based on certain principles,
including
o Cost effectiveness: The benefit of information should outweigh the cost of
providing it.
o Useful output: The provided information should be relevant, reliable,
understandable, timely, comparable.
o Flexibility: The system should accommodate a variety of changing needs resulted
from technological advances, increased competition, changing accounting
principles, organisational growth, government regulation and de-regulation.
3
Phases in developing an
accounting system

• Good accounting systems do not just happen. Instead, they are carefully planned,
designed, installed, managed and refined.
• Business managers should continually review and modify the accounting system as
the business environment changes.
• Generally, the accounting system
is developed in the 4 steps:
o Analysis
o Design
o Implementation
o Follow-up.

4
Internal control systems

• Internal control:
o Essential part of risk management.

• Consists of all the processes used by management and staff to:

o Provide efficient and effective operations and;
o Comply with laws, regulations and internal policies.

• Two aspects of internal control:

o Administrative controls provide operational efficiency and adherence
to policy and procedures.
o Accounting controls are the methods and procedures used to protect
assets and ensure that transactions are recorded appropriately.
5
Managements responsibility for
internal control

• Large companies establish objectives which encompass the principles of

the organisation.
• Management is responsible for developing practices and policies which are
consistent with these objectives.
• Corporate governance represents the framework of rules, relationships,
systems and processes within which authority is exercised within the
organisation:
o Internal audit is an element of good corporate governance that
involves monitoring the effectiveness of internal controls.

6
Internal and external auditing

• Internal auditing:
o Oversee the firm’s financial and operating procedures
o Check the accuracy of the financial record-keeping
o Implement improvements with internal control
o Ensure compliance with accounting regulations
• Institute of Internal Auditors definition: “The Audit Committee refers to the
governance body that is charged with oversight of the organization’s audit and
control functions.”
• External auditors must ensure the accuracy of the firm’s financial information for
shareholders.
• Big four external auditing firms:
o Price Waterhouse Coopers
o Deloitte & Touche
o Ernst & Young
o KPMG
7
Principles of internal control
• Establishment of responsibility
o When assigning responsibilities, the management should ensure the employees are
qualified.
• Segregation of duties:
o Related activities should be assigned to different individuals.
o The responsibility of keeping record of an asset should be separate from the physical
custody of that asset.
• Documentation procedures.
o Documents provide evidence that transactions and events have occurred. A procedure for
documentation should be established.
• Physical, mechanical and electronic controls
o Physical controls: safe, locked cabinets, etc.
o Mechanical and electronic controls: alarms, monitors, computers with password access,
time clocks, etc.
• Independent internal verification
o This principle involves the review, comparison, and reconciliation of data prepared by
employees.
o Four common elements (1) checking procedure, (2) supervisor monitoring, (3) internal
auditor verification, (4) duty rotations. 8
Limitations of internal control

• Cost versus benefits

• Human imperfection
• Business size
• Forensic Accounting:
o The application of accounting knowledge and analysis in the context
of civil and criminal litigations and investigations.
o Proactive risk reduction strategies.

9
Cash definition and ledger
account

• Cash is the most desirable asset because it is readily convertible into any
other asset.
• Cash consists of:
o cash on hand (notes and coins)
o cash at bank
o cheque accounts
o cash equivalents (bank overdrafts, deposits on money market, 90-day
bank acceptance bills).

10
Internal control over cash

• What can go wrong with cash in a business?

o Significant risk of theft (misappropriation)!
o Cash deposits: Theft could occur and the correct amount may not be deposited
o Cash payments: Fraud could occur in that payments are made to ‘false’ businesses
• How to safeguard cash?
o A key method of safeguarding cash is to keep track of cash by implementing controls
such as the Bank Reconciliation.
o There are numerous other cash related internal controls.

11
Bank Reconciliation

• Purpose: Prepared periodically to explain the difference between cash

reported on the bank statement and the cash ledger balance.
o Differences that are not able to be explained may indicate fraud.

Note the difference in language between the cash ledger account

and the bank statement.

