On 30th September 2017, Adedeji's cash book showed a debit balance of N7,600. However, his bank statement showed an overdraft balance of N1,880. On investigation, the following details were discovered:
i. A standing order of N160 had not been entered in the cash book
ii. Bank charges of N40 did not appear in the cash book
iii. Cash paid into the bank for N400 had been entered in the cash book as N360
iv. A cheque of N200 received from a customer was dishonoured
v. The bank received a credit transfer of N400 from a customer
vi. A cheque of N1,360 paid to Dexter Ltd had been entered in the cash book as N1,720
vii. A receipt of N40 shown on the bank statement had not been entered in the cash book;
viii. A cheque drawn amounting to N160 paid is still with the supplier
ix. Receipts of N3,600 paid into the bank on 30th September 2017 did not appear on the bank statement until October 2017
x. A cheque of N1,080 paid into the bank had been Wrongly credited by the bank as GH¢ 600
xi. A transfer of N6,000 to the bank had not been recorded in the cash book.
You are required to prepare
(a) Adjusted Cash Book;
The adjusted cash book is a corrected version of the original cash book that takes into account any discrepancies or errors that were discovered between the cash book and the bank statement. To prepare the adjusted cash book, we need to consider the following:
- Standing order not entered in the cash book: A standing order of N160 should be added as a debit in the cash book.
- Bank charges not in the cash book: Bank charges of N40 should be added as a debit in the cash book.
- Cash paid into the bank entered incorrectly: The cash paid into the bank for N400 should be corrected to N400 in the cash book.
- Dishonoured cheque: A cheque of N200 received from a customer was dishonoured, so it should be removed from the cash book as a credit.
- Credit transfer: A credit transfer of N400 from a customer should be added as a credit in the cash book.
- Cheque entered incorrectly: The cheque of N1,360 paid to Dexter Ltd should be corrected to N1,360 in the cash book.
- Receipt not entered in the cash book: A receipt of N40 shown on the bank statement should be added as a credit in the cash book.
- Cheque still with the supplier: A cheque of N160 paid to a supplier that is still with the supplier should not be included in the cash book yet.
- Receipts not on the bank statement: Receipts of N3,600 paid into the bank on 30th September 2017 should be added as a credit in the cash book, but only after they appear on the bank statement.
- Cheque wrongly credited by the bank: A cheque of N1,080 that was wrongly credited by the bank as GH¢600 should be corrected to N1,080 in the cash book.
- Transfer not recorded in the cash book: A transfer of N6,000 to the bank should be added as a credit in the cash book.
By making these adjustments, we can arrive at the adjusted cash book, which accurately reflects the true balance of Adedeji's account.
The adjusted cash book is a corrected version of the original cash book that takes into account any discrepancies or errors that were discovered between the cash book and the bank statement. To prepare the adjusted cash book, we need to consider the following:
- Standing order not entered in the cash book: A standing order of N160 should be added as a debit in the cash book.
- Bank charges not in the cash book: Bank charges of N40 should be added as a debit in the cash book.
- Cash paid into the bank entered incorrectly: The cash paid into the bank for N400 should be corrected to N400 in the cash book.
- Dishonoured cheque: A cheque of N200 received from a customer was dishonoured, so it should be removed from the cash book as a credit.
- Credit transfer: A credit transfer of N400 from a customer should be added as a credit in the cash book.
- Cheque entered incorrectly: The cheque of N1,360 paid to Dexter Ltd should be corrected to N1,360 in the cash book.
- Receipt not entered in the cash book: A receipt of N40 shown on the bank statement should be added as a credit in the cash book.
- Cheque still with the supplier: A cheque of N160 paid to a supplier that is still with the supplier should not be included in the cash book yet.
- Receipts not on the bank statement: Receipts of N3,600 paid into the bank on 30th September 2017 should be added as a credit in the cash book, but only after they appear on the bank statement.
- Cheque wrongly credited by the bank: A cheque of N1,080 that was wrongly credited by the bank as GH¢600 should be corrected to N1,080 in the cash book.
- Transfer not recorded in the cash book: A transfer of N6,000 to the bank should be added as a credit in the cash book.
By making these adjustments, we can arrive at the adjusted cash book, which accurately reflects the true balance of Adedeji's account.
