September 2021 | Learners GuideCPPREP4125 Transact in trust Accounts

447675962025Patricia Grolman

This Learners guide has been written for students attending classes for the above unit of competency in the Certificate IV in Real Estate Practice, course number CPP41419.

The exercises in this guide have been prepared, where possible, to replicate the accounting for Property Management and Property Sales trust account transactions, which take place daily in a Real Estate business. All legislation referred to in this guide was current at the time it was written

00Patricia Grolman

September 2021 | Learners GuideCPPREP4125 Transact in trust Accounts

This Learners guide has been written for students attending classes for the above unit of competency in the Certificate IV in Real Estate Practice, course number CPP41419.

Contents

TOC o "1-3" h z u Prerequisite PAGEREF _Toc83715519 h 2CPPREP4125 Transact in Trust Accounts PAGEREF _Toc83715520 h 2Introduction: PAGEREF _Toc83715521 h 2Trust Accounting PAGEREF _Toc83715522 h 5Trust money PAGEREF _Toc83715523 h 6Receipts for trust money PAGEREF _Toc83715524 h 7Banking of trust money PAGEREF _Toc83715525 h 11Trust deposits PAGEREF _Toc83715526 h 11Payment of trust money. PAGEREF _Toc83715527 h 13Property management payments PAGEREF _Toc83715528 h 15Property sales payments PAGEREF _Toc83715529 h 16Reporting GST collected to Landlords and Vendors. PAGEREF _Toc83715530 h 16Record of trust account transactions PAGEREF _Toc83715531 h 19Cash book PAGEREF _Toc83715532 h 19Trust accounting using a computer program PAGEREF _Toc83715533 h 20Trust account ledger PAGEREF _Toc83715534 h 21Trust account ledger trial balance PAGEREF _Toc83715535 h 22Security and maintenance of the trust accounts PAGEREF _Toc83715536 h 22Records of trust money to be kept by licensees PAGEREF _Toc83715537 h 23Trust account audit requirements PAGEREF _Toc83715538 h 24Review of Trust Accounts PAGEREF _Toc83715539 h 25Unclaimed trust money PAGEREF _Toc83715540 h 27Recording trust accounting transactions to trial balance. PAGEREF _Toc83715541 h 28Trust account transfer journals PAGEREF _Toc83715542 h 30Trust Exercises PAGEREF _Toc83715543 h 37Property Management PAGEREF _Toc83715544 h 37Sales PAGEREF _Toc83715545 h 50Bank Reconciliations PAGEREF _Toc83715546 h 63Comprehensive Example PAGEREF _Toc83715547 h 65Bank reconciliations Exercises PAGEREF _Toc83715548 h 69Solutions to Exercises PAGEREF _Toc83715549 h 81References: PAGEREF _Toc83715550 h 95

Prerequisite:- CPPREP4005 Must have been successfully completed prior to starting this unit.

CPPREP4125 Transact in Trust AccountsAt the end of this unit learners should have the skills and knowledge required to establish, manage, and maintain trust accounts in an agency context including recording trust transactions, and monitoring and reviewing trust accounts. You will learn to:-Apply financial management and accounting principles to maintain a Property management trust account and a Property sales trust account.

commit to client service and maintenance of client confidentiality

establish and manage agency trust accounts

demonstrate knowledge of agency practice, ethical standards, and legislative requirements for the operation of agency trust accounts

comply with legislative requirements for the operation and auditing of agency trust accounts

reconcile trust account with bank statement

Introduction:Purpose of Real Estate Trust Accounts

Trust accounts exist to protect everyone involved in real estate transactions.

Real estate agents are heavily governed by legislation and those who fail to comply with the legislation risk hefty penalties, including loss of licence and possible jail time.

The legislation which governs Real estate agents is the:

Property and Stock Agents ACT, 2002and Property and stock Agent Regulations 2014 (NSW).In addition, NSW Fair Trading publish Supervision guidelines.

The supervision guidelines set out the requirements for proper supervision of a real estate business, including the steps to take to prevent fraud, maintain trust accounts and audit requirements.

The parts and sections of the ACT and Regulations included in this workbook are those which the agency must adhere to when maintaining the agency trust accounts.

General rules of conduct applying to all agents and assistant agents

The Property and Stock Agents Regulations 2014 (NSW)

Schedule 1.1

Knowledge of Act and regulationsAn agent must have a knowledge and understanding of the Act and the regulations under the Act, and such other laws relevant to the category of licence or certificate of registration held (including, laws relating to residential tenancy, fair trading, competition and consumer protection, anti-discrimination, and privacy) as may be necessary to enable the agent to exercise his or her functions as agent lawfully

Schedule 1.8

To act in accordance with client authority

An agent must not act as an agent or represent himself or herself as acting as an agent on behalf of a person without written authority.

This clause does not apply to a sale solely of livestock

Schedule 1.9

To act in accordance with clients instructions

An agent must act in accordance with a clients instructions unless it would be contrary to the Act or regulations under the Act or otherwise unlawful to do so

Schedule 1.10

Licensee must ensure employees comply with the Act and regulations

An agent who is the licensee-in-charge at a place of business of a licensee must take reasonable steps to ensure other licensees or registered persons employed in the business conducted there comply with the Act and regulations under the Act.

Schedule 1.20

Agent to pay rental income monthly to landlord

An agent must pay rental money for each calendar month (less any authorised expenses) owing to a landlord under a residential tenancy agreement at the end of each calendar month, unless instructed otherwise by the landlord.

Schedule 1.22

An agent who is the licensee in charge of a business must ensure that there are separate trust accounts for rental money and sales money and that money from rentals and sales are paid into the appropriate accounts.

Exempt trust accounts

In addition to the Sales trust account, separate trust accounts, (exempt trust accounts), may be opened for the exclusive use of vendors and purchasers in the sale of land. Interest earned on the trust account can be transferred to the vendor and purchase on the settlement of the sale.

You are not required to notify NSW Fair Trading when opening a separate trust account. On the instructions of the client to whom those funds belong. Or for the exclusive benefit of a vendor and purchaser of land.

These separate trust accounts are exempt from directing interest to NSW Fair Trading

Trust AccountingTrust accounting is a simple form of bookkeeping used exclusively for trust transactions. It is based on the double entry bookkeeping principles.

It is the recording by a trustee of the receipts and payments of other people's money into individual trust ledger accounts which are maintained for the person from or on whose behalf the money was received or paid.

All moneys held for a person in relation to real estate transactions, such as property sales, (including money received in advance for advertising and/or auction expenses), property management, and strata management, must be paid into a specially titled trust account.

Money held in the trust accounts cannot go into the agencies general account as it is NOT the agencies money. It is held in trust for the agencys clients.

Only at the end of a sale, once the agent has received the Order on the agent, can they transfer the commission and expenses outlined in the agency agreement into their general account (the agencies working account).

In property management, the agency receives its fees at the end of each month, or at the time outlined in the managing agency agreement.

Trust money

Means money received for or on behalf of any person by a licensee in connection with the licensees business.

Trust money to be paid into trust account:

Property and Stock Agents Act 2002 No 66

Part 7

Division 2 Payment of trust money into trust account

Section 86 Trust money to be paid into trust account

(1)Money received for or on behalf of any person by a licensee in connection with the licensees business as a licensee

(a)is to be held by the licensee or (if the licensee is employed by a corporation) by the corporation, exclusively for that person, and

(b)is to be paid to the person or disbursed as the person directs, and

(c)until so paid or disbursed is to be paid into and retained in a trust account (whether general or separate) at an authorised deposit-taking institution in New South Wales and approved by the Secretary for the purposes of this Part.

(2)If the licence is held by a corporation, the trust account is to be in the name of the corporation and in any other case is to be in the name of the licensee or of the firm of licensees of which the licensee is a member.

(3)The name of a trust account and the description of the trust account in the books and records of the licensee and on all cheques drawn on the trust account

(a)must include the name of the licensee corporation, licensee, or firm of licensees in whose name the trust account is kept, and

(b)must include the words Trust Account, and

(c)may include, at the end of the accounts name, a name or other matter to identify the person on whose behalf money in the account is held.

(4)When opening a trust account at an authorised deposit-taking institution for the purpose of complying with this section, the licensee concerned must ensure that the authorised deposit-taking institution is notified in writing that the account is a trust account required by this Act. The notification must be in a form approved by the Secretary and the licensee must serve a copy of the notification on the Secretary within 14 days after the trust account is opened.

(5)A licensee must, within 14 days after closing a trust account, notify the Secretary in writing of the closure. The notification must be in a form approved by the Secretary.

(6)Subsections (4) and (5) do not apply in respect of

(a)a separate trust account kept on the instructions of a client of a licensee or firm of licensees for the exclusive benefit of the client, or

(b)a separate trust account opened by a licensee for the exclusive benefit of both the vendor and the purchaser of land.

(7)A licensee must also comply with any additional requirements relating to trust accounts prescribed by the regulations.

Maximum penalty100 penalty units.

Example of trust monies received

Monies received Appropriate trust account

Marketing fees for new sales listing. Sales trust account.

10% deposit paid by the purchaser. Sales trust account.

Sales holding deposit. Sales trust account.

Rental Holding deposit of one week. Property Management trust account.

Rent. Property Management trust account.

Water charges. Property Management trust account.

Receipts for trust moneyProperty and Stock Agents Regulation 2014

Part 4 Section 23

(1)A licensee must, immediately on receiving money for or on behalf of any person, prepare or cause to be prepared a receipt in accordance with this clause.

(2) When a receipt is being prepared by a licensee:

From the trust receipt book, a copy of the entries made on the receipt must be made simultaneously on the machine numbered duplicate form provided in the book, or

Otherwise, than from a trust receipt book, a copy of the entries made on the receipt must be made simultaneously in the record required to be kept by clause 26 (Record of trust account transactions).

(3)The following particulars must be shown on a receipt:

(a)The date of issue,

(b)The number of the receipt in numerical sequence,

(c)The name of the licensee and the words Trust Account,

(d)The name of the person from whom the payment was received,

(e)The name and ledger reference number of the person on behalf of whom the payment was made,

(f)Particulars sufficient to identify the transaction, in respect of which the money was paid,

(g)The amount of money received and whether (or the extent to which) it was paid in cash or by cheque, by electronic funds transfer or otherwise.

(4)Receipts must be prepared in the numerical order of the series to which they belong.

(5)The original of a receipt must be issued, on demand, to the person from whom the trust money is received.

(6)A licensee must retain:

(a)Any original receipt that is not issued to the person from whom the trust money is received, and

(b)Any original receipt that is cancelled after it is prepared, and

(c)Duplicate receipts.

(7) A licensee is not required to retain duplicate receipts in relation to money received if an electronic record of receiving the money was made as soon as was practicable after the money was received.