Cash ledger accounts Bank Statements

Dr =Increase Cr = Increase
Cr = Decrease Dr = Decrease 12
Cash ledger account vs.
bank statement
• Why are there legitimate differences between the cash ledger account and
the bank statement?
o Answer: Timing differences and errors which can be explained
Items on the bank
statement, i.e., cash
bank account which are
not known to the
business
 
Bank charges such as
interest and non-sufficient
funds
Bank interest revenue
earned
Dishonoured cheques
Errors
Impact on cash ledger Items in the cash ledger Impact on cash bank
account account which are not account
(and need to be known to the bank (and need to be shown
corrected by the   on the bank
business) reconciliation and/or
notified to the bank)
Reduce cash ledger Deposits in transit Increase cash bank
account balance (Outstanding deposits) account balance
Increase cash ledger Unpresented cheques Reduce cash bank
account balance (Recorded in the books but account balance
not cleared by the
recipient)
Reduce cash ledger Errors Reduce/Increase cash
account balance bank account balance
Reduce/Increase cash    
ledger account balances
13
Bank Reconciliation

• Thus, the bank reconciliation statement is prepared to explain the

legitimate differences (due to timing and errors) between the bank
statement balance AND the cash ledger balance.
• The format of the bank reconciliation statement is as follows:

VVV Business
Bank Reconciliation Statement
as at XXX Date
Balance as per bank statement   $..... Dr/Cr

Add/Subtract: Outstanding deposit   ……….

Add/Subtract: Unpresented cheques Cheque no. www $........  

  Cheque no. yyyy ……….

$.....
   
Balance as per Cash at Bank ledger   $ ….Dr/Cr

14
Steps to perform a bank
reconciliation
• Documents required:
o The bank reconciliation for the prior period
o Cash at bank ledger account
o Bank statement for the period since the last reconciliation
• Steps to perform a bank reconciliation:
1. Check that all items from the previous reconciliation are cleared. Any
unhighlighted outstanding deposits or unpresented cheques from the previous
bank reconciliation are carried forward as reconciling items to the current bank
reconciliation.
2. Compare the bank statement Crs to the cash receipts Drs recorded in the cash
ledger account . Highlight common items. The remaining unhighlighted cash
receipts are outstanding deposits.
3. Compare the bank statement Drs to the cash payments Crs recorded in the
ledger account. Highlight common items. The remaining unhighlighted cash
payments are unpresented cheques
15
Steps to perform a bank
reconciliation
4. Identify items on the bank statement that remain unhighlighted. These are items
initiated by the bank but not yet recorded in the business records. These should be
recorded in the general journal. Once complete highlight the bank statement to
show the item is dealt with.
5. Deal with Errors. Adjust cash ledger via the general journal for any errors made by
entity. Notify the bank of any errors in the bank statement [Note these errors on
reconciliation until corrected.]
6. Post the journals to the Cash at Bank ledger account. The balance of the ledger
account should then be determined.
7. Prepare the bank reconciliation statement.

16
Preparing a bank statement:
worked example
• Ben Hammond owns and runs his own confectionary store (sole trader)
named ‘Ben’s Sweets’. As the accountant for the business you are required
to perform a bank reconciliation at the end of June 2018. The bank
reconciliation statement for May 2018 is set out below:

Ben’s Sweets
Bank Reconciliation Statement
as at 31 May 2018
$ 1,811.55
Balance as per bank statement  
Cr
Add: Outstanding deposits   4,332.67
Less Unpresented cheques Cheque no. 4578 $567.35  
  Cheque no. 4579 $734.89  
  Cheque no. 4581 $987.34 (2,289.58)
   
