GRADE 12

ACCOUNTING

PAPER 2

BANK RECONCILIATION

2022

1
Reconciling the Cash Receipts and Cash Payments Journals with the business
account at a Bank is significant because:
• The Bank Reconciliation Statement serves as an important tool for the internal
control of transactions between an individual person or business owner and
his / her bank
• It confirms the accuracy of all transactions recorded in the cash journals and
the balance in the bank account, because these transactions are checked to a
bank statement, which is a document that is prepared by the bank
independently of the business and its staff.
• It also enables a business or individual to keep track of and manage:
❑ receipts and deposits
❑ cash withdrawals
❑ investments and savings
❑ bank charges/service fees
❑ electronic transfers/payments made by a business/person
❑ electronic transfers/direct deposits made in favour of a business/person
❑ debit orders
❑ credit card purchases and settlements
❑ debit card purchases
❑ interest on overdrafts
❑ interest earned
❑ errors in the books or the bank statement.
• It provides accurate figures which are essential in making short- and long-
term forecasting. Verified information in the bank statement enables more
reliable forecasts to be made.
• The bank account balance is kept up to date with information from the bank
statement resulting in a realistic and true bank balance.

RECONCILIATION PROCEDURES IN A TRADING OR BUSINESS CONTEXT:

2
WORKED ACTIVITY 1
Study the items given below and indicate where you will record each item by placing
an ‘X’ in the Cash Journal or No entry column. Use a ‘+’ or ‘-’sign for the Bank
Reconciliation column. The first one has been done for you.

3
WORKED ACTIVITY 2
Bank Reconciliation & internal control
You are provided with information relating to Rayno Products (Pty) Ltd. The business
receives its official bank statements on the 25th day of each month. The owner, Rayno Cele,
has negotiated a large overdraft with his bank.
Required:
1.1 The owner notices on the website of the bank that accountholders should be vigilant
about their bank accounts being ‘hacked’.

• Explain what is meant by ‘hacking’ and how accountholders can protect them-
selves against this crime.
• Explain the circumstances under which banks would probably be prepared to
refund accountholders if they incur a loss through ‘hacking’.
1.2 Calculate the correct bank balance in the ledger on 30 June 20.5.
1.3 Prepare the Bank Reconciliation Statement on 30 June 20.5.
1.4 Explain why the internal auditor would be concerned about the following evidence, and
what action he or the owner should take. The bookkeeper had recorded the following
entry in CRJ on 30 June 20.5.

Doc Date Details Analysis Bank Sales

CS977–986 30 June Cash R44 620 R44 620 R44 620

The internal auditor has noticed that cash slips, CS977–986, actually total R69 620.
Information:
(a) Before completing the reconciliation for June 20.5, the bookkeeper calculated the
balance on the bank account in the business’ ledger to be an overdraft of R74 810.
However, the bank statement for June 20.5 reflected an unfavourable closing balance of
R129 650.
(b) The following Bank Reconciliation Statement was prepared on 31 May 20.5:

4
5
Suggested solutions
WORKED ACTIVITY 1

WORKED ACTIVITY 2

1.1 Explain what is meant by ‘hacking’ and how accountholders can protect
themselves against this crime.

6
1.2 Calculate the correct bank balance in the ledger on 30 June 20.5.

1.3 BANK RECONCILIATION STATEMENT AT 30 JUNE 20.5

1.4 Explain why the internal auditor would be concerned about the evidence provided, and
what action he or the owner should take.

7
ACTIVITY 1
EASTERN CAPE 2022 PRELIMS

8
9
ACTIVITY 2
FREE STATE 2022 PRELIMS

1.2 MASALA TRADERS

The information relates to June 2022. The business receives its official
bank statements on the 25th day of each month.