Receipt for rent

(8) When a receipt is issued by a licensee in respect of rent collected additional must be shown on the receipt:-The date to which rent has been calculated and the position of the rental account as at the day the rent was received.

Receipts and recording Rental BondsFrom 30 January 2017, changes to the Residential Tenancies Act 2010 (the Act) make it mandatory for landlords and real estate agents to invite tenants to lodge their rental bonds using Rental Bonds Online (RBO).

The amendment does not change any other provisions in the Act, including those relating to the lodgement and claims for bonds.

Landlords and Real Estate Agents

From 30 January 2017, landlords and real estate agents are required to be registered with RBO and invite new tenants to provide their email address for the purpose of initiating the RBO bond lodgement process.

A landlord or agent, who fails to invite a new tenant to lodge their bond using RBO, prior to accepting a bond, will be in breach of the Act. A penalty of $2,200 may apply.

Bonds can still be lodged using the existing paper form-based method.

You may be required to use the existing paper form method when your tenant does not meet the requirements for an online bond.

NOTE: If a tenant makes the cheque for the bond payable to the Rental Bond Board(RBB), we do not bank it into the trust account, nor do we write a receipt to the tenant or account for it in our records.

We simply forward the cheque to the Rental Bond Board within ten working days from the end of the month, along with the appropriate bond lodgement form.

We will subsequently receive a receipt for the bond amount from the RBB, which we should keep in the landlord's file for future reference. The tenant will also receive a receipt directly from the RBB.

Example: Receipt for rentOn 5th August 20xx Peter Smithson, tenant at 9 Lyons street, Pymble, paid 2 weeks rent by cash. His weekly rent is $550 per week and is currently paid up to 8th August 2016

200026251460Ultimate Realty Pty Ltd

85 Pitt Street Sydney NSW 2000

Receipt No. 110

Date:--5/8/20xx

Received From: Peter Smithson

The sum of: one thousand and one hundred dollars

Being for: 2 weeks rent 8/8/16 to 22/8/16, 9 Lyons St, Pymble

Landlord: J. TaylorAccount No. 240

Property management trust account

Per: Your signature$1,100

By: Cash/cheque/EFT

Rent in Advance: 1,335.71

00Ultimate Realty Pty Ltd

85 Pitt Street Sydney NSW 2000

Receipt No. 110

Date:--5/8/20xx

Received From: Peter Smithson

The sum of: one thousand and one hundred dollars

Being for: 2 weeks rent 8/8/16 to 22/8/16, 9 Lyons St, Pymble

Landlord: J. TaylorAccount No. 240

Property management trust account

Per: Your signature$1,100

By: Cash/cheque/EFT

Rent in Advance: 1,335.71

The following receipts would be issued:

38023809969500

The above receipt complies with the regulations; the additional information required is calculated as follows:

The date to which rent has been calculated - 22/8/15

Position of the rental account as at that date:

Rent in advance 5/8/15 to 22/8/15 is 17days

Calculation: $550 pw 7 = $78.57 per day x 17 days = $1,335.71

Example: Sales Trust Receipt

A 10% deposit received from J. Franks (by Cheque) on 12/4/20xx for the property, 13 Clyde Street, Balmain, owned by F. Stone. The sales price is $850,000.

:Azure Beach Realty Group Sales Trust Account

144 Symons Road Azure Beach NSW 2100

ACN 604 981 912 150

Receipt No: 920 Date: 12/4/20xx

Received from J. Franks Vendor: F. Stone To J. Franks Purchaser:

The sum of: Eighty-five thousand dollars cents

Being for: 10% deposit for 13 Clyde St, Balmain

Sales Trust Account $85,000

Per: Agents signature By EFT / Cash / Cheque

Example: Sales Trust Receipt - Advertising

A cheque received from P. Carr for $7000 on 12/5/20xx, it is a contribution to the advertising campaign.

Azure Beach Realty Group Sales Trust Account

144 Symons Road Azure Beach NSW 2100

ACN 604 981 912 150

Receipt No: 921 Date: 12/5/20xx

Received from: P. CarrVendor: P. Carrto Purchaser: N/A

The sum of: Seven thousand dollars cents

Being for: Contribution to advertising

Sales Trust Account $ 7,000

Per: Agents signature By EFT / Cash / Cheque

Banking of trust moneyProperty and Stock Agents Regulation 2014

Part 4 section 18

Banking of trust money

A licensee who receives trust money must pay it into the licensees trust account

(a)before the end of the next banking day after the day of its receipt, if that is practicable, or(b)if that is not practicable, as soon as practicable after that day.

Trust depositsProperty and Stock Agents Regulation 2014

Part 4 section 25

A licensee who makes a deposit of money to the licensees trust bank account must ensure:

That the relevant deposit book or other written deposit record is produced to the authorised deposit-taking institution when the deposit is made, and

(b)That the following particulars are entered in the book or record:

(i)The date of the deposit,

(ii)The amount of the deposit,

(iii)Whether the deposit consists of cheques, notes, or coins,

(iv)If cheques are included in the deposit, the name of the drawer, the name and branch of the authorised deposit-taking institution on which the cheque is drawn and the amount of each cheque, and

That a duplicate of the particulars of each deposit is retained by the licensee.

(2)This clause does not apply to a deposit of money made directly to a licensees trust account, electronically or otherwise. (Direct deposit)

Example completed bank deposit

Completed bank deposit slip for the 10% deposit received from J. Franks on 12/4/20xx (Westpac Bank Sydney). The sales price is $850,000.

National Banking Corporation

Balmain NSW 2270

Account Name: Sydney Wide Realty Group Sales Trust Account

Account Number: 0655 29865

Please fill in the following particulars of cheques; proceeds will not be available until cleared

DRAWER Bank Branch Amount

1 J. Franks Westpac Sydney 85,000

Carried Forward Sub Total 85,000

Paid in by Signature: person who deposited the funds

DEPOSIT

DATE TELLER USE Notes Account Identification Number Teller

$100 Coins

0655 29865 $50

Account Name $20 Cheques 85,000

Sydney Wide Realty Group $10 $5 TOTAL$ 85,000

Payment of trust money.Licensees in charge to authorise trust account withdrawals

Only a licensee in charge (LIC) of a business may authorise trust account withdrawals from a trust account.

This means that LICs are responsible for reviewing and approving all transactions for the trust account before they occur, including electronic fund transfers and payment of trust money by cheque.

There can also only be one LIC who is able to authorise withdrawals for a trust account.

An LIC will be unable to delegate their authority to another person.

LICs should be aware that if they allow another person to withdraw funds from the trust account on their behalf, they may still be held liable for any breach or defalcation.

Note:

Signing Cheques: Only the licensee in charge may sign cheques for payments from an agency trust account. This function cannot be delegated.

Effecting Electronic funds transfers The Regulations allow another person in the agency, other than the licensee in charge, to physically disburse funds from a trust account by electronic means.

For example, under instruction from the licensee in charge, the other person may press a button to release funds from a bank account, but only if the licensee in charge responsible for that trust account has first authorised the withdrawal.

For each electronic funds transfer from an agency trust account, a record must be kept of:

the name of the person effecting the transfer

the reference number or other particulars sufficient to identify the transfer

details identifying the ledger accounts to be debited

the reason for the transfer.

Property and Stock Agents Regulation 2014

Part 4 section 24

Payment of trust money by cheque or electronic funds transfer

(1)Trust money must not be drawn from a licensees trust account otherwise than by cheque or electronic funds transfer in accordance with this clause.

Cheques(2)Each cheque must

(a)be machine numbered in series, and

(b)be marked not negotiable, and

(c)not be payable to cash, and

(d)contain the name of the licensee or (if appropriate) of the licensees firm and the words Trust Account, and

(e)be signed by the licensee in charge.

(3)The licensee must ensure that cheques are drawn in the numerical order of the series to which they belong and that for each cheque a record is kept of:

(a)The number and date of issue of the cheque, the name of the payee and the amount of the cheque, and

(b)details identifying the ledger account to be debited and the name and ledger reference number of the person on behalf of whom the cheque was drawn, and

(c)The reason for which the cheque was drawn and the invoice number that is applicable to that cheque, if one is available to the licensee.

(4)If the licensee maintains an accounting system that (at the same time as that at which, and in the same operation as that in which, a cheque is drawn) causes the particulars required by subclause (3) to be entered directly in the cash book required to be kept under clause 26, the entry of the particulars in the cash book is a sufficient compliance with the record keeping requirements of subclause (3).

Electronic Funds Transfer(5)The licensee must ensure that, for each electronic funds transfer, a record is kept of:

(a)The name of the person effecting the transfer and

(b)The reference number or other particulars sufficient to identify the transfer, the date of the transfer, the name of the payee and the amount transferred to or from each ledger account, and

(c)Details identifying the ledger accounts to be debited and the name and ledger reference number of each person on behalf of whom the transfer was made, and

(d)Particulars of the reason for the transfer.

Property management paymentsThe Managing agency agreement sets out all payment details regarding the funds that the agency holds in the property management trust account. The agency must follow these instructions strictly, and any variation must be completed in writing and signed by both the owner and the agency.

Landlords are generally paid either mid-month, end of the month or in some cases both. The agency must pay the rental monies collected for the month (less the approved expenses) to the owner at the end of each month unless the agent has received other instructions in writing. The agreement will also inform the agency how the owner would like to be paid, which could be by cheque or EFT.

Payments the agency may make on behalf of the owner could include:

management fees (amount set out in the agreement)

water rates

council fees

repairs

strata fees

letting fees

advertising

tribunal fees.

The agent should always confirm repairs or large payments with the owners before paying the tradespeople.

The Agent should:

Check the management agreement

Check the balance in the landlords account, to determine whether there are enough funds to make the payment

Email the Landlord to seek approval to pay the invoice if there are enough funds

If there are not enough funds in the Landlords account, ask the Landlord for instructions.

Do not pay the invoice until instructions from the Landlord have been received in writing.

An Owners statement must always accompany any payment made to the owner.

Property sales paymentsThe sales agreement sets out the agency costs for advertising, commission, auctioneer's fee and any other fees or charges.

A vendor statement must always accompany any payment made to the vendor.

Payments can occur for the following reasons:

Advertising: agency can deduct the advertising fees once the advertisements are completed. That can either be in a lump sum after all agreed advertising or intermittently as advertisements are completed (that is, monthly).

Commission/fees and charges: this payment cannot occur until the agent has received 'the order on the agent' from the solicitor post settlement.

Vendor payment (balance of deposit/interest): this payment cannot occur until the agent has received 'the order on the agent' from the solicitor post settlement.

Refund of deposit: can only occur before exchange or with the instruction of the vendor's solicitor.

Reporting GST collected to Landlords and Vendors.GST is a Goods and services tax (GST) it is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.

You need an ABN to register for GST, as the ABN is part of the GST system. Your ABN will also be your GST registration number.

