**Problem Statement:** Mr Kizito has discrepancies between his bank statement and cash book balances as of June 2014. We need to: 1. Prepare an adjusted cash book balance as at 30 June 2014. 2. Prepare a bank reconciliation statement as at 30 June 2014. --- ### Part i: Adjusted Cash Book Balance 1. **Given:** - Cash book balance: Sh.2,366,500 - Bank charges not entered in cash book: Sh.3,000 (deduct) - Receipts not entered in cash book: Sh.26,500 (add) - Standing order payments not entered in cash book: Sh.62,000 (deduct) - Payment entered wrongly (Sh.79,400 instead of Sh.74,900): adjust by adding Sh.4,500 (79,400 - 74,900) because the cash book shows excess payment - Cheque from debtor returned "refer to drawer" and not corrected: deduct Sh.15,000 - Opening cash balance brought forward as debit instead of credit by Sh.329,250, so adjust by adding Sh.658,500 (double this balance) to correct - Old cheque written back in cash book but bank had honored it: deduct Sh.44,000 - Receipts wrongly entered in cash book but not credited by bank (see part ii), already included in cash book, so no adjustment here 2. **Calculation:** Adjusted cash book balance $$ = 2,366,500 - 3,000 + 26,500 - 62,000 + 4,500 - 15,000 + 658,500 - 44,000 $$ 3. **Simplify:** $$ = 2,366,500 - 3,000 + 26,500 - 62,000 + 4,500 - 15,000 + 658,500 - 44,000 = 2,366,500 - 3,000 + 26,500 - 62,000 + 4,500 - 15,000 + 658,500 - 44,000 = (2,366,500 - 3,000) + 26,500 - 62,000 + 4,500 - 15,000 + 658,500 - 44,000 = 2,363,500 + 26,500 - 62,000 + 4,500 - 15,000 + 658,500 - 44,000 = (2,363,500 + 26,500) - 62,000 + 4,500 - 15,000 + 658,500 - 44,000 = 2,390,000 - 62,000 + 4,500 - 15,000 + 658,500 - 44,000 = (2,390,000 - 62,000) + 4,500 - 15,000 + 658,500 - 44,000 = 2,328,000 + 4,500 - 15,000 + 658,500 - 44,000 = (2,328,000 + 4,500) - 15,000 + 658,500 - 44,000 = 2,332,500 - 15,000 + 658,500 - 44,000 = (2,332,500 - 15,000) + 658,500 - 44,000 = 2,317,500 + 658,500 - 44,000 = (2,317,500 + 658,500) - 44,000 = 2,976,000 - 44,000 = 2,932,000 $$ **Adjusted cash book balance = Sh.2,932,000** --- ### Part ii: Bank Reconciliation Statement as at 30 June 2014 1. **Starting point:** Bank statement balance at 30 June 2014 = Sh.706,500 2. **Add:** - Cheques drawn but not yet presented: Sh.22,500 3. **Less:** - Receipts paid into bank but not yet credited by bank: Sh.98,500 - Customer deposits credited to another customer’s account by bank: Sh.832,500 4. **Bank reconciliation calculation:** $$ Adjusted bank balance = 706,500 + 22,500 - 98,500 - 832,500 = 706,500 + 22,500 - 931,000 = 729,000 - 931,000 = -202,000 $$ 5. **However, also consider:** - Receipts entered in cash book of Sh.832,500 (already included in cash book but not bank) 6. **Reconciliation statement format:** \begin{align*} \text{Bank balance as per statement} &= 706,500 \\ \text{Add: Cheques not yet presented} &= 22,500 \\ \text{Less: Receipts not credited by bank} &= 98,500 \\ \text{Less: Deposits credited to another customer's account} &= 832,500 \\ \hline \text{Adjusted bank balance} &= 706,500 + 22,500 - 98,500 - 832,500 = -202,000 \end{align*} --- ### Final answers: - Adjusted cash book balance = Sh.2,932,000 - Adjusted bank statement balance (per reconciliation) = Sh.-202,000 This negative bank balance indicates the bank statement does not reflect these transactions properly, and the reconciliation helps identify these differences.