Question

Mr. Aslam is running his small business under the name of Aslam and Sons. He has recently hired Mr. Anwar as a junior accountant to maintain the books of accounts of his business. Mr. Anwar has little knowledge in accounting and he is unable to prepare the Bank reconciliation statement and maintaining other necessary records. Recently, following causes of disagreement between bank column of cash book and business bank statement have been observed which was not reconciled by Mr. Anwar. Bank column of cash book showed a debit balance of Rs. 120,000.



Cheque of Rs. 16,000 issued but not presented yet.
Cheque of Rs. 38,000 deposited into the bank but not credited yet.


Further, he has not reported the provision for doubtful debts of Rs. 10,000 in financial statement at the end of accounting period. Reported net profit by Mr. Anwar in profit and loss account was Rs. 450,000.

Answer 1

Explanation:

Adjusted bank balance =120 000

(+) un presented cheque

cheque. 16000

_________

136000

(-) un realized cheque

cheque. (38000)

Bank balance as per _________

bankstatement. 98000

Net profit - bad debts

450 000. (10000) = 440 000