QUESTION 3 Mr. Emeka Obi is the sole proprietor of Obi Supermart, a retail business located in Enugu. He has just employed a new bookkeeper, Miss Chidinma, who has little experience with bank reconciliation. At the end of February 2024, Miss Chidinma prepared the following cash book and bank statement but could not reconcile the two balances: CASH BOOK (Bank Column) – February 2024 Dr N Cr N Balance b/d 52,400 Payments to suppliers 31,200 Receipts from sales 48,600 Salaries 18,500 Receipts from debtors 22,100 Utilities 4,300 Refund from supplier 3,500 Drawings 10,000 Balance c/d 62,600 ------- ------- 126,600 126,600 ======= ======= Balance b/d 62,600 BANK STATEMENT – February 2024 (Provided by Heritage Bank Plc) Date Details Debit(N) Credit(N) Balance(N) 01/02/24 Balance b/f 48,900 Cr 05/02/24 Cheque deposits 48,600 97,500 Cr 08/02/24 Cheque 001 – Suppliers 31,200 66,300 Cr 12/02/24 Direct credit – Debtors 22,100 88,400 Cr 15/02/24 NIBSS transfer – Salaries 18,500 69,900 Cr 18/02/24 Cheque 002 – Utilities 4,300 65,600 Cr 20/02/24 Standing order – Insurance 6,200 59,400 Cr 22/02/24 Bank charges 850 58,550 Cr 25/02/24 Cheque 003 – Drawings 10,000 48,550 Cr 28/02/24 Interest on deposit 1,200 49,750 Cr 28/02/24 Balance c/f 49,750 Cr Upon investigation, the following additional information was discovered: (i) The opening balance in the cash book of N52,400 does not agree with the opening bank statement balance of N48,900. The difference of N3,500 represents cheques issued in January 2024 that were not presented to the bank until February 2024. (These cheques were presented and cleared in February as shown on the bank statement — Cheque 001 for N31,200 includes this N3,500 clearing. NOTE: Treat opening balance difference as unpresented cheques from prior period now cleared.) (ii) The refund from supplier of N3,500 recorded in the cash book has not yet appeared on the bank statement (it was deposited on 28 February 2024 but not credited by the bank until March 2024). (iii) The standing order for insurance of N6,200 and bank charges of N850 have not been recorded in the cash book. (iv) Interest on deposit of N1,200 credited by the bank has not been recorded in the cash book. Required: (a) Identify and explain FIVE differences that can arise between a cash book balance and a bank statement balance, using examples from the scenario above where applicable. (10 marks) (b) Prepare an updated cash book for Obi Supermart for February 2024, incorporating all necessary adjustments. (6 marks) (c) Prepare a bank reconciliation statement as at 28 February 2024, starting with the bank statement balance and reconciling to the updated cash book balance. (4 marks) Total: 20 marks