11 Cash and cash equivalents

E 11.1
The following is an extract from the records of M Thatcher from East London.
Bank reconciliation statement as at 30 April 20.5
Debit Credit
R R
Balance per bank statement 1 080
Outstanding cheques: No. 386 111
391 6 200
403 139
Deposit not credited yet 2 120
Balance per bank account 5 410
R7 530 R7 530
Bank statement received from Bak Bank Ltd on 2 June 20.5

Date Cheque no., etc Debits Receipts Balance

Apr 30 1 080 od
May 1 2 120+ 1 040
2 413 307– 733
4 414 64– 210+ 879
4 DO 532– 347
7 418 68– 279
7 3 756+ 4 035
12 416 160– 3 875
12 CB 2– 3 873
13 419 112– 3 761
15 421 157– 3 604
15 BC 23– 3 581
15 475+ 4 056
17 UC 80– 3 976
19 391 6 200– 2 224 od
20 425 173– 2 397 od
21 427 200– 2 597 od
21 CO 4– 2 000+ 601 od
25 423 624– 1 225 od
26 426 288– 1 513 od
27 424 700– 2 213 od
28 420 11– 3 756+ 1 532
29 IN 190– 1 342
30 900+ 2 242
Explanation of abbreviations:
DO – debit order CO – commission CB – cheque book

BC – bank charges EC – error corrected UC – unpaid cheque

S – sundries IN – interest

Cash receipts journal

20.5 Bank
May 7 Sales and VAT 3 756
15 Sundry receivables 475
21 Sales and VAT 2 000
28 Sales and VAT 3 756
30 Sales and sundry receivables 3 200
R13 187

Cash payments journal

20.5 Cheque no Bank
May 1 Advertising and VAT 413 370
2 Rent and VAT 414 64
2 Telephone and VAT 415 27
3 E Heath (Payable) 416 160
4 Petty cash 417 90
5 Maintenance (vehicle) and VAT 418 68
8 Office equipment and VAT 419 112
10 Stationery and VAT 420 11
14 Purchases and VAT 421 157
15 M Steyn (payable) 422 100
18 Purchases and VAT 423 624
19 Property rates 424 700
19 Donation 425 173
20 Purchases and VAT 426 288
21 Wages 427 200
28 Salaries 428 1 200
R4 344

Additional information
1 The unpaid cheque was originally received from a receivable, H Wilson.
2 The debit order is in respect of an annual insurance premium payable by the entity and includes VAT.
3 The credit on 30 May 20.5 represents a bill collected by the bank on behalf of the entity.
4 The amount of cheque no. 413 on the bank statement corresponds with the amount on the cheque stub.
5 The credit on 4 May is a faulty entry in the bank statement.
Required
Reconcile the balance of M Thatcher’s bank account as at 31 May 20.5 with the balance of the bank statement.
E 11.2
Cannot Struggle presented the following information:
1 Bank reconciliation statement on 31 December 20.1
R
Outstanding cheques: No. 101 400,00
106 550,00
107 160,30
108 240,00
110 10,50
Outstanding deposit 840,00
2 The balance of the bank account in the ledger on 31 December 20.1 was
overdrawn by 640,00
3 Totals for January 20.2
Cash payments journal 4 600,00
Cash receipts journal 8 120,00
4 According to the bank statement the following were not recognised in the cash
journals:
4.1 Bank charges 62,50
4.2 Interest on overdraft 33,20
4.3 Cheque received from P Botha and deposited in the bank during November 20.1, dishonoured (the entry
regarding the deposit of the cheque was posted to the ledger) 318,00
4.4 Cheque no. 0042 drawn by P Botes for (debit in the bank statement) 118,00
4.5 Stop order in favour of Safe Insurers for 140,00
(This amount represents the annual insurance premium and includes VAT.)
4.6 Cheque received from P Steyn, dishonoured. 90,00
4.7 Cheque no. 125 for 400,00
5 The following items do not appear on the bank statement:
R
Cheque no. 101 400,00
106 550,00
125 40,00
126 141,50
127 254,00
Deposit made on 30 January 20.2 for R284,00.
Cheque no. 101 was drawn on 15 July 20.1 to pay a bill in favour of R Lourens.
According to the cheque stub, cheque no. 125 was drawn for R400 in respect of cash purchases inclusive of VAT.
Required
(a) Prepare the bank account in the ledger.
(b) Prepare the bank reconciliation statement to determine the balance according to the bank statement on 31 January
20.2.
E 11.3
A Botha compared his cash book with the bank statement on 30 June 20.0 and found that the following three cheques
were not cashed:
Cheque no. Date drawn Amount
104 3 January 20.0 R400
110 20 March 20.0 R200
111 20 March 20.0 R150
The following is presented to you and you are requested by Mr A Botha to reconcile his cash book with the bank
statement.
Cash book for July 20.0
R Cheque R
July 1 Balance b/f 4 300 120 1 Purchases and VAT 250
5 Sales and VAT 500 121 6 Interest expense 55
7 Sales and VAT 320 122 9 P Louw 410
9 P Botha 140 123 15 Salaries 125
20 Sales and VAT 1 400 124 18 Water and electricity
28 Rent and VAT 100 and VAT 80
125 23 Insurance and VAT 110
126 24 Purchases and VAT 350
127 30 Purchases and VAT 95
R6 760 R1 475

