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Financial Accounting

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FUN BANK LTD Account of: Extreme 17 Laugh Drive HAPPY BAY Vic 6135 Account Number – 9067-66666 Statement page 666 Date Particulars Debit Credit Balance 2009 Balance b / f 2000 Cr Jun-01 C/C 4955 6955 Cr 1 Interest Paid 120 6835 Cr 2 204 440 6395 Cr 2 205 220 6175 Cr 3 C/C 6886 13061 Cr 5 206 88 12973 Cr 7 208 880 12093 Cr 8 209 1100 10993 Cr 6 C/C 5703 16696 Cr 9 Account Keeping fees 12 16684 Cr 9 210 800 15884 Cr 10 Interest received 60 15944 Cr 10 Direct Deposit – subsidy (gst free) 2000 17944 Cr 10 Quarterly Loan facility fee 375 17569 Cr Cash receipts journal 1 2 3 4 5 6 7 8 9 10 11 12 Date Particulars Fol. Rec. Debtors Control GST Discount Debtors Cash GST Sundries Bank No. Expense Control Sales 01-Jun Term Dep Int. 1,600.00 1,600.00 Y. Who 1,300.00 130 1,430.00 Eftpos 900 90 990 Y. For 55 5 50 850 85 935 03-Jun Parts Fleet 660 60 600 6,000.00 600 6,600.00 Y. Not 200 20 220 Cash 60 6 66 06-Jun Eftpos 100 10 110 Eftpos 40 4 44 Investment Acc 20,000.00 20,000.00 Owners Contrib 500 500 Eftpos 1,650.00 165 1,815.00 I. See (Dr) 900 90 990 Cash Spark Plugs 40 4 44 Yippee (Dr) 2,000.00 200 2,200.00 Subsidy 2,000.00 2,000.00 Interest 60 60 TOTAL 715 65 650 11,250.00 2,790.00 1,404.00 24,160.00 39,604.00 Cash payments journal 1 2 3 4 5 6 7 8 9 10 11 12 Date Particulars Fol. Cheque No. Creditors Control GST Discount Income Creditors Control Cash Purchases Wages Rent Car 01-Jun Int Paid 2 Engine Man 204 400 W. Zone 205 22 2 20 200 5 Adver Comm 206 C lean Supp. 207 7 Wet Screens 208 800 8 Petrol 209 1,000.00 9 Account Keeping Fees J Smith 210 800 10 Quarterly Loan facility fee Poor Me 211 1,200.00 TOTAL 22 2 20 1,000.00 400 800 1,200.00 1,000.00 Extreme’s bank reconciliation report For the period ended _______________________________ Balance as per Bank statement as at 17,569.00 Add/deduct unpresented cheques No. Amount 207 66 211 1,320.00 -1,386.00 Add/deduct deposits not yet credited Particulars Amount Owners Contribution 20,000.00 20,000.00 Balance as per cash at bank ledger 36,183.00 BALANCE PER BANK ACCOUNT GENERAL LEDGER $36,183 Questions Briefly explain answers to the following questions. 1.    Why might the bank statement not match the bank balance in our ledger? Certain cheques deposited by us in bank are not credited in our account. Moreover, certain cheques issued by us are not presented with the bank for payment. Therefore, the bank statement does not match the bank balance in our ledger. 2.    What are two of the most common discrepancies between the bank and our cash receipts journals? a)      Direct deposit from customer without informing the company. b)      Interest earned from investment direct deposit to bank account. 3.    What are two of the most common discrepancies between the bank and our cash payments journals? a.       Check issued to supplier not yet presented to the bank. b.      Bank charges or interest expense directly deducted to the bank. 4.    Why are we only checking the cash journals for discrepancies with the bank statement? We assume that the bank statement is the most reliable data. 5.    Why is it a good idea to regularly reconcile our accounts with the bank’s records? To prevent different kind of cash error of fraud. 6.    Who would be interested in the ‘reconciled’ figure and why? Business owners and top management. 7. What would be an appropriate timeline for reconciliation for many businesses? It is recommended to do bank reconciliation weekly. 8. Why does the bank statement figure not provide us with the true balance we have available to spend? Bank statement records actual cash disbursement or checks already presented to the bank, the book records disbursement when check was released to the payee.