Eniola matched the July 2020 bank statement with the bank columns in her cash book and gave the following details.
Overdrawn balance shown in the cash book at 31 July 2020 $3420
Direct debit payment dated 25 July 2020, had not yet been entered in the cash book $350
A cheque received from a customer on 12 July 2020 was dishonoured. This dishonoured cheque had not yet been recorded in the cash book $665
Bank charges 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 a great deal over the past year. She is thinking about ways to improve her liquidity.
Eniola’s financial year end is 31 July 2020. She gave the following information 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 of the bank columns in the cash book at 31 July 2020.
(b)[4]
Prepare a bank reconciliation statement at 31 July 2020. Clearly show the bank statement balance on that date.
(c(i))[1]
Suggest one effect of hiring new non-current assets instead of purchasing them.
(c(ii))[1]
Suggest one effect of delaying paying credit suppliers.
(d)[6]
Prepare the rent and rates account for the year ended 31 July 2020. Balance the account and bring down the balances on 1 August 2020.
(e)[2]
Identify the sections of the statement of financial position at 31 July 2020 in which each of the balances on the rent and rates account would appear.
(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).