The real estate business will be registered for GST because it will have a turnover of $75,000 p.a. or more.

The GST collected will be recorded in the General business account.

The amount of GST collected must be recorded on the statements to the Vendors at time of settlement and the Landlords monthly statements.

The statements to the Landlord and vendors must have the words Tax Invoice and the businesss ABN number on them.

The management agreements and the sales agreements will set out the amount of commission payable including GST.

Example: - Property Management Statement

Property management commission is 7.7% of rent collected including GST.

Rent collect for the month is$ 3,300 x 7.7% = $254.10 commission inc. GST

The amount of GST included in the commission = $254.10/11 = $23.10 GST

This amount $23.10 GST must be reported to the landlords on their monthly statements.

Sydney Wide Real Estate

TAX INVOICE

ABN 112 334 877

Mr. R Price

180 Clyde Street,

Rose Bay NSW 2029

31 May 20xx

STATEMENT OF ACCOUNT for the month of May 20xx

CREDITDEBIT

$ $

Rent collected3,300

Management Commission @ 7.7%inc GST 254.10

Settlement for May EFT3,045.90

Management Commission includes GST $ 23.10

Sydney Wide Real Estate

TAX INVOICE

ABN 112 334 877

Mr. R Price

180 Clyde Street,

Rose Bay NSW 2029

31 May 20xx

STATEMENT OF ACCOUNT for the month of May 20xx

CREDITDEBIT

$ $

Rent collected3,300

Management Commission @ 7.7%inc GST 254.10

Settlement for May EFT3,045.90

Management Commission includes GST $ 23.10

Example:- Property Sales Vendor statement

Sydney Wide Real Estate

TAX INVOICE

ABN 112 334 877

Mr. K & Mrs. P. Pride

210 Elliot Street

North Bondi NSW 2026

24 May 20xx

Congratulations on the sale of your property at 55 Kent Street Smithfield

STATEMENT OF ACCOUNT

SETTLEMENT DATE: 24 May 20xx

DEBITCREDIT

$ $

Funds held in trust from K. Pike110,000

Settlement cheque85,800

Commission to Sydney Wide Real Estate 24,200

Commission includes GST $ 2,200

Sydney Wide Real Estate

TAX INVOICE

ABN 112 334 877

Mr. K & Mrs. P. Pride

210 Elliot Street

North Bondi NSW 2026

24 May 20xx

Congratulations on the sale of your property at 55 Kent Street Smithfield

STATEMENT OF ACCOUNT

SETTLEMENT DATE: 24 May 20xx

DEBITCREDIT

$ $

Funds held in trust from K. Pike110,000

Settlement cheque85,800

Commission to Sydney Wide Real Estate 24,200

Commission includes GST $ 2,200

Record of trust account transactionsCash bookProperty and Stock Agents Regulation 2014

Part 4 Section 26

A licensee must keep a record of daily receipts and payments of money into and out of the licensees trust account.

(2)The record must be in the nature of a cash book in which the pages are consecutively numbered and on the respective pages of which are shown:

(a)The consecutive numbers of receipts issued or cancelled, and

(b)The consecutive numbers of cheques drawn or cancelled, and

In the case of money received or disbursed by means of electronic funds transfer, the consecutive reference numbers, or other means of identification of the transfers.

When money required to be paid into the trust account is received, the licensee must enter into the record the particulars required by clause 23 (3) (a), (b) and (d)(g) to be entered in a receipt for the money, together with the date of the deposit of the money to the trust account and the amount of the deposit.

When money is paid out of the trust account, the licensee must enter into the record the particulars required by clause 24 (3) to be recorded for a cheque or required by clause 24 (5) to be recorded for an electronic funds transfer.

(5)At the end of each named month, the licensee must balance the cash book or other record and either

(a)carry forward the balance to the commencement of the next month, or

(b)carry forward the balance to a ledger account provided for the purpose.

(6)The licensee must, at the end of each named month, prepare a statement reconciling the balance of the licensees trust account with the balance of the related cash book or other record. (Bank reconciliation)

Trust accounting using a computer programWhether the Agency maintains their trust accounts manually or by computer system, they must comply with all parts of the Act and Regulations.

If they choose to use a computer system, they must also ensure they comply with the following regulation:

Property and Stock Agents Regulation 2014

Part 4 section 22

Computer systems control

(1)If a licensee maintains records for the purposes of this Part by means of a computer system, the licensee must comply with this clause in relation to the records.

(2)The licensee must maintain a record, compiled in chronological sequence, of all changes (including creation, amendment or deletion) to any of the following information

(a)the name of the person on behalf of whom the licensee acts,

(b)the address of the person on behalf of whom the licensee acts,

(c)the code reference number, if any, of the person on behalf of whom the licensee acts,

(d)agency description,

(e)trust account number,

disclosing the details of the information before and after the change.

(3)The licensee must ensure, in respect of any journal

(a)that entries balance before those entries are made in the ledger, and

(b)that any journal reference numbers are allocated in sequence under program control.

(4)The licensee must ensure in respect of any ledger that no program is capable of accepting the entry of a transaction resulting in a debit balance to an account unless a contemporaneous record of the transaction is made in such a manner as to enable the production in permanent legible form, on demand, of a separate chronological report of all such occurrences.

(5)The licensee must ensure in respect of any ledger that no program enables the deletion of an account unless

(a)the balance of the account is zero, and

(b)the account when deleted is retained (as it was immediately before deletion) in a form from which the information can be produced on demand in permanent legible form in the English language.

(6)The licensee must ensure that any entry in a record produced in visible form appears in chronological sequence.

(7)The licensee must ensure that a report, or each page of or entry in a report, is numbered sequentially under program control in a manner that enables the completeness of the records required to be kept by this Part to be conveniently verified.

(8)The licensee must ensure that no amendment to the particulars of a transaction already recorded can be made otherwise than by a separate transaction effecting the amendment.

(9)The licensee must ensure that each program requires input in each field of a data entry screen intended to receive information required by this Part to be included in records.

(10)The licensee must ensure that either

(a)a back-up copy of all records to which this clause refers is made on a computer disk or magnetic tape or by other electronic means not less frequently than once each month, and the most recent back-up copy is kept in such a place at a separate location that any incident (such as fire, or a power or disk failure) that could adversely affect the records would not also affect the back-up copy, or

(b)all records to which this clause refers are backed up using cloud technology through the internet not less frequently than once each month.

Property and Stock Agents Regulation 2014

Part 4 Section 28

Trust account ledger(1)A licensee must maintain a separate ledger account for trust money received on behalf of or paid to each person on behalf of whom the agent acts.

(2)The ledger account must include the name of the person on behalf of whom the licensee acts, a reference number or other identification and particulars of each transaction affecting trust money.

(3)Those particulars must include the following

(a) the date of the transaction,

(b) a description of the transaction,

(d) the amount of the transaction,

(e) the resulting current balance of account arising from the transaction.

Property and Stock Agents Regulation 2014

Part 4 Section 29

Trust account ledger trial balance(1)A licensee must, within 21 days after the end of each named month, prepare a trial balance statement of all ledger accounts current as at the end of that month.

(2)The trial balance statement must

(a)specify the month to which it refers and the date of its preparation, and

(b)list each ledger account that does not have a zero balance at the end of that month by stating the name of the person on behalf of whom the agent is acting, the reference number or other identification and the balance of the account at the end of the month, and

(c)show the total of the ledger account balances at the end of that month, and

(d)show a comparison between that total and the balance in the cash book reconciled with the balance in the trust account as required by clause 26 (6).

Security and maintenance of the trust accountsIt is a legal requirement for all licensees in charge to ensure that the trust accounts are secure. To do this, the following procedures and checks are used:

carry out monthly trial balances and bank reconciliations, as per regulations

maintain control over cheque books and receipt books

understand and operate the trust accounting computer system

Have written procedures instructing employees of their duties regarding the trust account from receipt of monies to the bank reconciliation

Ensure employees are adequately trained to operate computer system

have individual passwords for each employee and restrict access to what the employee is legally allowed to do

create organisational policy against sharing passwords

carry out periodic checks on the work of employees

carry out monthly internal audits/reviews

carry out yearly external audits as per the ACT

back up off-site every night if using a computerised trust account system.

Electric tracking

When choosing a computer system to maintain the trust accounts ensure it has electronic tracking capabilities. Electric tracking leaves a breadcrumb trail of who accessed the trust accounts and the date it was accessed. Electronic tracking provides an audit trail that clearly identifies transactions in and out of the trust accounts.

Records of trust money to be kept by licenseesProperty and Stock Agents Regulation 2014

Part 5 Section 33

Records and book entries to be in English languageRecords and book entries to be in English language

A licensee must ensure that all written records required to be made or produced by the licensee, and all entries in books of account required to be kept by the licensee, by the provisions of the Act and this Regulation, are in the English language.

Note: There are no restrictions on the technology that can be used to make and keep records. Records can be made and kept on paper or by electronic means.

Property and Stock Agents Act 2002 No 66

Part 8 Division 1 section 104

Keeping and inspection of records

(1)A licensee must make the following records

(a)a record containing full particulars of all transactions by or with the licensee in connection with his or her business as a licensee,

(b)such other records relating to the licensees business as a licensee as may be required by the regulations.

(2)A record required by this section must be kept for at least 3 years after it is made.

(3)The record must be kept

(a)by the licensee at the licensees registered office (while the licensee remains a licensee)

(b)if the licensee ceases to be a licensee, by the former licensee in his or her possession, custody or control unless the former licensee authorises some other person to have possession, custody or control of the record, or

(c)by any other person who obtains possession, custody, or control of the record whether as a result of being the personal representative of a deceased licensee or by transfer of the business of the licensee or otherwise.

Trust account audit requirementsSecretarys Guidelines for the Proper Supervision of the Business of a Licensee under s32 of the Property and Stock Agents Act 2002 states:

Licensees' records in relation to the handling of trust money must be audited.

Who is required to have their trust accounts audited?

The following people must have their trust accounts audited if they received or held trust money during the financial year ending 30 June:

a licensee (corporation or individual)

a former licensee (corporation or individual), or

a personal representative of a licensee.

Generally, for licensed corporations, it is the corporation that receives and is responsible for trust funds and not an individual licensee. In these cases, the corporation must ensure the trust account audit takes place.

However, if an individual licensee receives and is responsible for trust money, then they must ensure the trust account audit is done.

Who is required to submit an audit?

All trust account audits must be completed and submitted online by the auditor through the Auditors Report Online portal.

When must the audit be submitted?

All audits must be submitted to the Secretary within 3 months after the end of the audit period and no later than 30 September of that year.

Please note that all previously approved alternate audit periods are now rescinded.

If a trust account audit is not submitted by the due date, licensees could be disqualified from holding or renewing a licence.

Who can conduct the audit?

Auditors must be qualified under section 115 of the Property and Stock Agents Act 2002.

