QUESTION 1: RECONCILIATIONS AND INTERNAL CONTROL. REQUIRED: 1.1.1 Calculate the correct Bank Account balance in the General Ledger. 1.1.2 Prepare the Bank Reconciliation Statement on 31 August 2024.

The initial balance in the General Ledger is unfavourable, meaning it's an overdraft. We adjust this balance for items that appeared on the bank statement but were not yet recorded in the cash book.

Initial Bank Account balance (General Ledger, unfavourable) = $R4\,140$

$$\text{Initial Balance (Cr)} = -R4\,140$$

Adjustments from Information C:

• Service fees: $R333$ (reduces cash book balance)
• Deposit for rent income: $R15\,570$ (increases cash book balance)
• Debit order for water and electricity: $R3\,150$ (reduces cash book balance)

$$\text{Corrected Bank Account Balance} = -R4\,140 - R333 + R15\,570 - R3\,150$$ $$\text{Corrected Bank Account Balance} = -R4\,473 + R15\,570 - R3\,150$$ $$\text{Corrected Bank Account Balance} = R11\,097 - R3\,150$$ $$\text{Corrected Bank Account Balance} = R7\,947$$

The correct Bank Account balance in the General Ledger is $\boxed{\text{R7 947}}$.

The question mark in Information E indicates that this value needs to be calculated. We will work backwards from the corrected cash book balance (calculated in Step 1) using the items that affect the bank reconciliation statement.

Let $X$ be the Balance as per Bank Statement on 26 August 2024.
Items for Bank Reconciliation Statement:

• Outstanding deposit of $R11\,106$ on 28 August 2024 (Information D): This was recorded in the cash book but not yet by the bank. It is added to the bank statement balance.
• Bank error regarding EFT payment to Simon Traders $R432$ (Information C): The bank reflected this payment twice in error. Since it was a payment (debit), the bank statement balance is understated by $R432$. To correct this, $R432$ is added back to the bank statement balance.
• Unpresented EFT no 827 on 31 August 2024 for $R2\,250$ for insurance (Information D): This was recorded in the cash book but not yet by the bank. It is deducted from the bank statement balance.

The Bank Reconciliation Statement reconciles to the Corrected Bank Account Balance of $R7\,947$.

$$X + R11\,106 + R432 - R2\,250 = R7\,947$$ $$X + R11\,538 - R2\,250 = R7\,947$$ $$X + R9\,288 = R7\,947$$ $$X = R7\,947 - R9\,288$$ $$X = -R1\,341$$

The Balance as per Bank Statement on 26 August 2024 was an unfavourable (overdraft) balance of $R1\,341$.

LUKE STORES
Bank Reconciliation Statement as at 31 August 2024

Description	Amount (R)
Balance as per Bank Statement (26 August 2024)	(1 341)
Add: Outstanding deposit (28 August 2024)	11 106
Add: Bank error (Simon Traders EFT recorded twice)	432
Less: Unpresented EFT (no 827, 31 August 2024)	(2 250)
Corrected Bank Balance	7 947