Bank statement for July 20.0

Debit Credit Balance
R R R
July 1 Balance b/f 5 050
3 Cheque 120 250 4 800
Cheque 111 150 4 650
5 Deposit 500 5 150
9 Cheque 122 310 4 840
Ledger fees 5 4 835
Deposit 320 5 155
Deposit 140 5 295
16 Cheque 123 125 5 170
20 Deposit 1 400 6 570
Cheque 125 110 6 460
24 Deposit 168 6 628
30 Cheque 127 95 6 533
Cheque 121 55 6 478
Commission 3 6 475
S/O (X Insurers: Insurance) 123 6 352
You also determine that:
1 According to the cheque stub cheque 122 was drawn for R410.
2 The deposit of 24 July for R168 was a deposit by a receivable, P Pienaar.
3 Cheque 104 was issued to A Louw, a payable.

Required:
(a) Complete the bank account in the ledger.
(b) Prepare a bank reconciliation statement as at 31 July 20.0.
E 11.4 22 Minutes
The following information was obtained from the records of SJV on 31 March 20.3:
Bank reconciliation statement on 28 February 20.3
R
Balance per bank statement 12 200
Add: Outstanding deposit 2 100
14 300
Less: Outstanding cheques No. 100 2 200
No. 106 740
No. 109 540 (3 480)
R10 820

Cash book for March 20.3

Date Details Amount Cheque Date Details Amount
3 Sales and VAT 3 700 110 3 Water and electricity
4 H Stone 2 400 and VAT 400
10 Deposit 3 100 111 4 P Steyn 21 100
15 Sales and VAT 850 112 9 K Jooste 350
30 Deposit 1 670 113 10 Purchases and VAT 2 700
114 12 Salaries 4 200
115 Donation 500
116 20 Purchases and VAT 3 150
118 J Louw 600
Pencil total 11 720 Pencil total 33 000

Bank statement for March 20.3

Debit Credit Balance
R R R
1 Balance 12 200 Cr
4 Cheque 111 21 100 8 900 Dr
Deposit 3 700 5 200 Dr
Deposit 2 100 3 100 Dr
5 Deposit 2 400 700 Dr
Service fee 60 760 Dr
Debit order 1 400 2 160 Dr
10 Cheque 113 2 070 4 230 Dr
Cheque 110 400 4 630 Dr
Deposit 3 100 1 530 Dr
Cheque 112 530 2 060 Dr
Cheque 614 2 180 4 240 Dr
Cheque book 20 4 260 Dr
Cheque 109 540 4 800 Dr
Service fee 100 4 900 Dr
12 Cheque 115 500 5 400 Dr
15 Deposit 850 4 550 Dr
20 Cheque 118 600 5 150 Dr
Deposit 4 050 1 100 Dr

Additional information
1 Cheque 100 was drawn on 15 September 20.2 to pay a payable.
2 SJV signed a debit order for the monthly instalment on his motor vehicle bought from Fast Motors.
3 Cheque 614 was not drawn by SJV.
4 According to the paid cheques, cheque 112 was drawn for R350 and cheque 113 was drawn for R2 070.
5 A receivable deposited the amount of R4 050 owed by him directly into SJV’s bank account.