REQUIRED:

1.2.1 • Complete the CRJ and CPJ on 30 June 2022. (11)

• Calculate the correct bank balance in the ledger on

30 June 2022. Indicate whether the balance is favourable or
unfavourable. (5)
1.2.2 Prepare the Bank Reconciliation Statement on 30 June 2022. (9)
1.2.3 See Information H: Explain why the internal auditor would be
concerned (provide figures) and what action he or the owner
should take. (4)

10
INFORMATION:

A. The following Bank Reconciliation Statement was prepared on

31 May 2022:
DEBIT CREDIT
R R
Balance as per Bank Statement 87 150
Outstanding deposit
(from cash sales; dated 31 May 2022) 31 600
Outstanding EFT (no. 555) 16 850
Correction of error 22 700
Balance as per bank account 49 700
104 000 104 000

B. Provisional totals on 30 June 2022:

CRJ: R47 220 CPJ: R97 860

C. When comparing the May reconciliation statement to the

June 2022 bank statement, the following was noticed:
(i) The outstanding EFT no. 555, outstanding deposit, and
correction
of the error of were correctly reflected on the June bank
statement.
D. The following items on the June 2022 bank statement did not
appear in the June Cash Journals:

• EFT received from KZN Promotions for commission earned,

R36 400.
• Monthly debit order in favour of Far Call for cell-phone charges,
R2 800.
• A deposit of R23 000 appeared in the current account of
Masala Traders on 24 June 2022. The deposit has been identified
as an error made by the bank. The bank has agreed to correct the
error on the July bank statement.
• Cash deposit fees, R1 250.
• Service fees, R880.
• Interest on a debit balance, R2 160
• A debit card entry to withdraw cash for wages of R11 000 was
recorded on the statement.
• A debit order for R10 570 dated 24 June 2022; in favour of
Vodacell for cell-phone purchases. Masala Traders did not deal
with this service provider and informed the bank immediately. The
bank agreed to rectify this entry on the July 2022 bank statement.

11
 E. Differences noticed when journals and June’s bank statement
were compared:

• An EFT of R15 300 was recorded in the CPJ with an incorrect

beneficiary. The bank will rectify this on the next statement.
Correct the error.
• Credit card sales appear on the bank statement as R32 300, but
in the CRJ as R23 200. The bank statement is correct. Correct
the error.
F. Items in the journals but not in the June bank statement:
• EFT no. 633 for R24 800 dated 30 June 2022 in the CPJ.
• Cash deposit of R34 620 dated 30 June 2022 for sales (CS977-
986's) in the CRJ.
G. The June 2022 bank statement reflected a balance of R?

H. In July 2022, the internal auditor discovered that CS977-986's actual

total was R44 620. The entry in the CRJ was as follows:

Doc Date Details Analysis Bank

CS977–986 30 June Cash R34 620 R34 620

1.2.1 COMPLETE THE CRJ AND CPJ:

Cash Receipts Journal Cash Payments Journal
(figures only) (figures only)

11
Bank balance on 30 June 2022:

12
1.2.2 Prepare the Bank Reconciliation Statement on 30 June 2022
Debit Credit

1.2.3 Refer to Information H.

Explain why the internal auditor would be concerned and what actions
should be taken. Provide TWO points.
Problem

Action

ACTIVITY 3
GAUTENG 2022 PRELIMS
1.1 BANK RECONCILIATION

BUHLE STORES

The following information relates to Buhle Stores for May 2022.

REQUIRED:

1.1.1 Calculate the correct totals in the cash journals on 31 May 2022. (10)

1.1.2 Calculate the correct balance of the bank account on 31 May 2022. (5)

1.1.3 Prepare the Bank Reconciliation Statement on 31 May 2022. (7)

13
1.1.4 Mr Pooh Paddy is the finance clerk at Buhle Stores. He has been responsible
for all finance activities by himself since the inception of the store. He made
several mistakes and the owner has not taken any action. As the internal
auditor of Buhle Stores you are not happy with the control of cash in this
business. (3)

• Explain ONE problem to confirm your concern. Quote figures.

• Give advice on how the problem can be avoided in future.

INFORMATION:

A Extract from the Bank Reconciliation Statement on 30 April 2022

Balance as per bank statement (R36 294)

Outstanding cash deposits:
Dated 15 April 2022 12 080
Dated 30 April 2022 21 640
Outstanding EFTs:
431 (dated 29 April 2022) (13 800)
435 (dated 30 April 2022) (17 900)
Balance as per bank account ?

B Provisional totals in the cash journals on 30 April 2022 before receiving the bank
statement:
• Cash Receipts Journal: R60 334
• Cash Payment Journal: R34 865
C Entries in the Cash Journals for May 2022 that do not agree with the May Bank
Statement.

