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BANK RECONCILIATION The information relates to Mango Traders for June 2023 - NSC Accounting - Question 1 - 2023 - Paper 2
Question 1
BANK RECONCILIATION The information relates to Mango Traders for June 2023. The business uses the official bank statement which is received on the 26th of each mont... show full transcript
Worked Solution & Example Answer:BANK RECONCILIATION The information relates to Mango Traders for June 2023 - NSC Accounting - Question 1 - 2023 - Paper 2
Step 1
Calculate the correct totals for the Cash Journals
Answer
To find the correct totals for the Cash Journals, we sum up the cash receipts and payments. The Cash Receipts Journal is R81,300 and the Cash Payments Journal is R80,620. Adjust for any discrepancies based on the information given:
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Cash Receipts Total:
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Initial Total: R81,300
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Correcting entries: EFT 792 was missed in the journal. Since it was recorded but not accounted correctly on the bank statement (R6,200), our total is:
[\text{Final Cash Receipts} = 81,300 + 6,200 = R87,500]
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Cash Payments Total:
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Initial Total: R80,620
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Correcting entries: Transaction fees from the bank (540) must be considered, so:
[\text{Final Cash Payments} = 80,620 + 540 = R81,160]
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Thus, the final totals are:
- Cash Receipts: R87,500
- Cash Payments: R81,160
Step 2
Calculate the Bank Account balance in the General Ledger
Answer
To calculate the Bank Account balance in the General Ledger, we start from the favourable balance in the Ledger, which is R49,100, and adjust for any outstanding deposits and payments:
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Starting balance: R49,100
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Add outstanding deposits: R30,000 (for 18 May) and R18,000 (for 30 May):
[\text{Adjusted Balance} = 49,100 + 30,000 + 18,000 = R97,100]
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Subtract outstanding EFTs (R7,400 and R19,300):
[\text{Final Balance} = 97,100 - 7,400 - 19,300 = R70,400]
Thus, the final Bank Account balance in the General Ledger is R70,400.
Step 3
Prepare the Bank Reconciliation Statement on 30 June 2023
Answer
The Bank Reconciliation Statement should be prepared using the bank statement balance adjusted for outstanding deposits and withdrawals:
Bank Reconciliation Statement on 30 June 2023
| Details | Debit | Credit |
|---|---|---|
| Balance as per bank statement | 11,240 | |
| Outstanding deposit (30 May) | 30,000 | |
| Outstanding EFTs (to Ace Stationers) | 7,400 | |
| Outstanding EFTs (to Spark Wholesalers) | 19,300 | |
| Cash deposit (D Glen) | 14,600 | |
| Transaction Fees | 540 | |
| Adjusted balance as per bank account | 70,400 |
Thus, the adjusted balance as per the bank account is reconciled to the bank statement.
Step 4
Explain TWO strategies that the business can use to address the problem of missing cash
Answer
To address the issue of missing cash, Mango Traders can implement the following strategies:
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Improved Cash Handling Procedures: The business should establish clear protocols for handling cash. This can include:
- Designating specific employees to manage cash transactions to prevent discrepancies.
- Implementing dual control measures where significant cash amounts are handled by two employees to minimize the risk of theft.
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Regular Audits and Monitoring: Conducting regular cash audits and reconciliations can identify discrepancies promptly. The business should:
- Schedule frequent, unannounced cash counts to ensure actual cash on hand matches records.
- Utilize technology for tracking cash flow and discrepancies through software that provides alerts for unusual transactions.