Balance as per Cash at Bank
  $3,854.64 Dr
ledger

17
Worked example

• The business’s cash ledger account revealed the following cash receipts
and cash payments for June 2018:
Cash receipts (CR) Cash payments (CP)
Cheque Cash
Date Cash (Debit) Date
No. (Credit)
June 1 599.54 June 1 4582 345.67
June 2 56.98 June 4 4584 860.00
June 2 515.90 June 5 4585 54.65
June 5 548.70 June 5 4586 125.60
June 8 98.00 June 9 4588 2,595.00
June 8 45.68 June 9 4589 235.40
June 8 555.60 June 19 4596 50.00
June 9 520.00 June 26 4600 120.00
(34.65) Dishonoured
June 19 June 30 4602 38.70
cheque
June 19 478.90      
June 29 506.80      
June 30 480.65      
18
Worked example

• On 30 June 2018 Ben’s Sweets received the following bank statement:

Ben’s Sweets
Bank Statement for June 2018
Date Particulars Debit Credit Balance
2016        
June1 Beginning balance     $1,811.55 Cr
2 Cheque no. 4579 734.89   1,076.66 Cr
2 Deposit   4,332.67 5,409.33 Cr
2 Deposit   599.54 6,008.87 Cr
3 Deposit   572.88 6,581.75 Cr
4 Cheque no. 4582 345.67   6,236.08 Cr
4 Cheque no. 4584 880.00   5,356.08 Cr
5 Cheque no. 4585 54.65   5,301.43 Cr
5 Deposit   548.70 5,850.13 Cr
6 Cheque no. 4581 987.34   4,862.79 Cr
8 Deposit   699.28 5,562.07 Cr
9 Cheque no. 4588 2,595.00   2,967.07 Cr
9 Deposit   520.00 3,487.07 Cr
12 Cheque no. 4589 235.40   3,251.67 Cr
19 Deposit   478.90 3,730.57 Cr
19 Dishonoured cheque 34.65   3,695.92 Cr
26 Cheque no. 4596 50.00   3,645.92 Cr
28 Cheque no. 4600 120.00   3,525.92 Cr
30 Deposit   506.80 4,032.72 Cr
30 Account fees 60.00   3,972.72 Cr
 
NOTE: All the details on the bank statement are correct

19
Worked example
 
1. Complete the cash at bank ledger below for 30 June 2018.
 
Cash at bank
Debit Credit
       
       
       
       
       
       

2. Prepare a bank reconciliation statement for the business as at 30 June 2018.

Ben’s Sweets
Bank Reconciliation Statement
as at 30 June 2018
Balance as per bank statement    
     
     
     
     
Balance as per Cash at Bank ledger    
     
20
 Step 1

• Compare the bank reconciliation from last period to the bank statement
for this period to see if the outstanding deposits and unpresented cheques
listed on the bank reconciliation have cleared.

Ben’s Sweets
Bank Reconciliation Statement
as at 31 May 2018
Balance as per bank statement   $1,811.55 Cr
Add: Outstanding deposits   4,332.67
Less: Unpresented cheques Cheque no. 4578 $567.35  
  Cheque no. 4579 $734.89  
  Cheque no. 4581 $987.34 (2.289.58)

Balance as per Cash at Bank

  $3,854.64 Dr
Ledger
NB: This means that Cheque no. 4578 for $567.35 has not cleared and needs to be taken forward to
the June 2018 bank reconciliation. 21
Step 1

• On 30 June 2018 the business received the following bank statement:

Ben’s Sweets
Bank Statement for June 2018
Date Particulars Debit Credit Balance
2018        
June1 Beginning balance     $1,811.55 Cr
2 Cheque no. 4579 734.89   1,076.66 Cr
2 Deposit   4,332.67 5,409.33 Cr
2 Deposit   599.54 6,008.87 Cr
3 Deposit   572.88 6,581.75 Cr
4 Cheque no. 4582 345.67   6,236.08 Cr
4 Cheque no. 4584 880.00   5,356.08 Cr
5 Cheque no. 4585 54.65   5,301.43 Cr
5 Deposit   548.70 5,850.13 Cr
6 Cheque no. 4581 987.34   4,862.79 Cr
8 Deposit   699.28 5,562.07 Cr
9 Cheque no. 4588 2,595.00   2,967.07 Cr
9 Deposit   520.00 3,487.07 Cr
12 Cheque no. 4589 235.40   3,251.67 Cr
19 Deposit   478.90 3,730.57 Cr
19 Dishonoured cheque 34.65   3,695.92 Cr
26 Cheque no. 4596 50.00   3,645.92 Cr
28 Cheque no. 4600 120.00   3,525.92 Cr
30 Deposit   506.80 4,032.72 Cr
30 Account fees 60.00   3,972.72 Cr
 
