(a) NYPSMANN Limited's Cashbook at 30th November 2015 showed an overdrawn position of GH¢ 185,500 although the bank statement showed only GH¢ 105,900 overdrawn. Detailed examination of the two records revealed the following: The debit side of the cash book had been undercast by GH¢ 15,000. A cheque for GH¢78,000 in favor of DEM Suppliers Ltd, had been omitted by the bank from its statement, the cheque having been debited to another customer's account. A cheque for GH¢9, 100 drawn in payment of the telephone account had been entered in the cash book as GH(C6,400 but was shown correctly on the bank statement. A cheque for GH¢ 10,500 from A books having been paid into the bank was dishonoured and shown as such on the bank statement although no entry relating to the dishonour had been made in the cash book. The bank had debited a cheque for GH¢6,300 to NYPSMANN's account in error; it should have been debited by them to NYPSW ANN's account. /\ A dividend of GH¢4,500 on NYPSMANN's holding of Ordinary Shares has been paid direct to the bank account and no entry made in the cash book. Cheques totaling GH¢63,000 drawn on 29th November had not been presented for payment A lodgement of GH¢ 54,000 on 30th November had not been credited by the bank. Interest amounting to GH¢ l l,400 had been debited by the bank but not entered in the cash book. Required: (i) Update and correct the cash book on 30th November 2015. (ii) Draw up a bank reconciliation statement at 30th November 2015. (iii) Identify and comment on how the reconciling items in the statement in (ii) should be treated in the following month

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(a) NYPSMANN Limited's Cashbook at 30th November 2015 showed an overdrawn position of GH¢ 185,500 although the bank statement showed only GH¢ 105,900

overdrawn.

Detailed examination of the two records revealed the following:

The debit side of the cash book had been undercast by GH¢ 15,000.

A cheque for GH¢78,000 in favor of DEM Suppliers Ltd, had been omitted by the

bank from its statement, the cheque having been debited to another customer's account.

A cheque for GH¢9, 100 drawn in payment of the telephone account had been entered in the cash book as GH(C6,400 but was shown correctly on the bank statement.

A cheque for GH¢ 10,500 from A books having been paid into the bank was dishonoured and shown as such on the bank statement although no entry relating to the dishonour had been made in the cash book.
The bank had debited a cheque for GH¢6,300 to NYPSMANN's account in error; it

should have been debited by them to NYPSW ANN's account. /\

A dividend of GH¢4,500 on NYPSMANN's holding of Ordinary Shares has been paid direct to the bank account and no entry made in the cash book.
Cheques totaling GH¢63,000 drawn on 29th November had not been presented for payment
A lodgement of GH¢ 54,000 on 30th November had not been credited by the bank.

Interest amounting to GH¢ l l,400 had been debited by the bank but not entered in the cash book.

Required:

(i) Update and correct the cash book on 30th November 2015.

(ii) Draw up a bank reconciliation statement at 30th November 2015.

(iii) Identify and comment on how the reconciling items in the statement in (ii) should be treated in the following month.

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