Neco 2018 Financial Accounting Question 7

A manufacturing firm maintains a cash book that is periodically reconciled with its bank statement. The following information is available for the month ended 31 March 2026: - Cash book (bank column) balance on 31 March: ₦ 452,300 - Bank statement balance on 31 March: ₦ 468,750 - Deposits in transit at 31 March: ₦ 23,400 - Outstanding cheques (not yet presented to the bank): Cheque No. 315 for ₦ 12,800 and Cheque No. 318 for ₦ 7,600 - Bank charged a monthly service fee of ₦ 1,250 which was not recorded in the cash book. - The bank collected a note receivable on behalf of the firm for ₦ 15,600 and credited the amount to the firm's account. - A customer’s cheque of ₦ 9,500 was returned unpaid (NSF) and the bank deducted it from the statement balance. - The bank made an error by crediting ₦ 4,200 to the firm's account that actually belongs to another customer. Using the above information, answer the following: a) Prepare a bank reconciliation statement showing the adjusted cash book balance. b) Compute the corrected cash book balance after all adjustments have been made. c) Briefly explain two reasons why regular bank reconciliation is essential for a business.