NOTE: All the details on the bank statement are correct

22
Step 2: outstanding deposits

• Compare the cash ledger account Drs with the bank statement Crs and highlight
common items.
• The remaining unhighlighted item(s) in the cash receipts journal are outstanding
deposits.

 Cash ledger EXTRACT

Cash receipts (CR) for June 2018

Date Cash (Debit)

June 1 $599.54
June 2 56.98
June 2 515.90
June 5 548.70
June 8 98.00
June 8 45.68
June 8 555.60
June 9 520.00
June 19 (34.65) Dishonoured cheque
June 19 478.90
June 29 506.80
June 30 480.65
Total Cash receipts 4,372.10

NB: The total deposit for June 2 is $572.88 and June 8 is $699.28.
23
Step 2: outstanding deposits
Ben’s Sweets
Bank Statement for June 2018
Date Particulars Debit Credit Balance
2016        
June1 Beginning balance     $1,811.55 Cr
2 Cheque no. 4579 734.89   1,076.66 Cr
2 Deposit   4,332.67 5,409.33 Cr
2 Deposit   599.54 6,008.87 Cr
3 Deposit   572.88 6,581.75 Cr
4 Cheque no. 4582 345.67   6,236.08 Cr
4 Cheque no. 4584 880.00   5,356.08 Cr
5 Cheque no. 4585 54.65   5,301.43 Cr
5 Deposit   548.70 5,850.13 Cr
6 Cheque no. 4581 987.34   4,862.79 Cr
8 Deposit   699.28 5,562.07 Cr
9 Cheque no. 4588 2,595.00   2,967.07 Cr
9 Deposit   520.00 3,487.07 Cr
12 Cheque no. 4589 235.4   3,251.67 Cr
19 Deposit   478.90 3,730.57 Cr
19 Dishonoured cheque 34.65   3,695.92 Cr
26 Cheque no. 4596 50.00   3,645.92 Cr
28 Cheque no. 4600 120.00   3,525.92 Cr
30 Deposit   506.80 4,032.72 Cr
30 Account fees 60.00   3,972.72 Cr
 
NOTE: All the details on the bank statement are correct 24
Step 3: unpresented cheques

• Compare the ledger cash payments Cr’s with the bank statement Dr’s and highlight
common items.
• The remaining unhighlighted item (s) in the cash payment journal are unpresented
cheques.
Cash ledger EXTRACT
Cash payments (CP) for June 2018
Cash
Date Cheque No.
(Credit)
June 1 4582 345.67
June 4 4584 860.00
June 5 4585 54.65
June 5 4586 125.60
June 9 4588 2,595.00
June 9 4589 235.40
June 19 4596 50.00
June 26 4600 120.00
June 30 4602 38.70
Total cash payments   4,425.02
Note the discrepancy with Cheque no.4584 in the Cash journal ($860) versus the bank statement ($880).
The bank statement is correct (see note on Statement). Therefore an adjustment needs to be made to the
cash ledger to increase the amount of the cheque to $880. See future slides for the required adjustment. 25
Step 3: unpresented cheques
Ben’s Sweets
Bank Statement for June 2018
Date Particulars Debit Credit Balance
2018        
June1 Beginning balance     $1,811.55 Cr
2 Cheque no. 4579 734.89   1,076.66 Cr
2 Deposit   4,332.67 5,409.33 Cr
2 Deposit   599.54 6,008.87 Cr
3 Deposit   572.88 6,581.75 Cr
4 Cheque no. 4582 345.67   6,236.08 Cr
4 Cheque no. 4584 880.00   5,356.08 Cr
5 Cheque no. 4585 54.65   5,301.43 Cr
5 Deposit   548.70 5,850.13 Cr
6 Cheque no. 4581 987.34   4,862.79 Cr
8 Deposit   699.28 5,562.07 Cr
9 Cheque no. 4588 2,595.00   2,967.07 Cr
9 Deposit   520.00 3,487.07 Cr
12 Cheque no. 4589 235.4   3,251.67 Cr
19 Deposit   478.90 3,730.57 Cr
19 Dishonoured cheque 34.65   3,695.92 Cr
26 Cheque no. 4596 50.00   3,645.92 Cr
28 Cheque no. 4600 120.00   3,525.92 Cr
30 Deposit   506.80 4,032.72 Cr
30 Account fees 60.00   3,972.72 Cr
 
