QUESTION THREE (25 MARKS)
A. On September 30, 20X6, Rameh Copeland Company had a cash balance per books of
$29,250. The bank statement from the Community Bank on that date showed a balance of
$54,600. A comparison of the statement with the cash account revealed the following:
• The bank statement included bank charges of $300.
• There was an EFT deposit of $18,000 on the bank statement for the monthly rent
due from a tenant.
• Examination of the paid cheques revealed that cheques #541 and #543 for $2,050
and $4,200, respectively, were not amongst the cancelled cheques returned with the
statement.
• During the evening of September 30, a deposit of $38,000 was placed in the night
deposit box at the bank after closing hours; this is not shown on the bank statement.
• Comparison of the paid cheques returned by the bank with the entries in the
accounting records revealed that cheque # 532 written for the amount of $5,000 had
been erroneously entered by bookkeeper of Rameh Copeland Company as $50,000.
The cheque was written to a vendor to pay off an account payable.
• Included with the cancelled cheques was a cheque issued by the Forrester Company
to P. Price for $2,000 that was incorrectly charged to Rameh Copeland Company's
account by the bank.
• The September bank statement included a NSF cheque from W. Chambers, a
customer, for $3,600.
Required:
I. Prepare a bank reconciliation statement for Rameh Copeland Company at September
30, 20X6.
(7 marks)
II. Prepare the adjusting journal entries that would be necessary after preparing the bank
reconciliation for Rameh Copeland Company at September 30, 20X6
(7 marks)
III. State and explain three reasons why the cash balance as per the bank statement is often
different from the cash book balance in a business' accounting records. (6 marks)