Registered audit companies, authorised company auditors and members of a Professional Accounting Body holding a Public Practising Certificate or Certificate of Public Practice can conduct the audit.

Professional Accounting Body is defined under the Australian Securities and Investments Commission Act 2001, for example, CPA Australia, Chartered Accountants Australia and New Zealand and the Institute of Public Accountants.

Who can't conduct the audit?

Within the last 2 years of the audit period, an auditor must not have been employed by, nor be a partner of, the person whose records or documents are to be audited.

An auditor must not be a licensee, or a shareholder in a corporation that is a licensee with less than 20 shareholders.

Check that an auditor is registered by searching for their details on the ASIC website.

Audit recordsLicensees are required to hold a copy of their trust account audit (whether qualified or not) at their registered place of business, for at least 3 years, and make it available to Fair Trading inspectors for examination if required.

NOTE:A qualified audit is an audit which discovered a breach of the ACT or regulations.

No trust monies heldLicensees who did not hold or receive trust money during the audit year are required to note whether or not they did so when they next re-apply for their licence.

Review of Trust AccountsSecretarys Guidelines for the Proper Supervision of the Business of a Licensee under s32 of the Property and Stock Agents Act 2002

Extract:

3. Trust account procedures

3.1A principal licensee who employs a licensee in charge must:

3.1.1ensure that each trust account maintained in accordance with Part 7 o

the Act by the principal licensee, in connection with their business as a

licensee, has only one licensee in charge who is responsible for and able

to authorise withdrawal of money from that account, and

3.1.2prepare and maintain a document that clearly identifies each licensee

in charge and the trust account/s for which they are responsible.

3.2A principal licensee must prepare and maintain written procedures for the

review of trust accounts and daily or next day banking practices with respect

to the receipt of trust money.

3.3.Without limiting clause 3.2, the written procedures must ensure:

3.3.1 that each trust account has only one licensee in charge who can

authorise the withdrawal of trust money from that account, and details of

the relevant licensee in charge and trust account have been recorded for

each trust account,

3.3.2a review of trust account transactions is conducted at least once per

calendar month,

3.3.3 the amounts deposited into and withdrawn from the trust account have

been verified using the relevant financial institutions records as source

documents,

3.3.4 all persons who have access to the trust account system have

separate logins, and their passwords are not shared with anyone,

3.3.5 any adjustments shown in an end of month reconciliation can be

explained with evidence,

3.3.6 there are processes for obtaining and documenting the express

authorisation of a licensee in charge to withdraw trust funds in

accordance with the Regulation,

3.3.7rental and sales money is paid into the appropriate trust accounts, and

3.3.8rental money owing to a landlord under a residential tenancy

agreement (less any authorised expenses) is paid to the landlord at the

end of each calendar month, unless instructed otherwise by the landlord.

3.A licensee in charge must maintain a record of all cash transactions which

includes, at a minimum:

3.4.1the cash amount received,

3.4.2the name of the person who received the cash from the payer,

3.4.3the name of the person who prepared the daily banking of those funds,

3.4.4the name of the person who deposited the funds in trust at the financial

institution, and

3.4.5the trust account details.

Unclaimed trust moneyFrom 1 July 2013, the responsibility for handling unclaimed trust money was transferred from NSW Fair Trading to Revenue NSW.

The Unclaimed Money Act 1995 now applies to unclaimed money held in a trust account under the Act.

Trust money is considered unclaimed if it has been held by a licensee for more than two years in a trust account. This applies to all amounts of money.

A licensee must make reasonable efforts to locate the owner of any outstanding money in the trust account.

Failure to do so could attract a penalty of up to $5,500.

Money held in a trust account by a former licensee, or the personal representative of a deceased licensee is unclaimed money and must be returned to the Revenue NSW within three months after the person ceased to be a licensee or became a personal representative.

Failure to comply can attract a penalty of up to $5,500 and up to $550 for each additional day of non-compliance.

What to do with unclaimed trust money

All returns and payments should be made to the Chief Commissioner Revenue NSW, and not to Fair Trading.

Recording trust accounting transactions to trial balance.Trust Accounting Flow Chart

Source documents: - When transactions take place source documents are created, such as a receipt is written, or a cheque is drawn, and the details of the cheque are recorded on the cheque butt.

Journals: - The details of the transactions are entered into Journals (trust cash book) from the source documents. The trust cash book consists of the trust cash receipts journal and the trust cash payments journal. All the pages of the trust cash book must be numbered consecutively.

Trust account transfer journal:-In the event a transaction has been posted to the wrong trust ledger account the entries required to make the correction must be recorded in the trust account transfer journal.

Ledger Accounts: - A separate ledger account must be maintained for each principal. Transferring the transactions form the trust cash book to the ledger is referred to as posting to the ledger. This should be done as soon as possible after the transaction has occurred.

Note: When posting to the trust ledger accounts there must be a cross reference established between the trust cash book and the trust ledger accounts. The trust cash book page number is recorded in the trust cash book Number (TCB No.) column of the trust ledger account and the trust ledger account numbers are recorded in the trust cash book.

Trial balance The Trial Balance is merely a list of all the account balances in the trust ledger. If the double entry procedures have been followed correctly, the debit balance (The trust bank ledger account) will be equal to the credit balances (The total of the principals ledger accounts.

Financial reports are prepared: - The reports prepared from the trust ledgers will include Statements to Landlords, in accordance with the management agreements for properties under management and statements to vendors on the completion of a sale.

Trust account transfer journalsIn the event a transaction has been posted to the wrong trust ledger account the correction must first be recorded in the trust account transfer journal and signed by the Licensee in charge. This must be done prior to the transaction being entered into the trust accounting records. This is the source document for the transaction.

Property and Stock Agents Regulation 2014

Part 4 section 27

(1)A licensee must record in a journal, maintained exclusively for the licensees trust account, all transfers between accounts in the trust account ledger that are not effected by cheque or electronic funds transfer.

(2)The recording must include the following

(a) the date of the transfer,

(b) the amount transferred to and from each ledger account,

(d) the relevant reference number or other identification,

(e) sufficient particulars to identify the transfer and the reason for the transfer.

(3)Each transfer, when entered in the journal, is to be numbered consecutively.

Example: Trust account transfer journal:- The bond ($2,800) paid by a tenant J. Strick is posted to the Landlords, K. Smyth account and should have been posted to the Rental Bond Board Suspense account, RBB.

Transfer from CR

Transfer to Date Particulars Ledger Account No. $ $ 11.5.20xX K Smyth (landlord) 210 2800.00 Signature of licensee in charge.

11.5.20xX RBB

(Rental Bond Board Suspense) 200 2800.00 Bond monies for J. Strick mistakenly placed in owner ledger K Smyth

Error rectified by transferring monies from K Smyth to RBB

Cash book

The cash book includes the trust cash receipts journal and the cash payments journal.

Each page of the trust cash book must be numbered, e.g., TCB01.

The information recorded in the Trust cash receipts journal is as follows:

Date:

The date the receipt was issued.

Receipt Number: Enter the receipt number. Receipts are source documents.

Receipt Type:

How was the money received, Cheque, EFT or Cash

Received from: The name of the person who paid the money.

On account of: Who did you receive the money for, i.e. On whose behalf are you holding the money, this will be the ledger account name.

NB: If one payment is received for both rent and bond, two receipts will be issued and will require two entries in the trust receipt journal.

Account number: Enter the trust ledger account number.

Transaction:

Why did you receive the money, e.g.,10% or preliminary deposit, rent, etc.

Amount $:

How much money was received?

Bank $: How much money was banked on this day, i.e., there may be several transactions on one day and the total of those transactions are banked on the day.

If a payment was made, it will be recorded in the trust cash payments journal, the details for each payment made are recorded as follows:-The information recorded in the Trust payments journal is as follows

Date:

The date the payment was made.

Cheque/EFTNumber: Enter the cheque number or the EFT transaction number. This is the source document number.

Payee

The name of the person/entity the payment was made to, i.e. The name on the cheque.

On account of: Who did you make the payment for, i.e., on whose behalf are you making the payment, this will be the name of ledger account.

Account number: The trust ledger account number the transaction will be posted to.

Transaction:

Why did you pay the money, e.g., stove repairs, fence repairs etc.

Bank $: The amount the cheque/EFT was for. A cheque /EFT can only be drawn for one amount.

Immediately after you have recorded the transaction in the trust cash book, post the transaction to the Principals trust ledger account. The Principals ledger accounts must be kept up to date.

Trust Ledger Accounts

The trust bank account ledger is updated at the end of each month. Receipts are posted to the Debit (DR) column and payments to the Credit (CR) column. The bank must always result in a DR balance.

Account Name: Trust Bank Account e.g., Property Management Trust AccountAccount Number: Number allocated to bank account

Date Particulars TCBNumber Debit

$ Credit

$ Balance

Last day of month Receipts

Cash book page number

e.g., 01 Total amount of receipts for month-Money in Total amount of payments for the month Money Out Balance after each transaction is posted. (must always be a DR balance)

The Principals ledger accounts are updated after each transaction, money received is posted to the credit column and payments are posted to the debit column, The Principals accounts must always result in a CR balance

Account Name: Name of the Principal funds are held for e.g., Landlords nameAccount Number: Account number allocated to Principal

Date Particulars TCBNumber Debit

$ Credit

$ Balance

Date of

transaction Details of transaction

Cash book page number

e.g., 01 Amount of Money paid out. Amount of money received Balance after each transaction is posted. (must always result in a CR balance)

End of month procedure

Balance the trust cash book.

The steps to balancing the trust cash book are as follows:

Step 1Total Receipts:

Add up both the amount column and the bank column (include the balance brought forward, if there is one) of the trust cash receipts journal, the total of these two columns must be the same. Only the total of receipts for the month is posted to the DR column of the bank trust ledger.

Step 2Total Payments:

Add up the bank column of the trust cash payments journal and write the total next to the word Sub/total.

Step 3Balance carried forward:

Calculate the balance to be carried forward to the next period; this is the amount of money which you have in the trust bank account at the end of the period. It is the amount of money which will be brought forward in the next period. The receipts minus the payments.

Note: The closing balance of one period is always the opening balance of the next period.

Total receipts journal Total payments journal = balance carried forward

Step 4Record balance carried forward:

Record the balance carried forward figure, (you just calculated), under the sub/total of payments figure and add it to the sub/total payment figure, the total should be equal to the total receipts.

Step 5Record balance carried forward, receipt side:

Record the balance brought forward figure in the bank column of the trust cash receipts journal. The date is the first day of the next period, this balance will be the entered in the amount and the bank column, as the brought forward for the beginning of the period.