NOTE: All the details on the bank statement are correct 26
Step 4: bank initiated items

• Deal with bank initiated items

o Identify items on the bank statement that remain unhighlighted. These
are items initiated by the bank but not yet recorded in the business
records.
o These should be entered in the appropriate cash journals and ticked in
these records and on the bank statement.

27
Step 4: bank initiated items
Ben’s Sweets
Bank Statement for June 2018
Date Particulars Debit Credit Balance
2018        
June1 Beginning balance     $1,811.55 Cr
2 Cheque no. 4579 734.89   1,076.66 Cr
2 Deposit   4,332.67 5,409.33 Cr
2 Deposit   599.54 6,008.87 Cr
3 Deposit   572.88 6,581.75 Cr
4 Cheque no. 4582 345.67   6,236.08 Cr
4 Cheque no. 4584 880.00   5,356.08 Cr
5 Cheque no. 4585 54.65   5,301.43 Cr
5 Deposit   548.70 5,850.13 Cr
6 Cheque no. 4581 987.34   4,862.79 Cr
8 Deposit   699.28 5,562.07 Cr
9 Cheque no. 4588 2,595.00   2,967.07 Cr
9 Deposit   520.00 3,487.07 Cr
12 Cheque no. 4589 235.4   3,251.67 Cr
19 Deposit   478.90 3,730.57 Cr
19 Dishonoured cheque 34.65   3,695.92 Cr
26 Cheque no. 4596 50.00   3,645.92 Cr
28 Cheque no. 4600 120.00   3,525.92 Cr
30 Deposit   506.80 4,032.72 Cr
30 Account fees 60.00   3,972.72 Cr
 NOTE: All the details on the bank statement are correct

Post
Date Account Particulars Debit Credit
Ref
30/6/18 Bank charges   60  
Cash     60
(record bank fees)       28
Step 5: errors

• Deal with ERRORS

Cash ledger EXTRACT
Cash payments (CP) for June 2018

Date Cheque No. Cash (Credit)

June 1 4582 345.67

June 4 4584 860.00 (assume for supplies expense)
June 5 4585 54.65
June 5 4586 125.60
June 9 4588 2,595.00
June 9 4589 235.40
June 19 4596 50.00
June 26 4600 120.00
June 30 4602 38.70

29
Step 5: errors
Ben’s Sweets
Bank Statement for June 2018
Date Particulars Debit Credit Balance
2018        
June1 Beginning balance     $1,811.55 Cr
2 Cheque no. 4579 734.89   1,076.66 Cr
2 Deposit   4,332.67 5,409.33 Cr
2 Deposit   599.54 6,008.87 Cr
3 Deposit   572.88 6,581.75 Cr
4 Cheque no. 4582 345.67   6,236.08 Cr
4 Cheque no. 4584 880.00   5,356.08 Cr
5 Cheque no. 4585 54.65   5,301.43 Cr
5 Deposit   548.70 5,850.13 Cr
6 Cheque no. 4581 987.34   4,862.79 Cr
8 Deposit   699.28 5,562.07 Cr
9 Cheque no. 4588 2,595.00   2,967.07 Cr
9 Deposit   520.00 3,487.07 Cr
12 Cheque no. 4589 235.4   3,251.67 Cr
19 Deposit   478.90 3,730.57 Cr
19 Dishonoured cheque 34.65   3,695.92 Cr
26 Cheque no. 4596 50.00   3,645.92 Cr
28 Cheque no. 4600 120.00   3,525.92 Cr
30 Deposit   506.80 4,032.72 Cr
30 Account fees 60.00   3,972.72 Cr
 NOTE: All the details on the bank statement are correct