JOURNAL DOCUMENT DATE DETAILS AMOUNT

CRJ Deposit slip 12 29 Sales R54 370
Deposit slip 17 30 Debtors’ control 26 300

JOURNAL DOCUMENT DATE DETAILS AMOUNT

CPJ EFT 21 16 Ivory Ltd R1 780
EFT 26 22 Municipality 3 660
D Items on the Bank Statement dated 31 May 2022 that do not agree with the May
Cash Journals.

Date Details Debit Credit

02 Deposit (30/04) R21 640
03 Direct transfer to JB Stores 13 800
04 Direct transfer to Atlas Co. 19 700
15 Debit order (insurance) 1 670
16 Direct deposit from Ivory Ltd 1 780
17 Deposit (15/04) 10 080
Debit order (insurance) 1 670
20 Internet banking fee 176
25 Interest 315
28 Service fees 475

14
 NOTE:
• EFT 435 (Atlas Co.): Bank Statement is correct.
• A debit order for insurance was duplicated in error. The bank will correct this
in June.
• Mr Pooh Paddy the finance clerk, cannot account for the missing amount.
The owner of Buhle Stores decided to write off the amount, but further
investigations will be done.

1.1 BANK RECONCILIATION

1.1.1
Cash Receipts Journal Cash Payments Journal
60 334 34 865

10

1.1.2 Calculate the correct balance of the Bank account in the ledger on
31 May 2022.

5
1.1.3
Prepare the Bank Reconciliation Statement on 31 May 2022.
Debit Credit

15
 1.1.4 Problem with figure Advice

ACTIVITY 4
MPUMALANGA 2022 PRELIMS
1.2 BANK RECONCILIATION AND INTERNAL CONTROL
The following information relates to Marula Traders for July 2022.
The Bank statement shows transactions up to the 25th of July 2022 and the
business prepares a bank reconciliation after receiving the statement.
REQUIRED:
1.2.1 Show the entries that must be recorded in the Cash Journals by
completing the table provided in the ANSWER BOOK. (7)
1.2.2 Calculate the Bank Account balance on 31 July 2022. (4)
1.2.3 Prepare the Bank Reconciliation Statement on 31 July 2022. (8)
1.2.4 Refer to Information C.
Explain whether or not the business made the right decision in alerting the
bank about the deposit of R9 800, on 25 July 2022. (2)
INFORMATION:
A. Bank Reconciliation Statement on 30 June 2022:

Favourable balance as per Bank Statement R 18 400

Outstanding deposit: Dated 28 June 2022 12 730
Outstanding EFT’s No. 632 13 200
No. 633 2 630
Favourable balance as per Bank Account in the Ledger 15 300

B. On 31 July 2022, the provisional totals in the Cash Journals were:

• Cash Receipts Journal, R510 600
• Cash Payments Journal, R486 300

C. Information on the July 2022 Bank Statement which did not appear in
the July 2022 Cash Journals:

16
 DATE DETAILS DEBIT CREDIT
June 29 Deposit R12 730
29 EFT - 632 R13 200
30 Deposit R6 250
July 01 EFT - 633 R6 230
05 Petty Insurers R1 850
05 Petty Insurers R1 850
15 Debit card withdrawal R1 000
20 Transaction fees R1 425
24 Interest on current account R290
25 Voda Administrators R9 800
• The deposit on the 30th was for a rent income from a tenant, S.Ntuli.
• EFT No. 633 on the 1st appeared correctly on the Bank Statement.
• A debit order on the 5th, R1 850 for the monthly insurance appeared twice
on the Bank Statement, but no entry has been made in the Journals.
The bank will rectify this on the Bank Statement next month.

• Debit card withdrawal on the 15th was a windscreen repair to the business
vehicle. The driver did not submit the slip to bookkeeper.

• The deposit on the 25th was incorrectly deposited to Marula Traders.

The bank was notified.