Post to trust bank ledger account

The total of the receipts for the current month is posted to debit column of the trust bank ledger, the balance is then updated. The total of the payments for the month is posted to the credit column of the trust bank ledger, and then the balance is updated. The date is the last day of the month. The balance of the trust bank ledger account will be the same as the balance brought forward in the trust cash book and must always have a debit balance (DR).

Note: The amount of receipts posted to the debit column is the total received for the month; If the trust bank account had a balance brought forward from the previous period, the amount posted will be the total receipts at the end of the period minus the balance brought forward, the updated balance will be equal to total receipts in the cash book.

Prepare a Trial Balance

Only include the trust ledger accounts which have a balance. Record the trust ledger account name, account number and the balance of the account, in the corresponding debit or credit column. The total debit balance (only the trust bank account) must be equal to the total of the trust ledger accounts credit balances. If the debit balance is equal to the credit balances, you have followed the double entry accounting process correctly, you balance!!!

TRIAL BALANCE AS AT

Name of trust Account

Last day of month

__________________________________________

Name Account

Number Debit ($) Credit ($)

Trust bank account Account number Balance of trust bank account ledger Name of Principals account Account number Balance of Principals accounts

TOTAL XXXXXXX XXXXXXX

The debit balance at the bank must equal the credit balances.

Dishonoured cheques

If a cheque has been received and banked and then the bank notifies you that the cheque has been dishonoured (for example, because there are insufficient funds in the drawers bank account, or the drawer has instructed the bank not to pay the cheque), a reversal entry must be made to record that you have less money in the trust bank account than you anticipated.

It is important that you have an arrangement with the bank not to debit bank and government fees and charges to the general trust account.

Debiting the trust bank account with charges for processing a dishonoured cheque could lead to a breach of the regulations, because you would be disbursing trust money other than as directed by the client. Such charges should be debited to the businesss general bank account, or paid separately, and be entered in the office account records.

An example of a reversal entry is as follows. On 7th December 20xx J. Peters gives you a cheque for $5000 (in advance) for auction and advertising costs. As you have not yet incurred the costs and rendered a tax invoice, you pay the money into the trust account. You write a receipt, enter the receipt in the trust account receipts cash book, and post the entry to the ledger, resulting in a credit in the clients, J. Peters, ledger account.

On 10 December 20xx you receive notice from the bank the cheque has been dishonoured and make a reversal entry in the cash book. The entry is made in the cash payments journal, no cheque number, and no payee, (you are not making a payment) on account of is J. Peters and the transaction is dishonoured cheque. You then post the entry to the ledger as a debit, bringing the balance of the account back to nil, as it should be.

When J Peters pays you again with, a bank cheque or cash, a new receipt is issued and recorded in the trust cash book and trust ledger account. Any bank fees incurred are collected from the J. Peters and paid into the general business account.

Trust Exercises

Property ManagementExercise No. 1 - Class

Using the following information provided by the licensee of Sydney Realty Pty Ltd, you are required to:

Correctly complete the Trust Cash Book

Correctly complete the Trust Ledgers

Correctly complete the Trust Trial Balance as at 30th November, 20xx.

Students to note the following:

The Trust Cash Book, Trust Ledger and Trust Trial Balance are to be completed so as to comply with the Property, Stock and Agents Act 2002, and the Regulations 2014.

The next Trust Receipt Number to be issued is Number 001 and the next Trust Cheque Number is Number 001

All trust receipts are banked on day of receipt.

All receipts and payments are by cheque unless otherwise stated.

All transactions are GST free unless stated.

November 20xx

2ndObtained a tenant M. Moon, owner H. Clause. M. Moon paid with two cheques. One cheque was for two weeks rent, which amounted to $1,000, the other for $2,000, made payable to the Rental Bond Board. Do not record Bond it was made out to the RBB

Paid the office telephone account $2,500-Do not record this transaction, it belongs in the general business accounts

5thPaid J. Freshman $5,600 being his share of commission for the month of October.

7thApproved a new tenant for a townhouse owned by P. Cox. The tenant J. June paid the agency with cash, total of $3,000. This represented two weeks rent and four weeks bond.

11thPaid the Rental Bond Board all outstanding money

14thPaid B. Black $340 for repairs to the shower recess. The property is owned by P. Cox.

16thM. Moon paid three weeks rent.

18thPaid $1,200 valuation fees to N. Milan, a qualified valuer.

Paid the petrol account $978 for the month of October,

19thAdvised19/11/ by the bank the cheque from M. Moon was dishonoured.

21stM. Moon came into the office and paid cash for the same amount of the dishonoured cheque.

23rdSettled with P. Cox for the month. Property management fees 7.7% of rent collected GST inclusive.

Trust Cash Book Receipts JournalProperty Management Trust AccountSydney RealtyExercise No.PM-1 TCB No. 01

Date Receipt

No. Receipt

Type Received From On Account Of AccountNumber Transaction Amount

$ Bank

1/11/23 Balance B/FwdNIL

2/11/23 001 CHQ M. Moon H. Clause 011 2 weeks rent 1,000 1,000

7/11/23 002 CASH J. June P. Cox 012 2 weeks rent 1,000 7/11/23 003 CASH J. June Rental Bond Board (RBB) 013 Bond 2,000 3,000

16/11/23 004 CHQ M. Moon H. Clause 011 3 weeks rent 1,500 1,500

21/11/23 005 CASH M. Moon H. Clause 011 3 weeks rent 1,500 1,500

STEP 1 Add up receipts 7,000 7,000

1/12/23 Balance B/FWd2,500

Trust Cash Book Payments JournalExercise No. PM 1 TCB No. 01

Date ChequeNo. PAYEE On Account Of Account

Number Transaction Bank

11/11/23 001 Rental Bond Board Rental Bond Board 013 Bonds 2,000

14/11/23 002 B. BLACK P. Cox 012 Shower recess repair 340

19/11/23 ----- ---------------------- H. Clause 011 Dishonoured Chq - Moon 1,500

23/11/23 003 Sydney Realty Pty Ltd P. Cox 012 Management fee 77

23/11/23 004 P. Cox P. Cox 012 Settlement 583

STEP 2 Add up payments Subtotal 4,500

Step 3 Calaculate Bal C/Fwd7000-4500=2500 Step 4 record and add bal C/Fwd2,500

7,000

Trust Ledger Accounts.Exercise No. PM -1

Account Name: Property Management Trust bank AccountAccount Number: 010

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/11/23 Balance B/FwdNIL

30/11/23 Receipts 01 7,000 7,000 DR30/11/23 Payment 01 4,500 2,500 DRAccount Name: H. ClauseAccount Number: 011

Date Particulars TCBNumber Debit

$ Credit

$ Balance

2/11/23 2 weeks rent - Moon 001 1,000 1,000 CR16/11/23 3 weeks rent Moon 001 1,500 2,500 CR19/11/23 Dishonoured Chq- Moon 001 1,500 1,000 CR21/11/23 3 weeks rent Moon 001 1,500 2,500 CRAccount Name: P. Cox

Account Number: 012

Date Particulars TCBNumber Debit

$ Credit

$ Balance

7/11/23 2 weeks rent June 01 1,000 1,000 CR14/11/23 Shower recess repair 01 340 660 CR23/11/23 Management fee 01 77 583 CR23/11/23 Settlement 01 583 NIL

Account Name: Rental Bond BoardAccount Number: 013

Date Particulars TCBNumber Debit

$ Credit

$ Balance

7/11/23 Bond June 01 2,000 2,000 CR11/11/23 Bonds 01 2,000 nil

TRIAL BALANCE AS AT

_____30/11/23__________

Name Account

Number Debit ($) Credit ($)

PM Trust bank Account 010 2,500 H. Clause 011 2,500

TOTAL 2,500 2,500

Property Management

Trust Exercise No. 2

This exercise includes recording opening balances.

Using the following information provided by the licensee of Bondi Realty Pty Ltd, you are required to:

Correctly complete the Trust Cash Book

Correctly complete the Trust Ledgers

Correctly complete the Trust Trial Balance as at 31st May, 20xx.

Students to note the following:

The Trust Cash Book, Trust Ledger and Trust Trial Balance are to be completed so as to comply with the Property, Stock and Business Agents Act 2002, and the Regulations 2014.

The next Trust Receipt Number to be issued is Number 55 and the next Trust Cheque Number is Number 73

All trust receipts are banked on day of receipt.

All receipts and payments are by cheque unless otherwise stated.

All transactions are GST free unless stated.

The Trust Ledger had the following balances as at 30th April 20xx

100Trust Bank Account$ 2,000 Debit

130L. Fox$ 2,000 Credit

Record opening balances:-The opening balance for the trust bank account is recorded on the first line in the amount and bank columns of the trust cash receipts journal and on the first line of trust bank ledger account. The date is 1st day of the period. Balance brought forward can be abbreviated to Balance B/Fwd.

The balance(s) B/Fwd. are recorded in the principals trust ledger accounts.

Once the trust cash book and ledgers have been established and the opening balances have been recorded, you can start recording the transaction for the month

May

2ndObtained a new tenant, P. Marcher for a property owned by K. Richards. Marcher paid with 2 cheques, one for 2 weeks rent $1,100 and the other made payable to the Rental Bond Board $2,200.

3rdP. Malone, who rents from L. Fox paid 3 weeks, rent $1,500, by EFT.

6thPaid $250 to ABC repairs for a repair to the stove on behalf of L. Fox

9thObtained a new tenant D. Shaw, for a property owned by M. Pike, Shaw paid a total of $3,360 for 2 weeks and 4 weeks bond.

10thSettled with L. Fox for the month, management fee $120 Inc. GST

10thPaid all monies held to the Rental Bond Board

15thPurchased a new photocopier $5,600

Paid monthly salaries $5,600

17thReceived 1 weeks rent from D. Shaw (Landlord M. Pike)

20thThe last cheque from D. Shaw was dishonoured. D. Shaw came into the office and paid with cash and it was banked today.

21stPaid Wentworth Courier $920 for the months advertising.

25thPaid $275 to All Fences for a fence repair to the property owned by M. Pike.

27thP. Malone paid 2 weeks rent (Landlord Fox)

30th Settled with M. Pike, management fee is 7.7%including GST of rent collected.

