Eniola matched her bank statement for July 2020 with the bank columns in her cash book and supplied the details below.
Overdrawn balance shown in the cash book at 31 July 2020 $3420
Direct debit payment dated 25 July 2020, not yet entered in the cash book $350
A cheque received from a customer on 12 July 2020 was dishonoured. This dishonoured cheque had still not been recorded in the cash book $665
Bank charges appearing on the bank statement had not yet been entered in the cash book $45
Unpresented cheques at 31 July 2020 $1290
Uncredited deposits at 31 July 2020 $410
Eniola is worried that her bank balance has fallen sharply over the last year. She is considering ways to improve her liquidity.
Eniola’s financial year end is 31 July 2020. She provided the following details about the rent and rates of her business.
On 1 August 2019, she owed two months’ rent totalling $900. On the same date, rates of $260 were prepaid up to 30 September 2019.
During the year ended 31 July 2020 the following payments were made by credit transfer.
2019 August 1 Seven months’ rent $3150
October 1 Twelve months’ rates $1860
2020 March 1 Six months’ rent $2700
(a)[4]
Calculate the adjusted balance in the bank columns of the cash book at 31 July 2020.
(b)[4]
Prepare a bank reconciliation statement for 31 July 2020 and make the bank statement balance at that date clear.
(c(i))[1]
Suggest one effect of hiring new non-current assets instead of buying them.
(c(ii))[1]
Suggest one effect of delaying payment to credit suppliers.
(d)[6]
Prepare the rent and rates account for the year ended 31 July 2020, balance it, and bring the balances down on 1 August 2020.
(e)[2]
Identify which sections of the statement of financial position at 31 July 2020 would contain each balance from the rent and rates account.
(f(i))[1]
Name one accounting principle Eniola would apply when recording the rent and rates in her financial statements.
(f(ii))[1]
State how Eniola would apply the accounting principle named in (f)(i).