Neco 2019 Financial Accounting Question 7

The cash book of XYZ Ltd shows a cash balance of ₦1,250,000 as at 30 June 2024. The bank statement for the same date shows a balance of ₦1,100,000. The following information is available: - Outstanding cheques not yet cleared: ₦80,000 (Cheque No. 102) and ₦45,000 (Cheque No. 103). - Deposits in transit (cash deposited on 28 June but not yet reflected by the bank): ₦60,000. - Bank service charges shown on the statement: ₦5,000 (not yet recorded in the cash book). - Interest earned and credited by the bank: ₦3,000 (not yet recorded in the cash book). - A customer's cheque of ₦25,000 was returned unpaid (dishonoured) by the bank and has not been entered in the cash book. - The bank mistakenly credited ₦12,000 to XYZ Ltd’s account that actually belongs to another customer; the error was discovered during reconciliation. Using the above data, answer the following: a) List all adjustments that must be made to the cash book and to the bank statement in order to reconcile the two balances. b) Prepare a bank reconciliation statement and compute the adjusted cash book balance. c) Explain how the bank error (the ₦12,000 mis‑credit) and the dishonoured cheque affect the cash book balance and the bank statement balance. d) Recommend two internal control measures that could help minimise such discrepancies in future.