Trust Cash Book Receipts JournalExercise No. PM02TCB No. 02

Date Receipt

No. Receipt

Type Received From On Account Of AccountNumber Transaction Amount

$ Bank

1/5/23 Balance B/Fwd2,000 2,000

2/5/23 55 CHQ P. Marcher K. Richards 131 2 weeks rent 1,100 1,100

3/5/23 56 EFT P. Malone L. Fox 130 3 weeks rent 1,500 1,500

9/5/23 57 CHQ D. Shaw M. Pike 132 2 weeks rent 1,120 9/5/23 58 CHqD. Shaw Rental Bond Board (RBB) 133 Bond 2,240 3,360

17/5/23 59 CHQ D. Shaw M. PIKE 132 1 weeks rent 560 560

20/5/23 60 CASH D. Shaw M. Pike 132 1 weeks rent 560 560

27/5/23 61 CHQ P. Malone L. Fox 130 2 weeks rent 1,000 1,000

10,080 10,080

1/6/23 Balance C/ Fwd2,100

Trust Cash Book Payments JournalExercise No. 2TCB No.02

Date ChequeNo. PAYEE On Account Of Account

Number Transaction Bank

6/5/23 73 ABC Repairs L. Fox 130 Stove repair 250

10/5/23 74 Bondi Realty Pty Ltd L. Fox 130 Management fee 120

10/5/23 75 L. Fox L. Fox 130 Settlement 3,130

10/5/23 76 Rental Bond Board RBB 133 Bonds 2,240

20/5/23 ------ ----------------------- M. Pike 132 Dishonoured chq Shaw 560

25/5/23 77 All Fences M. Pike 132 Fence repair 275

30/5/23 78 Bondi Realty Pty Ltd M. Pike 132 Management fee @ 7.7% 129.36

30/5/23 79 M. Pike M. Pike 132 Settlement 1,275.64

Sub/Total 7,980

10,080 7980 = 2,100 Balance C/Fwd2,100

10,080

Trust Ledger Accounts.

Account Name: Bondi Realty Property Management Trust Bank AccountAccount Number: 100

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/5/23 Balance B/Fwd2,000 DR31/5/23 Receipts 02 8,080 10,080 DR31/5/23 Payments 02 7,980 2,100 DRAccount Name: L. FoxAccount Number: 130

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/5/23 Balance b/Fwd2,000 CR3/5/23 3 weeks rent Malone 02 1,500 3,500 CR6/5/23 Stove repair 02 250 3,250 CR10/5/23 Management fee 02 120 3,130 CR10/5/23 Settlement 02 3,130 NIL

27/5/23 2 weeks rent Malone 02 1,000 1,000 CRAccount Name: K. RichardsAccount Number: 131

Date Particulars TCBNumber Debit

$ Credit

$ Balance

2/5/23 2 weeks rent - Marcher 02 1,100 1,100 CR

Account Name: M. PikeAccount Number: 132

Date Particulars TCBNumber Debit

$ Credit

$ Balance

9/5/23 2 weeks rent - Shaw 02 1,120 1,120 CR17/5/23 1 weeks rent Shaw 02 560 1,680 CR20/5/23 Dishonoured Chq- Shaw 02 560 1,120 CR20/5/23 1 weeks rent 02 560 1,680 CR25/5/23 Fence repair 02 275 1,405 CR30/5/23 Management fee 02 129.36 1,275.64

30/5/23 Settlement 02 1,275.64 NIL

Account Name: Rental Bond BoardAccount Number: 133

Date Particulars TCBNumber Debit

$ Credit

$ Balance

9/5/23 Bond shaw 02 2,240 2,240 CR10/5/23 Bonds 02 2,240 NIL

Account Name: Account Number:

Date Particulars TCBNumber Debit

$ Credit

$ Balance

TRIAL BALANCE AS AT

_________________31/5/23_________________________

Name Account

Number Debit ($) Credit ($)

Bondi Realty PM Trust Account Bank 100 2,100 L. fox 130 1,000

K. Richards 131 1,100

TOTAL 2,100 2,100

Sales

Exercise 1- Class

Using the following information provided by the licensee of Sydney Realty Pty Ltd, you are required to:

Correctly complete the Trust Cash Book

Correctly complete the Trust Ledgers

Correctly complete the Trust Trial Balance as at 30th November, 20xx.

Students to note the following:

The Trust Cash Book, Trust Ledger and Trust Trial Balance are to be completed so as to comply with the Property, Stock and Agents Act 2002, and the Regulations 2014.

The next Trust Receipt Number to be issued is Number 001 and the next Trust Cheque Number is Number 001

All trust receipts are banked on day of receipt.

All receipts and payments are by cheque unless otherwise stated.

All transactions are GST free unless stated.

November 20xx

2ndSigned an exclusive listing for a property owned by P. Gold. The property has been listed for sale at $965,000.

Received $25,000 being a deposit from J. Lots for a property owned by S. Pleat

3rdReceived $720 from P. Gold for advertising his property.

Received a bank cheque for $235,000 (10% deposit) from L. Snow for a property owned by T. Thong. Both parties agreed for this amount to be deposited in an interest bearing account with Citibank until settlement takes place, at which time the interest earned thereon will be shared equally between the two parties.

Paid the office telephone account $2,500

20thReceived $40,000 from C. Lowman, being a preliminary deposit for a property owned by S. Pauly.

24thC. Lowman paid the remainder of the 10% deposit for the property owned by S. Pauly, Sale price is $1,100,000.

30thThe sale Thong to Snow settled. The initial investment, plus interest of $2,100 was bank into the trust account. Cheques were draw including a cheque for $162,440 for commission.

Trust Cash Book Receipts JournalSales Trust AccountExercise No. ST Ex01TCB No. 01

Date Receipt

No. Receipt

Type Received From On Account Of AccountNumber Transaction Amount

$ Bank

1/11/23 Balance B/FwdNIL

2/11/23 001 CHQ J. Lots Pleat to Lots 011 Deposit 25,000 25,000

3/11/23 002 CHQ P. Gold P. Gold 012 Advertising 720 3/11/23 003 B CHQ L. Snow Thong to Snow 013 10% Deposit 235,000 235,720

20/11/23 004 CHQ C. Lowman Pauly to Lowman 014 Preliminary deposit 40,000 40,000

24/11/23 005 CHQ C. Lowman Pauly to Lowman 014 Balance of 10% deposit 70,000 70,000

30/11/23 006 CHQ Citibank Thong to Snow 013 10% deposit plus interest 237,100 237,100

607,820 607,820

1/12/23 Balance B/Fwd135,720

Trust Cash Book Payments JournalExercise No.01TCB No.01

Date ChequeNo. PAYEE On Account Of Account

Number Transaction Bank

3/11/23 001 Citibank Thong to Snow 013 Investing 10% deposit 235,000

30/11/23 002 Sydney Realty Pty Ltd Thong to Snow 013 Commission 162,440

30/1/23 003 Snow Thong to Snow 013 Half interest earned 1,050

30/1/23 004 Thong Thong to Snow 013 Settlement + interest 73,610

Sub/Total 472,100

Bal C/Fwd 607,820-472,100 = 135,720 Balance c/Fwd135,720

607,820

Trust Ledger Accounts.Exercise No. S 01

Account Name: Sydney Realty Sales Trust Bank accountAccount Number: 010

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/11/23 Balance b/FwdNIL

30/11/23 Receipts 01 607,820 607,820 DR30/11/23 Payments 01 472,100 135,720 DRAccount Name: Pleat to Lots

Account Number: 011

Date Particulars TCBNumber Debit

$ Credit

$ Balance

2/11/23 Deposit 01 25,000 25,000 CRAccount Name P. Gold

Account Number: 012

Date Particulars TCBNumber Debit

$ Credit

$ Balance

3/11/23 Advertising 01 720 720 CR

Account Name: Thong to Snow

Account Number: 013

Date Particulars TCBNumber Debit

$ Credit

$ Balance

3/11/23 10% Deposit 01 235,000 235,000 CR3/11/25 Invest 10% deposit 01 235,000 NIL

30/11/23 10% Dep + Int 01 237,100 237,100 CR30/11/23 Commission 01 162,440 74,660 CR30/11/23 interest 01 1,050 73,610 CR30/11/23 Settlement + Int 01 73,610 NIL

Account Name: Pauly to LowmanAccount Number: 014

Date Particulars TCBNumber Debit

$ Credit

$ Balance

20/11/23 Prelim Dep 01 40,000 40,000 CR24/11/23 Bal 10% deposit 01 70,000 110,000 CRTRIAL BALANCE AS AT

_________________30/11/23_________________________

Name Account

Number Debit ($) Credit ($)

Sales trust bank account 010 135,720 Pleat to Lots 011 25,000

P. Gold 012 720

Pauly to Lowman 014 110,000

TOTAL 135,720 135,720

Sales- Exercise 2

This exercise includes recording opening balances.

Using the following information provided by the licensee of Bondi Realty Pty Ltd, you are required to:

Correctly complete the Trust Cash Book

Correctly complete the Trust Ledgers

Correctly complete the Trust Trial Balance as at 31st May, 20xx.

Students to note the following:

The Trust Cash Book, Trust Ledger and Trust Trial Balance are to be completed so as to comply with the Property, Stock and Agents Act 2002, and the Regulations 2014.

The next Trust Receipt Number to be issued is Number 55 and the next Trust Cheque Number is Number 73

All trust receipts are banked on day of receipt.

All receipts and payments are by cheque unless otherwise stated.

All transactions are GST free unless stated.

The Trust Ledger had the following balances as at 30th April 20xx

100Trust Bank Account$44,000 Debit

110P. Nords to J. Ride$24,000 Credit

120J. Stein to K. Peters$20,000 Credit

The balance(s) B/Fwd. are recorded in the principals trust ledger accounts.

Once the trust cash book and ledgers have been established and the opening balances have been recorded, you can start recording the transaction for the month.

May

5thReceived $550,000 a 10% deposit, from C. Lone for a property owned by R. Rob. Both parties agreed to invest the deposit in an interest bearing account, at Westpac, until settlement. Interest earned will be shared equally between the two parties.

7thThe sale Stein to Peters has now settled, the balance of the deposit was forwarded to the vendor by after deducting commission of $8,300 including GST.

15thPurchased a new photocopier $8,600

Paid monthly salaries $9,600

17thReceived a preliminary deposit $55,000 from S. Rite for a property owned by T. Antler.

19thReceived $5,500 for auction and advertising for a new listing of property owned by J Swift

21stPaid Wentworth Courier $620 for the months advertising.

28thS. Rite paid the balance of the 10% deposit on the property owned by T. Antler; the sale price is $1,500,000.

31st The sale Rob to Lone settled. The initial deposit plus the interest earned, $1,200 was received into the trust bank account by EFT. Cheques were draw including a cheque for commission of $105,000.

