Part B Question 1: Accounting for Current Assets The balance of S11,318 D (65 ma
ID: 2407228 • Letter: P
Question
Part B Question 1: Accounting for Current Assets The balance of S11,318 D (65 marks) (15 marks) Ltd's bank statement for the month of December showed a balance De Lange hoak of $14,000 CR. The company's Cash account in the general ledger had a R at 30 November. Other information is as follows: ber recorded on the company's books were $10,400 but Cash receipts for 31 Decem this amount does not appear on the (1) bank statement. debit for $80 for cheque printing charges. (2) The bank statement shows a No 119 payable to Black Company was recorded in the cash payments (3) Cucleared the bank for S496. A review of the accounts payable subsidiary jou mal and ledger shows a debit entry for $946. (4) The total amount of cheques still outstanding at 31 December amounted to $11,600. ue No. 138 was correctly recorded by the bank for $818. The cash payment reflects an entry for Cheque No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $980. (6) The bank returned a dishonoured cheque from a customer for $1,120. (7) The bank included a credit for $2,520, which represents collection of a customer's note by the bank for the company; principal amount of the note was $2,400 and interest was $120. Interest has not been accrued. Required: (a) Prepare the bank reconciliation statement for De Lange Ltd at 31 December 4 marks) (b) Prepare the cash at bank ledger account for De Lange Ltd at 31 December 6 marks) (5 marks) (c) Describe the five basic principles of cash managementExplanation / Answer
Solution a:
Solution b:
Solution c:
The five basic principles of cash management are the following:
1. Eeduce receivable or average collection period.
2. manage inventory levels
3. Increase average payment period
4. Plan major expenses
5. Invest excess or idle cash
De Lange Ltd Bank Reconciliation - November 30 Bank's Cash balance Company's cash balance Particulars Amount Particulars Amount Ending balance as per Bank Statements $14,000.00 Ending Balance as per cash books $11,318.00 Additions: Additions: Outstanding cash receipt $10,400.00 Incorrect recording of cheque no 138 $162.00 Note collected by bank $2,520.00 Deductions: Deductions: Outstanding Checks $11,600.00 NSF Cheque $1,120.00 Cheque printing charges $80.00 Up to date cash balance as per bank $12,800.00 Up to date cash balance as per books $12,800.00