Neco 2022 Financial Accounting Question 6

Alpha Traders uses a three‑column cash book (cash, bank and discounts) for the month of January 2024. The opening cash balance on 1 January was N50,000 and the opening bank balance was N120,000. The following transactions were recorded: 1. 3 Jan – Cash sales of N45,000, discount allowed 2% on cash sales. 2. 5 Jan – Cash purchase of inventory for N22,000, discount received 1%. 3. 8 Jan – Paid N15,000 cash for rent. 4. 12 Jan – Received cash from a customer for a previous credit sale, amount N30,000 (recorded as a credit entry by mistake). 5. 15 Jan – Bank withdrawal of N40,000 for office equipment. 6. 18 Jan – Loan repayment of N25,000 via bank. 7. 20 Jan – Interest on bank overdraft charged N2,500 (recorded on the debit side). 8. 25 Jan – Cash received from sale of old furniture N8,000, discount allowed 5%. 9. 28 Jan – Paid electricity bill N6,000 by cash, discount received 2%. The bank statement at 31 January shows a closing balance of N55,000. Outstanding checks amount to N12,000 and deposits in transit total N18,000. Answer the following: (a) Identify the posting error in the cash book and correct it. (b) Prepare the corrected cash book showing the closing cash and bank balances. (c) Prepare a bank reconciliation statement for 31 January 2024.