Post
Date Account Particulars Debit Credit
Ref
30/6/18 Supplies expense (880- 860)   20  
Cash     20
(Correct journal entry for cheque no. 4584)       30
Step 6-1

1. Post the opening cash leger balance

Ben’s Sweets
Bank Reconciliation Statement
as at 31 May 2018

Balance as per bank statement   $1,811.55 Cr

Add: Outstanding deposits   4,332.67
Less: Unpresented cheques Cheque no. 4578 $567.35  
  Cheque no. 4579 $734.89  
  Cheque no. 4581 $987.34 (2.289.58)

Balance as per Cash at Bank

  $3,854.64 Dr
Ledger
Cash (at bank)
Debit Credit
Balance b/f 3,854.64    
       
       
       
       

The ending balance for May 2018 (31/5/16) is the opening balance for June 2016 (1/6/16). 31
Step 6-2 Cash receipts (CR)
 
Cash ledger EXTRACT
Cash receipts (CR) for June 2018
Date Cash (Debit)
2. Post total cash receipts June 1 $599.54
June 2 56.98
June 2 515.90
June 5 548.70
June 8 98.00
June 8 45.68
June 8 555.60
June 9 520.00

June 19 (34.65) Dishonoured cheque

June 19 478.90
June 29 506.80
June 30 480.65
Total Cash receipts 4,372.10

Cash (at bank)

Debit Credit
Balance b/f 3,854.64    
30/6 Cash receipts 4,372.10    
       
       
       
32
Step 6-3

3. Post total cash payments

Cash ledger EXTRACT
Cash payments (CP) for June 2018
Date Cheque No. Cash (Credit)
June 1 4582 345.67
June 4 4584 860.00
June 5 4585 54.65
June 5 4586 125.60
June 9 4588 2,595.00
June 9 4589 235.40
June 19 4596 50.00
June 26 4600 120.00
June 30 4602 38.70
Total cash payments   4,425.02

Cash (at bank)

Debit Credit
Balance b/f 3,854.64 30/6 Cash payments 4,425.02
30/6 Cash receipts 4,372.10    
       
       
       
33
Step 6-4

• 4. Post journal entries

Post
Date Account Particulars Debit Credit
Ref
30/6/18 Bank charges   60  
Cash     60
(record bank fees)      

Post
Date Account Particulars Debit Credit
Ref
30/6/18 Supplies expense   20  
Cash     20
(Correct journal entry for cheque no. 4584)      

Cash
Debit Credit
Balance b/f 3,854.64 30/6 Cash payments 4,425.02
30/6 Cash receipts 4,372.10 30/6 Supplies expense 20
    30/6/ Bank charges 60
       
       

34
Step 6-5

5. Balance the cash ledger account

Cash (at bank)

Debit Credit

Balance b/f 3,854.64 30/6 Cash payments 4,425.02

30/6 Cash receipts 4,372.10 30/6 Supplies expense 20

    30/6 Bank charges 60

    Balance c/d 3,721.72

  8,226.74   8,226.74

Bal b/d 3,721.72 Dr      

35
Step 7-1

1. Create bank reconciliation statement template

Ben’s Sweets
Bank Reconciliation Statement
as at 30 June 2018
Balance as per bank statement  
(Add/Less) Outstanding deposits    
     
(Add/Less) Unpresented cheque No. $    
No. $    
No. $    
Balance as per Cash at Bank ledger    
     