Trust Cash Book Receipts JournalSalesExercise No.2TCB No.02

Date Receipt

No. Receipt

Type Received From On Account Of AccountNumber Transaction Amount

$ Bank

1/5/23 Balance B/Fwd44,000 44,000

5/5/23 55 CHQ C. Lone Rob to Lone 121 10% Deposit 550,000 550,000

17/5/23 56 CHQ S. Rite Antler to Rite 122 Preliminary dep 55,000 55,000

19/5/23 57 CHQ J. Swift J. Swift 123 Auction & Advertising 5,500 5,500

28/5/23 58 CHQ S. Rite Antler to Rite 122 Balance of 10% Dep 95,000 95,000

31/5/23 59 EFT Westpac Rob to Lone 121 10% deposit + interest 551,200 551,200

Step 1 1,300,700 1,300,700

1/6/23 Step 5 - Balance B/Fwd179,500

Trust Cash Book Payments JournalExercise No.2TCB No.02

Date ChequeNo. PAYEE On Account Of Account

Number Transaction Bank

5/5/23 73 Westpac Rob to Lone 121 Investing 10% deposit 550,000

7/5/23 74 Bondi Realty Stein to Peters 120 Commission 8,300

7/5/23 75 Stein Stein to Peters 120 Settlement 11,700

31/5/23 76 Bondi Realty Rob to Lone 121 Commission 105,000

31/5/23 77 Lone Rob to Lone 121 interest earned on deposit 600

31/5/23 78 Rob Rob to Lone 121 Settlement + Int 445,600

Step 2 Sub/total 1,121,200

31/5/23 Step 3- Bal C/Fwd = 1300700-1121200 = Step 4 179,500

179,500 1,300,700

Trust Ledger Accounts.Exercise No.02

Account Name: Bondi Realty Sales Trust AccountAccount Number: 100

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/5/23 Balance B/Fwd44,000 DR31/5/23 Receipts 02 1,256,700 1,300,700 DR31/5/23 Payments 02 1,121,200 179,500 DRAccount Name: P. Nords to J. RideAccount Number: 110

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/5/23 Balance B/Fwd24,000 CRAccount Name: J. Stein to K PetersAccount Number: 120

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/5/23 Balance B/Fwd20,000 CR7/5/23 Commission 02 8,300 11,700 CR7/5/23 Settlement 02 11,700 NIL

Account Name: Rob to LoneAccount Number: 121

Date Particulars TCBNumber Debit

$ Credit

$ Balance

5/5/23 10% Deposit 02 550,000 550,000 CR5/5/23 Invest 10% dep 02 550,000 NIL

31/5/23 Dep + Int 02 551,200 551,200 CR31/5/23 Commission 02 105,000 446,200 CR31/5/23 Int 02 600 445,600 CR31/5/23 Settlement + Int 02 445,600 NIL

Account Name: Antler to Rite

Account Number: 122

Date Particulars TCBNumber Debit

$ Credit

$ Balance

17/5/23 Prelim Dep 02 55,000 55,000 CR28/5/23 Bal 10% Dep 02 95,000 150,000 CRAccount Name: J. SwiftAccount Number: 123

Date Particulars TCBNumber Debit

$ Credit

$ Balance

19/5/23 Auction & Ads 02 5,500 5,500 CR

TRIAL BALANCE AS AT

_________________31/5/23________________________

Name Account

Number Debit ($) Credit ($)

Bondi Sales Trust Account 100 179,500 Nord to Ride 110 24,000

Antler to Rite 122 150,000

J. Swift 123 5,500

TOTAL 179,500 179,500

Bank ReconciliationsWhat is a Bank Reconciliation?

A bank reconciliation bank rec', is a process by which you identify and explain any differences between how much cash you think you have, and the amount of cash shown on your bank balance.

It is very unlikely that at any given moment the bank's records will exactly match those of the business.

Bank reconciliations

Trust Account

It is a requirement of the Property, Stock and Business Agents Regulation 2014:- The Licensee must, at the end of each month, prepare a statement reconciling the balance of the licensees trust account with the balance of the related cash book. A bank reconciliation must be performed on the Trust bank account at the end of each month.

General Business Account

A bank reconciliation has two extremely important purposes: To verify that your accounting records are accurate and to ensure that the bank has correctly credited your account with all the cash owed to you. The reconciliation allows you to ensure that your records, and the bank's, are correct.

What can cause discrepancies?

A discrepancy is something which appears in one of these sets of records but not in the other. In order for the two sets of records to match, any errors must be removed, and every legitimate transaction must appear somewhere in both sets.

TimingThe accounting and bank records you are working with are a snapshot of your financial position from two different perspectives and one of the main causes of differences between them is simply timing for example, you will have recorded a transaction in your cash ledger the moment you received a cheque or made a deposit, but this may not yet have been processed by the bank. In a few days the bank's records will catch up with your own.

Bank fees and chargesThe bank may automatically debit your account with fees or interest. Until you receive your statement you will have no record of these amounts. When opening a Trust account an arrangement with the financial institution needs to be made, so any fees or charges are debited to the general business.

Un-presented chequesWhen a company issues a cheque it immediately records the payment as having been made, but many cheques do not get presented by the recipient until sometime later. You will have to account for the missing cheque in each bank reconciliation until it is finally cashed or is cancelled and reissued.

Other DiscrepanciesDuring a reconciliation you may also identify errors in one of the sets of records for example transposed figures (652 instead of 562) or amounts which were incorrectly credited or debited to your account by the bank.

If the error occurred in the cash book, it must be corrected in the cash book and the relevant ledger account updated. If the bank made the error, it must be recorded on the bank reconciliation and the error must be communicated to the bank.

How to perform a bank reconciliation

Step 1.Compare your bank statement with your records (cash book)

Verify transactions by comparing the trust bank statement to the trust cash records of the business, i.e., trust cash receipts and trust payments journals (trust cash book) and the previous months bank reconciliation. Tick off transactions which match. That is, tick off transactions which appear in the trust records of both the business and the bank statement.

Note: If you are preparing the first bank reconciliation for the business, there will not be a bank reconciliation from the previous month. Therefore, you will only compare the cash book with bank statement.

Step 2.Update cash records of the business

Transactions which appear in the bank statement but were not ticked off in step 1 ("bank initiated transactions") must be recorded in the trust cash book. These transactions may include direct deposits, dishonoured cheques.

If the trust cash book has already been balanced and posted to the trust bank ledger account, these transactions should be recorded in the trust general journal and posted directly to the bank ledger account.

If trust cash book has not yet been balanced and posted to the ledger, the transactions may be added to the appropriate journal of the trust cash book, before the cash book is balanced, and included in posting the totals to the trust bank ledger account.

Where errors have been identified in Step 1 and it is determined that the bank record of the transaction is correct, an adjustment should be made as part of this step. Errors by the bank will be adjusted in Step 3.

Step 3.Prepare bank reconciliation

Transactions which appear in the cash records of the business but were not ticked off in Step 1 have not yet been received or processed by the bank. These transactions will include:

Outstanding deposits - recorded by the business as cash receipts but not appearing as a credit on the bank statement.

Unpresented cheques - recorded by the business as a cash payment but not yet debited to the bank statement.

These outstanding transactions must be allowed for in order to reconcile the bank statement balance with the final bank account balance determined in Step 2.

Bank errors - Where errors were identified in Step 1 and it is determined that the trust records of the business are correct; the bank statement balance must be adjusted to correct the error in this step. If you find any errors, add or deduct the amounts from your bank balance, on the bank reconciliation, and contact the bank with details.

Step 4.Compare the final balances

The adjusted bank balance and the adjusted trust cash book balance should be the same. If they don't match, then you will need to check everything again. Reconciliation has only been achieved when both sets of records show the same, true cash balance.

Step 5.Adjust your accounting records

If you have made any adjustments to your cash balance you will need to record these in your accounts, both in your bank ledger and in the corresponding ledger account. For example, if a customer's cheque has bounced you will need to record both the decrease in your cash balance, and an increase in the amount owed to your business by that customer.

Comprehensive ExampleThe example below shows the bank reconciliation as at 31 January 20xx, cash receipts and payments journals (cash book simplified) for February 20xx and the trust bank account statement received from the bank as at 28 February.

Note: The trust cash book in this example and the following exercises has been simplified, providing you only with the information you need to prepare a bank reconciliation.

Step 1 Has been completed with matching transactions ticked off (in red) between the trust bank statement and the simplified trust cash book and the following items identified:

An error has been identified in the amount of cheque number 43564 (circled in red).

Bank initiated transactions appearing on the trust bank statement which are not recorded in the trust cash book. (Indicated with an asterisk *).

Outstanding deposits (o/s) and unpresented cheques (u/p) marked on the trust cash book.42405301569720

190500681355Sydney Property Services Pty LtdTrust Bank Reconciliation as at 31/1/20xx

Credit balance as per bank statement 31/1/20xx$ 6,075

Add: Outstanding deposits 850

6,925

Less:Unpresented cheques $

Cheque No.43560 23243558up485 717

Debit balance as per Trust Cash Book 31/1/20xx 6,208

00Sydney Property Services Pty LtdTrust Bank Reconciliation as at 31/1/20xx

Credit balance as per bank statement 31/1/20xx$ 6,075

Add: Outstanding deposits 850

6,925

Less:Unpresented cheques $

Cheque No.43560 23243558up485 717

Debit balance as per Trust Cash Book 31/1/20xx 6,208

33318451806575

3400425197104000Trust Cash Book (Simplified)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

Feb

balance b/Fwd57150121920

6,208

Feb

236855175260

1057910123825

Receipts

770

5 Payments 43561 198755139065

510

1057910119380

Receipts

1,840

14 Payments 43562 76835187960

3,020

106235516256000Receipts

860

18 Payments 43563 14224017970500 1,260

Receipts

o/s 2,46022 Payments 43564 error 41523 Direct deposit 1,100 28 Payments 43565 3956051650900up 92016 Dishonoured c 250

23 Adj for error 43564 36

Sub/Tot 6,411

Bal C/Fwd6,827

13,238 13,238

1/3 Bal B/Fwd6,827

Step 2

The entries required for step two are shown above with cash journals and bank initiated transactions recorded in the simplified trust cash book (In blue). An adjusting entry is also recorded for the error in cheque number 43564 assuming the trust bank statement entry is correct. Balance the cash book, the procedure for balancing the cash is the same as in the previous exercises.

CITI BANKBank Statement Sydney Property Services Pty LtdTrust Account

Date

Details

Debit

Credit

Balance

FEB

1 1 Opening Balance 205740244475

6,075 CR1

Deposit 850 6,925 CR7

Deposit 22860039370

770 7,695 CR8 43560 28765533655

232 7,463 CR10 43561 22479025400

510 243840276860

6,953 CR15 Deposit 1,840 8,793 CR16 Dishonoured chq *250 8,543 CR18 43562 7429544450

3,020 5,523 CR22 43563 8001059690

1,260 4,263 CR23 Direct Deposit *1,100 5,363 CR23 43564 742952921000error 45124 Deposit 31242058420

860 5,772 CR28 Bank fees *40 5,732 CR28 Dishonoured chq fee *95 5,637 CR

Step 3Prepare bank reconciliation

Note: Arrangements have been made for any bank fees to be debited to the general business account, therefore the fees are added to the bank reconciliation and the bank would be notified to correct the error.