Required
(a) Complete the cash book for March 20.3 by starting with the pencil totals.
(b) Prepare the bank reconciliation statement as at 31 March 20.3.
E 11.5 16 Minutes
The following information is obtained from the bank statement and cash journals of BMY Traders for the two months
ended 30 April and 31 May 20.5.
R
April journals
Cash payments journal 1 800
Cash receipts journal 2 050
May journals
Cash payments journal 2 100
Cash receipts journal 2 200
Bank statement details
In respect of cheques drawn in April
Cheques cashed in April 1 500
Cheques cashed in May 180
Cheques not presented for payment 120
In respect of cheques drawn in May
Cheques cashed in May 1 700
Cheques not presented for payment 400
In respect of April deposits
Deposits credited by the bank in April 1 700
Deposits credited by the bank in May 350
In respect of May deposits
Deposits credited by the bank in May 1 950
Deposits credited by the bank in June 250
Bank charges
Debited by the bank in April 50
Debited by the bank in May 75
A cheque for R85 by BMZ Traders is cashed by the bank and debited against the account of BMY Traders. This error is
corrected in May.
On 1 April 20.5 the balance per bank statement was equal as the balance per cashbook.
The favourable balance per bank statement on 30 April 20.5 was R280.

Required
(a) Calculate the balance per bank statement on 31 May 20.5.
(b) Prepare the bank reconciliation statement as at 31 May 20.5.
E 11.6 46 Minutes
The following information was obtained from the financial records of Patria Traders
The totals of the receipts and payments journal until 27 February 20.3 were as follows:
Receipts journal
Bills Sales Receivables VAT Sundries Bank
receivable control output
R R R R R R
Total 400 4 261 40 6 200 10 901

Payments journal
Purchases Receivables Payables VAT Sundries Bank
control control input
R R R R R R
Total 3 600 5 800 360 344 10 104

Transactions on 28 February 20.3:

1 A fixed deposit of R5 000 invested at Rand Bank had expired. The bank notified Patria Traders that this amount,
including interest at 15% per year for six months, was paid into the entity’s bank account on 26 February. The
entry has, however, not yet been recognised in the cash receipts journal. Patria Traders decided to transfer the
entire amount received to a savings account at Rand Bank, and issued cheque no. 813 for this purpose.
2 Paid by cheque 814 for repairs to the building, R513.
3 Received R228 cash from A van Zyl in settlement of a debt, previously written off as irrecoverable.
4 Paid R1 500 by cheque 815 to Rand Motors as an instalment on a motor vehicle bought on credit.
5 Paid Big Traders by cheque 816 for the following:
Merchandise R6 000, (10% trade discount plus 14% VAT must still be taken into account) and packing material,
R150 (14% VAT must still be taken into account).
6 Received a cheque for R120 from R Roux to redeem his bill on the expiry date.
7 Cash sales of merchandise, R600 plus 14% VAT.
8 Received W Weideman’s cheque for R1 134.
Deposit all the cash on hand.
Additional information
A comparison of the cash receipts and the cash payments journal with the bank statement on 28 February 20.3
revealed the following differences:
1 Favourable bank balance according to cash book on 1 February 20.3, R3 108. Overdraft bank balance according to
statement on 28 February 20.3, R2 154.
2 The bank debited Patria Traders with the following amounts:
l Interest on bank overdraft, R65.
l Dishonoured cheque, R850 (the cheque was drawn by S Smalberger and deposited on 15 January).
l Debit order for insurance premium, beneficiary Multi Insurers, R342 (included 14% VAT).
l Bank charges, R57.
l Cheque 8124, drawer Donat General Dealer, R270.
3 The deposit of 28 February does not appear in the bank statement.
4 A deposit of R880 in the bank statement is in respect of rent paid into Patria Trader’s account, instead of the
owner’s private bank account.
5 A list of outstanding cheques was compiled on 28 February. The total amounted to R2 985 and included a cheque
of R505 dated 15 January which already appeared in the bank reconciliation statement of 31 January 20.3.