D. The following entries were in the Cash Journals for July 2022 only:
• A deposit of R10 000 (dated 29 July 2022)
• EFT No. 655, R5 650
• EFT No. 656, R1 445

E. Bank Statement balance 31 July 2022…...?

1.2 BANK RECONCILIATION AND INTERNAL CONTROL

1.2.1 Show the entries that must be recorded in the Cash Journals.

CASH RECEIPTS JOURNAL CASH PAYMENT JOURNAL

Details Amount Details Amount
Provisional total R510 600 Provisional total R486 300

17
1.2.2 Calculate the Bank Account balance on 31 July 2022.
Answer

1.2.3 BANK RECONCILIATION STATEMENT ON 31 JULY 2022

DEBIT CREDIT
Balance per Bank Statement

Debit outstanding cheques:

Balance as per Bank Account

1.2.4 Explain whether or not the business made the right decision in alerting the
bank about the deposit of R9 800, on 25 July 2022.

18
ACTIVITY 5
METRO CENTRAL DISTRICT (WC)
1.1 BANK RECONCILIATION

Stark Industries employs Obadiah Stane as their bookkeeper. He is also

responsible for depositing money into the bank, and he process EFT receipts
and payments. He is currently on sick leave and the owner, Tony asks you,
the newly appointed internal auditor, to prepare the Bank Reconciliation for
August 2022. The official bank statement was received from PP Bank via
email on 27 August 2022.

REQUIRED:

1.1.1 Calculate the correct Bank balance in the ledger on the 31 August

2022. (13)

1.1.2 Prepare the Bank Reconciliation Statement on 31 August 2022. (6)

1.1.3 An investigation revealed that the deposit of R62 420 could not be
accounted for, it was decided to write off this amount, further
investigation will be made.

• State the GAAP principle that applies to this decision (1)

• Provide TWO internal control measures that Tony can use to prevent
such a loss in future (4)

INFORMATION

A. Extract from the Bank Reconciliation Statement on 31 July 2022.

Outstanding deposits: 9 July 2022 62 420

30 July 2022 24 210
Outstanding EFT: No. 121 9 432
No. 142 16 222

NOTE: The balance in the bank account on 27 August, before receiving the
bank statement reflected a favourable balance of R405 008.

• The outstanding deposit of R24 210, dated 30 July 2022 and EFT 121,
appeared on the Bank Statement for August 2022.

• EFT 142 appears on August Bank Statement and was recorded as

R12 622, the Bank Statement is correct.

19
• The outstanding deposit of R62 420 on the Bank Reconciliation
Statement did not appear on August Bank Statement. This was in
respect of cash taking for the day. An investigation revealed that the
bookkeeper, Obadiah Stane never deposited the money, as he is not
available for further questions, you inform Tony he should rather write
off this amount.

B The following information on the August 2022 Bank Statement from PP

Bank did not appear in the August Cash Journals

• A deposit of R62 200 from Shield Bank being fixed deposit that
matured together with the interest.

• Service fees of R890

• Interest on current account R108

• ATM withdrawal by Tony, the owner for personal use, R4 300

• A debit order to The City for R56 230 for Water, Electricity and Utilities.

• EFT 211 for R2 631 in favour of Marvel Motors was recorded in

appropriate journal. PP Bank however, reflected it twice on the August
Bank Statement. The bank informed us that they will rectify it on the
next Bank Statement.

• Debtor, N Fury send Stark industries proof of a direct deposit into the
business bank of R5 820, by the 26 August 2022, being a payment on
his account. The bookkeeper entered this in the CPJ.

C. The following information in the August 2022 Cash Journals did not
appear on the Bank Statement for August 2022.

• EFT 322 for R7 920 and EFT 323 for R6 361

• Outstanding deposit on 31 August 2022 for R33 756

• The Bank Statement for 31 August 2022 showed a favourable bank

balance of R336 610.

20
1.1.1 Calculate the correct Bank balance in the ledger on the 31 August
2022.

13

1.1.2 Prepare the Bank Reconciliation Statement on 31 August 2022..

Debit Credit

21
1.1.3 An investigation revealed that the deposit of R62 420 could not be
accounted for; it was decided to write off this amount, further
investigation will be made.

