|
STATEMENT
Date
Transaction
Total
$
Current
$
30+
$
60+
$
10 May 20X9
Invoice 100
94.50
94.50
1 June 20X9
CN 2008
(24.56)
(24.56)
4 July 20X9
Invoice 110
101.99
101.99
15 July 20X9
Invoice 156
106.72
106.72
TOTALS
278.65
106.72
101.99
69.94
May I remind you that our credit terms are 30 days.
Here is the payables’ ledger which corresponds with this supplier:
Nino Ltd
$
$
1 June 20X9 CN
24.56 10 May 20X9
Invoice 100
94.50
4 July 20X9
Invoice 110
110.99
15 July 20X9
Invoice 156
106.72
You can see that the invoice dated 4 July 20X9 in the ledger is of a total
$110.99, however in the statement it appears as $101.99.
The purchase invoice itself should be reviewed to check which amount is
correct. If the supplier statement is incorrect, then a polite telephone call
to the supplier should be made or a letter sent explaining the problem.
If it is the ledger that is incorrect then it should be updated.
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Chapter summary
Chapter 14
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Test your understanding answers
Test your understanding 1
Receivables' ledger control account
$
$
Balance b/f
54,000 Balance b/f
1,000
Credit sales
251,000 Sales returns
11,000
Dishonoured cheques
500 Cash received
242,000
Interest charged
1,400 Irrecoverable debts
4,000
Contra
800
Balance c/f
2,000 Balance c/f
50,100
––––––
––––––
308,900
308,900
––––––
––––––
Balance b/f
50,100 Balance b/f
2,000
Payables' ledger control account
$
$
Balance b/f
200 Balance b/f
43,000
Purchase returns
3,000 Credit purchases
77,000
Cash paid
74,000
Discount received
2,000
Contra
800
Balance c/f
40,200 Balance c/f
200
––––––
––––––
120,200
120,200
––––––
––––––
Balance b/f
200 Balance b/f
40,200
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Test your understanding 2
The following are reasons why the accounts receivable control account
may not agree with the ledger account:
•
The sales day book, sales returns day book or cash receipts book
have been incorrectly totalled.
•
A total from a book of prime entry has been transferred to the
control account as a different figure.
•
An individual entry from a book of prime entry has been transferred
to the individual customer’s account as a different figure.
•
An entry in the control account or the individual customer’s account
has been omitted or posted to the wrong side of the account.
•
The double entry for a day book total has been incorrectly made.
•
An individual customer’s account has been incorrectly balanced.
•
The list of accounts receivable ledger balances has been
incorrectly totalled.
•
An entry has been made in either the control account or the
individual customer’s account but not in both.
•
An individual customer’s balance has been omitted from the list of
balances.
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Test your understanding 3
Receivables’ ledger control account
$
$
Balance b/f
172,000 Contra (1)
1,500
Credit sales (5)
4,500 Balance c/f
175,000
––––––
––––––
176,500
176,500
––––––
––––––
Balance b/f
175,000
Receivables’ ledger reconciliation
Balance per accounts receivable ledger
176,134
Dishonoured cheque (2)
555
Misposting (3)
(89)
Cash received (4)
(1,600)
–––––––
175,000
–––––––
Test your understanding 4
The correct answer is D
Cook Tonga
$
$
Difference
Balance per question
14,810
10,000
Adjustment (4,080)
40
––––––
––––––
Revised balance
10,730
10,040
690
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Bank reconciliations
Chapter learning objectives
Upon completion of this chapter you will be able to:
•
understand the purpose of bank reconciliations
•
identify the main reasons for differences between the cash
book and the bank statement
•
correct cash book errors and/or omissions
•
prepare bank reconciliation statements
•
derive bank statement and cash book balances from given
information
•
identify the bank balance to be reported in the final accounts.
Chapter
15
PER
One of the PER performance objectives (PO6)
is to record and process transactions and
events. Working through this chapter should
help you understand how to demonstrate that
objective.
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1 Overview
Introduction
This chapter deals with the reasons for preparing a bank reconciliation,
and how the reconciliation is prepared. In particular, it deals with
sources of difference between the bank statement and the cash book of
an entity along with their significance.
Much of the content of this chapter is new. However, it is an important
foundation for your future ACCA studies, in particular for Financial
Reporting.
2
The bank reconciliation
The objective of a bank reconciliation is to reconcile the difference between:
•
the cash book balance, i.e. the business’ record of their bank account, and
•
the bank statement balance, i.e. the bank’s record of the bank account.
The cash book is the double entry record of cash and bank balances contained
within the nominal ledger accounting system. It is, in effect, the cash control
account.
Note that debits and credits are reversed in bank statements because the bank
will be recording the transaction from its point of view, in accordance with the
business entity concept.
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