Bank Reconciliation and Inventory Valuation

The assignment consists of two questions. Question 1 involves preparing necessary adjustments in a bank book and drafting a bank reconciliation statement. Question 2 has three parts: determining the value of inventory to be recorded in a balance sheet, reconciling ledger balances with physical records, and preparing adjusting entries for Fashion Blue Limited.

Accounting

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................3
Preparing necessary adjustments in bank book and then draft bank reconciliation statement....3
QUESTION 2..................................................................................................................................4
a. Determining the value of inventory that should be recorded in balance sheet........................4
b. Reconciling ledger balance with physical record....................................................................4
c. Preparing adjusting entries in the books of Fashion Blue Limited..........................................4

QUESTION 1
Preparing necessary adjustments in bank book and then draft bank reconciliation statement
Corrected bank book
Particulars Figures (in £)
Add: bank charges 1700
Add: deposits 49200
Add: cash receipts deposited on July 1st 67213
Add: Re-dated cheque deposited on July 3 4200
Add: annual subscription 1000
Add: Mistakenly deposited by bank in
company’s account
10000
Add: hire purchase system 7800
Add: deposits mistakenly recorded twice 36400
Add: Overdraft interest 16718
Less: customer’s sales 19500
Less: cheque issued but not presented 467200
Less: Directly deposited by the customers 49000
Less: Directly deposited by the customers 15700
Bank book balance on 30th June (overdraft) 357169
Bank Reconciliation statement on 30Th June 2018
Particulars Figures (in £)
Bank book balance on 30th June (overdraft) 357169
Less: 85169
Bank Balance on 30th June (overdraft) 272000

QUESTION 2
a. Determining the value of inventory that should be recorded in balance sheet
Particulars Figure (in £)
Purchases 4100
Purchases 4000
Under-casted stock 900
Sales 19000
Purchase return 25000
Goods sold to Mr Hales 5460
Notes:
Goods held on the behalf of third party is not included in balance sheet
On the basis of above table, it can be stated that on 31st December 2018 amount of £8100
(4100 + 4000) needs to be shown in balance sheet.
b. Reconciling ledger balance with physical record
Particulars Amount (in £) Particulars Amount (in £)
To purchases a/c 4100
To purchases a/c 4000 To balance c/d 8100
c. Preparing adjusting entries in the books of Fashion Blue Limited
Particulars Debit (in £) Credit (in £)
Closing inventory a/cv Dr 8100
To Trading a/c 8100