State the GAAP principle that applies to this decision:

Provide TWO internal control measures that Tony can use to prevent 1
such a loss in future

22
SUGGESTED SOLUTIONS
ACTIVITY 1
EASTERN CAPE 2022 PRELIMS

QUESTION 2

2.1
2.1.1 False 
2.1.2 True 
2.1.3 False 
Accept “F” or “T” 3

2.2.1 Update the CRJ and CPJ totals in the table provided, and calculate the
correct Bank balance in the General Ledger on 31 July 2022.
CASH RECEIPTS JOURNAL CASH PAYMENTS JOURNAL
116 400 132 500
1 800  1 150 
1 840 
740 
118 200 136 230

Bank Balance:
see CRJ total* see CPJ total*
21 800  + 118 200  – 136 230  = 3 770  one part correct; ignore sign
* CRJ and CPJ totals must include provisional totals
Accept other arrangements for calculation e.g. ledger account
-1 foreign items (would appear on the Recon) 9

2.2.2 BANK RECONCILIATION STATEMENT ON 31 JULY 2022

DEBIT CREDIT
36 270 
Balance as per statement balancing figure;
could be Cr

Outstanding deposits: 20/07 22 500 

29/07 12 700 

Deposit for rent not yet reflected 9 200 

Outstanding EFT 778 6 200 

Error on statement / amount duplicated 1 840 

3 770 
Balance as per bank account see 2.2.1;
Dr or Cr

Accommodate ONE column method

46 240  46 240
-1 for poor presentation (no details) both totals (same) 8

23
2.2.3 Refer to the outstanding deposit of R22 500 dated 20 July 2022.
Explain why the Accountant should be concerned about this deposit.
Provide ONE point.

ONE valid point  part marks for incomplete / unclear responses

• Deposit is late / not good business practice to keep cash (security risk)
• Poor internal controls – lack of checks and balances / supervision
• Possible lack of division of duties – person taking advantage / negligent
• May contribute to poor management of cash – liquidity problems in future
• Possible rolling of cash 2

ACTIVITY 2
FREE STATE 2022 PRELIMS

1.2.1 COMPLETE THE CRJ AND CPJ:

Cash Receipts Journal Cash Payments Journal
(figures only) (figures only)
47 220 97 860
36 400  2 800 
15 300  # 2 130
Two marks
# 1 250 
9 100  32 300 CRJ
23 200 CPJ # 880 
2 160 
11 000 

11
108 020 115 950

Bank balance on 30 June 2022:

– 49 700  + 108 020 – 115 950 = – 57 630  one part correct

Unfavourable  5

1.2.2 Prepare the Bank Reconciliation Statement on 30 June 2022.

Debit Credit
Debit balance as per bank statement 55 020
balancing figure
Credit outstanding deposit 34 620
Debit amount incorrectly credited 23 000
Rectify error 10 570
Debit outstanding EFT 633 24 800
Credit balance as per bank account 57 630
see 1.2.1
102 820 102 820
Both must be 9
the same

24
1.2.3 Refer to Information H.
Explain why the internal auditor would be concerned (provide
figures). What actions should be taken? Provide TWO points.

Concern (with figures): 

• R10 000 less cash from sales were recorded and deposited.

Actions:
Any ONE action

• Division of duties - person receiving the money must not be the one
depositing it / count in, count – out cash procedure (count cash at 4
the beginning and end of shifts).
• Control deposits before going to the bank to ensure accuracy

ACTIVITY 3
GAUTENG 2022 PRELIMS

BANK RECONCILIATION

1.1.1 Cash Receipts Journal Cash Payments Journal

60 334 34 865
(1 780 + 1 780) 3 560  (19 700 – 17 900) 1 800 
315  1 670 
(12 080 – 10 080) 2 000 
651 
(176 one mark + 475 one mark)

10
64 209 40 986

1.1.2 Calculate the correct balance of the Bank account in the ledger on
31 May 2022.
–34 274  + 64 209  – 40 986  = –11 051  one part correct
See CRJ See CPJ

Accept ledger account

Check the net effect
5

25
1.1.3 Prepare the Bank Reconciliation Statement on 31 May 2022.