36
Step 7-2

2. Insert the bank statement ending balance

Ben’s Sweets
Bank Statement for June 2018
Date Particulars Debit Credit Balance
June1 Beginning balance     $1,811.55 Cr
2 Cheque no. 4579 734.89   1,076.66 Cr
2 Deposit   4,332.67 5,409.33 Cr
2 Deposit   599.54 6,008.87 Cr
3 Deposit   572.88 6,581.75 Cr
4 Cheque no. 4582 345.67   6,236.08 Cr
4 Cheque no. 4584 880.00   5,356.08 Cr
5 Cheque no. 4585 54.65   5,301.43 Cr
5 Deposit   548.70 5,850.13 Cr
6 Cheque no. 4581 987.34   4,862.79 Cr
8 Deposit   699.28 5,562.07 Cr
9 Cheque no. 4588 2,595.00   2,967.07 Cr
9 Deposit   520.00 3,487.07 Cr
12 Cheque no. 4589 235.4   3,251.67 Cr
19 Deposit   478.90 3,730.57 Cr
Dishonoured
19 34.65   3,695.92 Cr
cheque
26 Cheque no. 4596 50.00   3,645.92 Cr
28 Cheque no. 4600 120.00   3,525.92 Cr
30 Deposit   506.80 4,032.72 Cr
30 Account fees 60.00   3,972.72 Cr
 
NOTE: All the details on the bank statement are correct

37
Step 7-2

Ben’s Sweets
Bank Reconciliation Statement
as at 30 June 2018

Balance as per bank statement   $3,972.72 Cr

(Add/Less) Outstanding deposits    

     
(Add/Less) Unpresented cheque No. $    
No. $    
No. $    
Balance as per Cash at Bank ledger    
     

38
Step 7-3

• Insert the cash ledger ending balance

Cash (at bank)
Debit Credit
Balance b/f 3,854.64 30/6 Cash payments 4,425.02
30/6 Cash receipts 4,372.10 30/6 Supplies expense 20
    30/6 Bank charges 60
    Balance c/d 3,721.72
  8,226.74   8,226.74
Bal b/d 3,721.72 Dr      
Ben’s Sweets
Bank Reconciliation Statement
as at 30 June 2018
Balance as per bank statement   $3,972.72 Cr
(Add/Less) Outstanding deposits    
     
(Add/Less) Unpresented cheque No. $    
No. $    
No. $    
Balance as per Cash at Bank ledger   $3,721.72 Dr
     
39
 Cash receipts (CR)

Step 7-4
 

Cash ledger EXTRACT

Cash receipts (CR) for June 2018
Date Cash (Debit)
June 1 $599.54
June 2 56.98

• Insert the outstanding deposits June 2

June 5
515.90
548.70
June 8 98.00
June 8 45.68
June 8 555.60
June 9 520.00
June 19 (34.65) Dishonoured cheque
June 19 478.90
June 29 506.80
June 30 480.65
Total Cash receipts 4,372.10

Ben’s Sweets
Bank Reconciliation Statement
as at 30 June 2018
Balance as per bank statement   $3,972.72 Cr
Add Outstanding deposit   480.65
     
(Add/Less) Unpresented cheque No. $    
No. $    
No. $    
Balance as per Cash at Bank ledger   $3,721.72 Dr
     

40
 Cash ledger EXTRACT

Step 7-5
Cash payments (CP) for June 2016
Date Cheque No. Cash (Credit)
June 1 4582 345.67
June 4 4584 860.00 (assume for supplies
expense)
• Insert unpresented cheques June 5
June 5
4585
4586
54.65
125.60
AND balance the bank June 9 4588 2,595.00
June 9 4589 235.40
reconciliation statement June 19 4596 50.00
June 26 4600 120.00
June 30 4602 38.70

Ben’s Sweets
Bank Reconciliation Statement
as at 30 June 2016

Balance as per bank statement   $3,972.72 Cr

Add Outstanding deposit   480.65
     
Less Unpresented cheque No. 4578 $567.35    
No. 4586 $125.60    
No. 4602 $38.70   (731.65)

Balance as per Cash at Bank ledger   $3,721.72 Dr

41