Bank Reconciliation and Control Account

Introduction

 
 
 
This assessment covers:
LO3 Perform bank reconciliations to ensure company and bank records are correct
LO4 Reconcile control accounts and shift recorded transactions from the suspense accounts to the right accounts
 

Scenario 1

 
 
 
 
You are an employee of King Kong & Co. and the following information have been given to you.
 

1. The cash book (bank columns) of King King & Co. for December 2016

2016	Dr	£	2016	Cr	£
6-Dec	P.Pan	230	1-Dec	Balance b/d	1,900
20-Dec	C.Hook	265	10-Dec	J.Lamb	304
31-Dec	W.Britten	325	19-Dec	P.Wilson	261
31-Dec	Balance c/d	1,682	29-Dec	K.Coull	37
		2,502			2,502

 

b)      Bank Statement for the month of Dec 2016
		Dr.     £	Cr.      £	Balance  £
1-Dec	Balance			1,900	O/D
6-Dec	Cheque		230	1,670	O/D
13-Dec	J.Lamb	304		1,974	O/D
20-Dec	Cheque C.Hook		265	1,709	O/D
22-Dec	P.Wilson	261		1,970	O/D
29-Dec	NSF* C.Hook	265		2,235	O/D
30-Dec	Tox: standing order	94		2,329	O/D
31-Dec	F.Ray: trader’s credit		102	2,227	O/D
31-Dec	Bank charges	72		2,299	O/D
* NSF= No Sufficient Fund

 

Required

 
 
 
 
Task 1:
(Task 1 meets learning P5 Apply the bank reconciliation process to prepare a number of bank reconciliations.)
 

1. You are to write cash book up to date taking into account all the necessary items in scenario 1.
2. Draw up a bank reconciliation statement as on 31 December 2016. Clearly identifying the treatment of cheque not lodged at bank, unpresented cheques and NSF cheque.

 
Evidence format:  T-Accounts for cash book and Statement format for bank reconciliation.

Scenario 2

 
 
 
The following details were given to you.  You are to prepare relevant control accounts.
 

	£
Sales Ledger balances at 1 July 2016 – Debit	20,040
Sales Ledger balances at 1 July 2016 – Credit	56
Purchases Ledger balances at 1 July 2016 – Debit	12
Purchases Ledger balances at 1 July 2016 – Debit	14,860
Activities during the half-year to 31 December 2016:
Payments to trde accounts payable	93,685
Cheques from credit customers	119,930
Purchases on credit	95,580
Sales on credit	124,600
Bad Debts written off	204
Discounts allowed	3,480
Discounts received	2,850
Returns inwards	1,063
Returns outwards	240
Sales Ledger credit balances at 31 December 2016	37
Sales Ledger debit balances at 31 December 2016	19,006
Purchases Ledger debit balances at 31 December 2016	26
Purchases Ledger credit balances at 31 December 2016	13,241
During the half-year, debit blances in the sales ledger, amounting to £438, were transferred to the purchases ledger.

 

Required

 
 
 
 
(Task 2 below meets learning P6 Explain the process taken to reconcile control accounts and clear
suspense accounts using given account examples.)
 
Task 2    a. Prepare the sales control account and the purchases ledger control account for the half-year to 31 December 2016.

1. Prepare a suspense ledger account. On your investigation £500 difference was related to sales that had been recorded but no corresponding entry was made in the cash book.
2. Explain what are the benefits of control accounts and what purpose the reconciliation of the accounts serve?

 
Evidence format: Prepare T-accounts for both control accounts and suspense account and paragraphs.
 
 
 
 

Marking Scheme
Outcome	Evidence for The Criteria	Feedback	Assessor’s Decision & Page No.
LO3 Perform bank reconciliations to ensure company and bank records are correct	P5 Apply the bank reconciliation process to prepare a number of bank reconciliations.
	M3 Apply the reconciliation process demonstrating the use of deposit in transit, outstanding checks and Not Sufficient Funds (NSF) check.
	D3 Prepare accurate bank reconciliations that apply appropriate tools and techniques to check general accounts and balance sheets.
Outcomes	Evidence for The Criteria	Feedback	Assessor’s Decision & Page No.
LO4 Reconcile control accounts and shift recorded Transactions from the suspense accounts to the right accounts	P6 Explain the process taken to reconcile control accounts and clear suspense accounts using given account examples.
	M4 Demonstrate understanding of the different types of accounts and how and why they are reconciled.
	D4 Produce accurate accounts that have been reconciled applying the appropriate methods.

 
 
 
 
Sources of Information
Guidance on Harvard APA referencing system,(http://referencing.port.ac.uk/apa/)
Dyson R J – Accounting for Non-Accounting Students (Financial Times/Prentice Hall, 2010)
Frank Wood & Alan Sangster- Business Accounting 1 (10^th or 13^th edition)
www.aat.co.uk– The Association of AccountingTechnicians
www.frc.org.uk – The Financial Reporting Council
www.ft.com – The Financial Times
 

Report Format

 
 

• Use a standard business report
• Word process the report using Microsoft Word.
• Use 12 point Arial or Times New Roman script with 5 spacing.
• Use the APA referencing system.
• Complete the title page and sign the statement of authenticity.
• Submit a TurnItIn report with your assignment.