The following is a summary from the cash book of a company for July 20X5: Opening balance 2,920 Receipts 26,382 Payments (26,245) Closing balance 3,057 On investigation you discover that: 1. Bank charges of £40 shown on the bank statement have not been entered in the cash book. 2. A cheque drawn by the company for £125 to pay a supplier has been entered in the cash book as a receipt. 3. A cheque from a customer for £180, which was banked (and included above in receipts), has been returned by the bank as ‘unpaid: funds not available’, but this has not been adjusted in the company’s books. 4. An error of transposition has occurred in that the opening balance in the cash book should have been recorded as £2,290. 5. Cheques totalling £285 have been sent by post to suppliers but were not presented to the company’s bank until August 20X5. 6. The last page of the bank account paying-in book shows a deposit of £1,260 which was not credited to the account by the bank until 1 August 20X5. 7. The company’s bank statement at 31 July 20X5 shows a balance of £982. a. Show any adjustments needed to the company’s accounting records. b. Prepare a bank reconciliation statement as at 31 July 20X5
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The following is a summary from the
Opening balance 2,920
Receipts 26,382
Payments (26,245)
Closing balance 3,057
On investigation you discover that:
1. Bank charges of £40 shown on the bank statement have not been entered in the cash book.
2. A cheque drawn by the company for £125 to pay a supplier has been entered in the cash book as a receipt.
3. A cheque from a customer for £180, which was banked (and included above in receipts), has been returned by the bank as ‘unpaid: funds not available’, but this has not been adjusted in the company’s books.
4. An error of transposition has occurred in that the opening balance in the cash book should have been recorded as £2,290.
5. Cheques totalling £285 have been sent by post to suppliers but were not presented to the company’s bank until August 20X5.
6. The last page of the bank account paying-in book shows a deposit of £1,260 which was not credited to the account by the bank until 1 August 20X5.
7. The company’s bank statement at 31 July 20X5 shows a balance of £982.
a. Show any adjustments needed to the company’s accounting records.
b. Prepare a
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