Required
(a) Recognised the transactions in the receipts and payments journal on 28 February 20.3. Note: All cash is banked
daily and all payments are made by cheque.
(b) Prepare the bank account and balance it.
(c) Prepare the bank reconciliation statement as at 28 February 20.3.
Note: Patria Traders is registered for VAT purposes.
E 11.7 21 Minutes
The following is a summary of the cash book of Govendor Distribution for May 20.8:
Summary of the cash book for May 20.8
Deposit 3 860 Balance b/f 1 450
Deposit 4 230 Cheque no. 1105 168
Deposit 1 268 1106 3 402
Deposit 2 431 1107 680
Deposit 1 537 1108 1 138
1109 45
1110 940
1111 1 736
31 Balance c/f 3 767
R13 326 R13 326

The following is the bank statement of Govender Distributors for May 20.8:
Debit Credit Balance
R R R
1 Balance 1 063 (1 063)
Deposit 3 860 2 797
Cheque 1101 142 2 655
Cheque (RD) 50 2 605
Deposit 4 230 6 835
Cheque 1105 168 6 667
Cheque 1107 680 5 987
Deposit 195 6 182
Deposit 1 286 7 468
Cheque 303 420 7 048
Cheque 1109 45 7 003
D/O 210 6 793
Cheque 1110 940 5 853
Deposit 2 431 8 284
Bank charges 68 8 216
Interest paid 167 8 049
D/O – Debit order
RD – Return to drawer

Additional information
1 Cheque 1099 issued in April 20.8 for R245 was not cashed on 31 May 20.8.
2 All the entries in the cash book are correct.
3 The debit order is in respect of insurance on the imported motor of the wife of Mr Govender.
4 The dishonoured cheque was in respect of cash sales. The drawer of the cheque has agreed to settle the amount in
cash.
5 The deposit of R195 on the bank statement was paid directly into the account by L Vermaak.
6 Cheque 303 was drawn by Mr Govender on his personal account.

Required
(a) Prepare a supplementary cash book for May 20.8.
(b) Reconcile the bank statement balance with the cash book balance as at 31 May 20.8. Govender Distributors is
registered for VAT purposes.
E 11.8 18 Minutes
On 31 May 20.1 the cash book of Lawlay Traders was overdrawn by R673.
l The following cheques were not yet presented to the bank for payment:
No. 202 R509 in favour of A Botha, a payable (drawn on 15 November 20.0).
No. 455 R103 in respect of cash purchases.
No. 458 R303 in respect of salaries.
No. 465 R488 in respect of advertising.
A deposit of R289, received from a receivable and deposited, does not appear on the bank statement.
The following items on the bank statement do not appear in the cash book: bank charges, R25, ledger fees, R35,
interest on overdraft, R75.
Cheque no. 1456 for R555, drawn by Lawlay Manufacturers, is debited against the account of Lawlay Traders.
A cheque received from a receivable, P du Plessis, for R420 is returned ‘Refer to Drawer’ by the bank. No entry in
this regard has been made in the cashbook. P du Plessis sent a new cheque, dated 15 June 20.1, for the amount
payable.
Cheque no. 444 for R660 appears in the bank statement as R66.

Required
(a) Prepare the supplementary cash book for May 20.1.
(b) Prepare the bank reconciliation statement as at 31 May 20.1 to calculate the balance of the bank statement.
Lawlay Traders is registered for VAT purposes.