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What are deposits in transit in the context of bank reconciliation, and can you complete a bank account reconciliation table for Willie Willie?

Accounting

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Answer

D

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4 steps

here are the answers to the questions:

Part 10

A bank account holder brings together the bank reconciliation statement to identify and account for discrepancies between their cashbook balance and the bank's records. This process helps to find items that have been recorded by one party but not the other. Deposits that have been made by the business but are not yet shown on the bank statement (known as deposits in transit) are a common reconciling item that the account holder aims to identify.
The correct option is D. deposits that are not shown in the bank statement.

Part 11· 4 steps

The table provided is a record of the bank account for Willie Willie, showing receipts, payments, and the running balance. We will complete the table by calculating the missing values.

  1. Calculate the payment for the Electricity bill.

    The balance decreased from K890.00 to K790.00.

    Payment=Previous Balance−New Balance\text{Payment} = \text{Previous Balance} - \text{New Balance} Payment=K890.00−K790.00=K100.00\text{Payment} = \text{K}890.00 - \text{K}790.00 = \text{K}100.00

    So, the payment for the Electricity bill was K100.00.

  2. Infer the deposit amount and the balance after the deposit.

    The next transaction is a deposit. The balance after the deposit is partially visible as "00". The subsequent transaction is a payment to "Happy" which results in a final balance of "0". This implies that the payment to "Happy" was equal to the balance before it. Assuming a round number for the balance after deposit, if the balance was K900.00, then the deposit would be K110.00 (K900.00 - K790.00). This would make the payment to "Happy" K900.00 to bring the balance to K0.00.

  3. Calculate the deposit amount.

    Deposit Amount=Balance after Deposit−Balance before Deposit\text{Deposit Amount} = \text{Balance after Deposit} - \text{Balance before Deposit} Deposit Amount=K900.00−K790.00=K110.00\text{Deposit Amount} = \text{K}900.00 - \text{K}790.00 = \text{K}110.00

  4. Calculate the payment to "Happy".

    Since the final balance is K0.00, the payment to "Happy" must be equal to the balance before this payment.

    Payment to Happy=Balance before Payment=K900.00\text{Payment to Happy} = \text{Balance before Payment} = \text{K}900.00

    Here is the completed table:

    Record 1: Bank Account-Willie Willie

    DATEPARTICULARSREFRECEIPTS (K)PAYMENTS (K)BALANCE (K)
    November 1Balance B/Forward890.00
    2Electricity billCHQ 101100.00790.00
    3DepositDS1110.00900.00
    3HappyCHQ900.000.00

    The final balance in the bank account is K0.00\boxed{\text{K}0.00}.

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