Revision question on preparation of cash book

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(b)       Explain any four objectives of financial statements. 

(c)       Karongi Enterprises Ltd had the following un-reconciled amounts as at 1 June, 2017.

Un-presented cheques: Frw Direct credits: Frw
NO: 2222 500,000 Interest on deposit 300,000
NO: 2232 1,200,000 Rubavu Ltd 250,000
NO: 2240 5,000,000    
Un-credited cheques:   Direct debits:  
NO: 24 4,500,000 Bank charges 16,000
NO: 16 800,000 Loan interest 280,000
NO: 40 600,000 Makunza 140,000

The following information is available for the month of June 2017:

1 The  balance  as  per  the  bank  statement  on  30  June,  2017  was  a  credit  Frw 75,141,500 while the balance as per the cash book (bank column) was a debit Frw 68,500,000.
2 Cheque NO: 2222 and NO:2240 were presented on 15 June, 2017 and cheque NO: 16 was credited on 29 June, 2017.
3 The previous un-reconciled interest on deposit Frw 300,000 and bank charges Frw 16,000 were debited and credited respectively in the cash book on 18 June, 2017.
4 A standing order (MTN) for June, 2017 Frw 50,000 had not yet been recorded in the cash book.
5 A debtor, Bagaza settled his account Frw 7,500,000 by paying directly into the bank. Karongi Enterprises Ltd has not recorded this transaction in the cash book.
6 A deposit on 15 June 2017 Frw 5,000,000 was omitted from the bank statement.
7 A deposit on 18 June, 2017 Frw 1,500,000 was entered in the bank statement as Frw 5,100,000.
8 A cheque Frw 750,000 from Bikindi Ltd was returned unpaid by the bank. This is not yet reflected in the cash book.
9 A  cheque  Frw  2,250,000,  issued  to  Boshoso  and  paid  by the  bank,  had  been erroneously recorded in the cash book as Frw 2,520,000.
10 A receipt from a debtor (Kanza) collected by the bank on 25 June 2017 Frw 3,812,500 and interest thereon Frw 381,250 did not appear in the cash book (bank column). The bank charged collection fees Frw 38,250.
11 Bank charges Frw 18,000 were not yet recorded in the cash book.
12 A cheque from a debtor (Kengo) Frw 1,800,000 sent to the bank was returned together with a bank statement unpaid.
13 Cheques to Mugabo Enterprises Ltd and Gatanazi Ltd, Frw 2,000,000 and Frw 1,200,000 respectively were yet to be presented to the bank for payment.
14 A  cheque  from  Toto  Frw  652,000  was  entered  in  the  bank  statement  as  Frw 256,000.

REQUIRED:

(i) Prepare an adjusted cash book. 

(ii)  Starting with the adjusted cash book balance obtained in (c)

(ii) above, prepare a bank reconciliation statement as at 30 June 2017.        

Author: amidu edson

I am certified accountant with more than 5 years of teaching experience. Currently am teaching auditing and assurance, management accounting and financial accounting for student preparing for professional exams such as ACCA and CPA.

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