Debit Credit
Balance as per bank statement R89 731 
Balancing figure Could be DR/CR
Do not accept
R36 294

Outstanding deposit 54 370 

R80 670 two marks

26 300 
Outstanding EFT 3 660 
Correction of error by the bank 1 670 
Balance as per bank account 11 051 
See 1.1.2 Do not accept
R34 274
7
Totals must be the same to award a part mark 93 391 * 93 391

1.1.4 Explain ONE problem to confirm the auditors concern and give an advice on
how the problem can be avoided. Quote figures.
Problem  Figure(s)  Advice 
• Shortfall in cash deposit, • Use security company to collect
R2 000/R12 080 received and deposits on daily or regular basis
documented but only R10 080 was • Divide duties: person receiving the
deposited/Delay in cash deposit (15 money must not be the one
April – 17 May 2022) depositing it / count in, count – out
• EFT incorrectly recorded as payment cash procedure (count cash at the
of R1 780. beginning and end of shifts).
• Senior personnel should check
(monitor) internet banking
transactions regularly (daily)
/deposit slips that reflects daily
deposits.
• Encourage debtors to make direct
deposit/EFTs.

Do not accept “install cameras”

3

26
ACTIVITY 4
MPUMALANGA 2022 PRELIMS
1.2 BANK RECONCILIATION AND INTERNAL CONTROL

1.2.1 Show the entries that must be recorded in the Cash Journals.

CASH RECEIPTS JOURNAL CASH PAYMENT JOURNAL

Details Amount Details Amount
Provisional totals R510 600 Provisional totals R486 300
P. Papane- Rent 6 250  EFT-633 3 600 
Interest 290  Petty Insurers 1 850 
Debit card 
1 000
Repairs
Transaction fees 1 425 

R517 140  Both totals R494 175 8

1.2.2 Calculate the Bank Account balance on 31 July 2022.

Answer

R15 300 + 517 140 – 494 175 R38 265

one part correct 4

1.2.3 BANK RECONCILIATION STATEMENT ON 31 JULY 2022

ONE COLUMN DEBIT CREDIT
METHOD
Balance per Bank Statement R43 310 Balancing figure R43 310 
Credit outstanding deposit R10 000 R10 000 
Debit outstanding EFT:
EFT No.655 (R5 650) R5 650 
EFT No.656 (R1 445) R1 445 
Debit incorrect amount (R9 800) R9 800 
Credit incorrect amount R1 850 R1 850 
Balance as per Bank Account (R38 265) R38 265 
R55 160 R55 160
7

27
 1.2.4 Explain whether or not the business made the right decision in alerting the
bank about the deposit of R9 800, on 25 July 2022.

Any ONE valid explanation 

• Yes, he did make a good decision to alert the bank because he would not
have been able to prove that the money was his/No documents
• Eventually the intended recipient would have complained about not receiving
the money, which would have led to a disagreement or the possibility of a
police investigation.
• The business must maintain its reputation as an ethical organisation.
2

ACTIVITY 5
METRO CENTRAL DISTRICT (WC)

1.1.1 Calculate the correct Bank balance in the ledger on the 31 August
2022.

405 008  + 3 600  - 62 420  + 62 200  - 890  + 108  - 4 300 

- 56 230  + 11 640  (5 820 +5 820) = 358 716  
 
LEARNERS MAY USE BANK ACCOUNT

13

1.1.2 Prepare the Bank Reconciliation Statement on 31 August 2022..

Debit Credit
Credit balance as per bank statement 336 610 
Credit bank error 2 631 
Debit outstanding EFT 322 7 920 
EFT 323 6 361 
Credit outstanding deposit 33 756 
Debit balance as per Bank account 358 716 
372 997 372 997
6

28
1.1.3 An investigation revealed that the deposit of R62 420 could not be
accounted for; it was decided to write off this amount, further
investigation will be made.

State the GAAP principle that applies to this decision:

1
Principle of Prudence 

Provide TWO internal control measures that Tony can use to prevent
such a loss in future
Any TWO valid point    
• Division of duties/Rotation of duties/Divide duties amongst employees so
that the one can act as a check on the other / The person issuing receipts
should not be the same person doing the deposits.
• Responsible staff members to check/make the deposits.
• Regular and timely supervision / monitor cash deposits
• Cash must be deposited daily (check deposit slip against receipts).
• Outstanding deposits must be investigated promptly.
• Encourage EFT payments by customers / debtors.
• Request bank to send confirmation of all transactions (e.g. sms) 4

29