Bank Reconciliation as at 28/2/2015

Credit balance as per bank statement $

5,637

Add: outstanding deposits: 28/2/15 2,460 Bank fees in error 40 Dishonoured chq fee 95 2,595

8,232

Less: unpresented cheques: - chq 43558 (still O/S from previous month) 485 - chq 43565 920 1 405

Debit balance as per trust cash book 6,827

Bank reconciliations ExercisesExercise No. 1 (Simple, no previous bank reconciliation)

Trust Bank Reconciliation, 31/12/20xx

Sydney Property Services Pty Ltd

Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

Dec 1 Balance B/Fwd813 Dec 2 Payments 501 x266

9 Receipts x341 11 Payments 502 x260

20 Receipts x1,520 16 Payments 503 Up 385

28 Receipts x2,550 18 Payments 504 x380

31 Receipts o/s 3,202 27 Payments 505 x98

8,426 29 Payments 506 up310

31 Payments 507 up450

Payments 508 up31

1/1/xx Bal B/Fwd6,246 Sub/tot 2,180

Bal C/F 6,246

8,426

Note: Arrangements have been made for all bank fees and charges to be debited to the general business account. If errors are detected, the bank statement is correct.

Westpac Bank Statement

Sydney Property services Pty Ltd - TRUST ACCOUNT-

Date

Details

Debit

Credit

Balance

20xx $ $ $

Dec 1 Balance B/Fwd813 CR2 501 x266 547 CR9 Cash/Chqx341 888 CR14 502 x260 628 CR20 Cash/Chqx1,520 2,148 CR28 505 x98 2,050 CR28 Cash/Chqx2,550 4,600 CR29 504 x380 4,220 CR

Sydney Property Services Pty Ltd

Trust Bank Reconciliation as at 31/12/20xx

$ $

Credit balance as per bank statement 31/12/20XX Add: Outstanding deposit 31/12/20xx Less: Unpresented cheques Chq No Debit balance as per Trust Cash Book as at 31/12/20xx

Exercise No. 2 (Errors in cash book)

From the following records, prepare a bank reconciliation as at 30 June 20xx. Where there are differences in amounts between the bank statement and the records of the business, assume that the Bank statement is correct.

Previous months bank reconciliation

TOP Property services Pty LtdBank Reconciliation Statement as at 31 May 20xx

Credit balance as per bank Statement 31/5/xx $ $

29,000

Add: Outstanding deposit 27/5/xx

28/5/xx

Bank fees in error

x4,923

x2,729

x21 7,673

36,673

Less: unpresented cheques. Chq No. 873

881

897

906

908 up463

x1,000

x471

x873

up1,190 3,997

Debit balance as per Trust cash book 31/5/xx 32,676

TOP Property services Pty Ltd Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

June 1 Balance B/Fwd32,676 June 1 Payments 910 up175

5 Receipts x10,070 3 Payments 911 x2,120

10 Receipts x4,093 7 Payments 912 x2,163

15 Receipts x10,782 12 Payments 913 x1,124

20 Receipts x830 20 Payments 914 x295

25 Receipts x19,347 21 Payments 915 up4,090

30 Receipts o/s 1,460 21 Payments 916 x174

5 Adjust for err 1.00 23 Payments 917 up81

79,259 26 Ajust for error 914 (2.00)

10,220

Bal C/F 69,039

1 July Bal B/F 69,039 79,259

79259-10220

WestpacTOP Property Services Pty Ltd Trust Account

Date Particulars Debit Credit Balance

June 1 Balance B/Fwd29,000 CRDeposit x4,923 33,923 CR2 Deposit x2,729 36,652 CR881 x1,000 35,652 CR897 x471 35,181 CR906 x873 34,308 CR6 Deposit x10,071 44,379 CR911 x2,120 42,259 CR7 Reversed bank fees x21 42,280 CR12 Deposit x4,093 46,373 CR912 x2,163 44,210 CR16 Deposit x10,782 54,992 CR913 x1,124 53,868 CR21 Deposit x830 54,698 CR26 Deposit x19,347 73,045 CR914 x293 73,752 CR30 916 x174 73,578 CR

TOP Property services Pty Ltd

Trust Bank Reconciliation as at 30/6/20xx

$ $

Credit balance as per bank statement 30/6/20XX 73,578

Add: Outstanding deposit 30/6/20xx 1,460 1460

75,038

Less: Unpresented cheques Chq No

873 463

908 1,190

910 175

915 4,090 917 81 5,999

Debit balance as per Trust Cash Book as at 30/6/20xx 69,039

Exercise No. 3 (Cashbook error)

From the following records, prepare a bank reconciliation as at 31 May 20xx. Where there are differences in amounts between the bank statement and the records of the business, assume the Bank Statement is correct

Charlestown Property Services Pty LtdBank reconciliation statement as at 30/4/20xx

$ $

Credit balance as per bank statement 30/4/xx 6,092

Add: Outstanding deposits 29/4/20xx

30/4/20xx

Add: Adjustment to deposit 18/4/xx

Bank fee in error 2,040

1,700

125

30 3,740

155

9,987

Less: unpresented cheques: Chq No Less: Error- Adjust chq No. 606 601

604

608

609

610

110

400

750

200

57 1,517

1,537

Debit balance per Trust cash book 30/4/xx 8,450

Charlestown Property Services Pty Ltd Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank$

May 1 Balance B/Fwd8,450 May 3 Payments 611 555

5 Receipts 3,400 7 Payments 612 480

8 Receipts 2,100 16 Payments 613 65

28 Receipts 2,450 21 Payments 614 810

31 Receipts 1,800 30 Payments 615 120

Payment 616 262

WestpacCharlestown Property Services Pty Ltd Trust Account

Date Particulars Debit Credit Balance

May 1 Balance B/Fwd6,092

2 Deposit 2,040 8,132 CRDeposit 1,700 9,832 CR4 Adjust error deposit 18/4 125 9,957 CRAdjust error bank fees 30 9,987 CR5 Deposit 3,400 13,387 CR604 400 12,987 CR7 608 750 12,237 CR610 57 12,180 CR612 480 11,700 CR9 Deposit 2,100 13,800 CR17 611 525 13,275 CR18 609 200 13,075 CR613 65 13,010 CR20 601 110 12,900 CR25 614 810 12,090 CR30 Deposit 2,450 14,540 CRAdjust error chq 606 20 14,520 CR

Charlestown Property Services Pty Ltd

Trust Bank Reconciliation as at 31/05/20xx

$ $

Credit balance as per bank statement 31/05/20XX Add: Outstanding deposit 31/05/20xx Less: Unpresented cheques Chq No Debit balance as per Trust Cash Book as at 31/05/20xx

Exercise No.4 (Direct deposit, dishonoured cheque. Bank fee & cashbook error)

Sydney Property Services Pty Ltd

Trust Bank Reconciliation as at 31/1/20xx

$ $

Credit balance as per bank statement 31/1/20XX 6,075

Add: Outstanding deposit 31/1/20xx x850 850

6,925

Less: Unpresented cheques Chq No 560 x232 558 up485 717

Debit balance as per Trust Cash Book as at 31/1/20xx 6,208

From the following records, prepare a bank reconciliation as at 28 February 20xx. Where there are differences in amounts between the bank statement and the records of the business, assume that the Bank statement is correct

Sydney Property Services Pty Ltd

Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

Feb 1 Balance B/Fwd6,208 Feb 6 Receipts x770 5 Payments 561 x510

15 Receipts x1,840 14 Payments 562 x3,020

23 Receipts x860 18 Payments 563 x1,260

28 Receipts o/s2,460 22 Payments 564 xerr415

23 Direct Deposit 1,100 28 Payments 565 up920

13,238 23 Adj error 564 36

16 DIShon250

Sub/Tot 6,411

Bal C/F 6827

13,238

1/3 Bal B/F 6,827 13238-6411=

Sydney Property Services Pty Ltd

Trust Bank Reconciliation as at 28/2/20xx

$ $

Credit balance as per bank statement 28/2/20XX 5,637

Add: Outstanding deposit 28/02/20xx 2,460 Bank fees in error 40 Dishon chq fee 95 2,595

8,232

Less: Unpresented cheques Chq No 558 485 565 920 1,405

Debit balance as per Trust Cash Book as at 28/02/20xx 6,827

Westpac Sydney Property Services Pty Ltd

Trust Account

Date Particulars Debit Credit Balance

FEB 1 Opening Balance 6,075 CR1 Deposit x850 6,925 CR7 Deposit x770 7,695 CR8 560 x232 7,463 CR10 561 x510 6,953 CR15 Deposit x1,840 8,793 CR16 Dishonoured Chqx250 8,543 CR18 562 x3,020 5,523 CR22 563 x1,260 4,263 CR23 Direct Deposit 1,100 5,363 CR23 564 x451 4,912 CR24 Deposit x860 5,772 CR28 Bank fees 40 5,732 CR28 Dishonoured Chq fee 95 5,637 CR

Exercise No. 5 (Direct deposit & Bank made errors)

TOP Property Services Pty LtdBank reconciliation statement as at 31/5/20xx

$ $

Credit balance as per bank statement 7,800

Add: Outstanding deposit 31/5/20xx 3,400 3,400

11,200

Less: unpresented cheques: Chq No 1810

1817

1822

1825

2,500

1,500

500

3,200 7,700

Debit balance per Trust cash book 31/5/20xx 3,500

TOP Property Services Pty Ltd Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank$

June 1 Balance B/Fwd3,500 June 1 Payments 1827 2,200

5 Receipts 10,071 6 Payments 1828 407

10 Receipts 4,093 11 Payments 1829 1,305

12 Receipts 10,582 14 Payments 1830 1,102

24 Receipts 230 21 Payments 1831 293

30 Receipts 1,500 28 Payments 1832 240

WestpacTOP Property Services Pty LtdTrust Account

Date Particulars Debit Credit Balance

June 1 Balance B/Fwd7,800 CRDeposit 3,400 11,200 CR1817 1,500 9,700 CR1825 3,200 6,500 CR2 Direct Deposit 450 6,950 CRBank Fees 24 6,926 CR1822 500 6,426 CR1827 2,200 4,226 CR6 Deposit 10,071 14,297 CR10 Deposit 4,093 18,390 CR13 1829 1,300 17,090 CR14 Deposit 10,582 27,672 CR

25 Deposit 330 28,002 CR1810 2,500 25,502 CR1831 293 25,209 CR30 Deposit 1,500 26,709 CR

TOP Property services Pty Ltd

Trust Bank Reconciliation as at 30/6/20xx

$ $

Credit balance as per bank statement 30/6/20XX Add: Outstanding deposit 30/6/20xx Less: Unpresented cheques Chq No Debit balance as per Trust Cash Book as at 30/6/20xx Solutions to ExercisesProperty Management Exercise No. 1

Trust Cash Book Receipts JournalProperty Management Trust AccountSydney RealtyExercise No.PM-1 TCB No. 01

Date Receipt

No. Receipt

Type Received From On Account Of AccountNumber Transaction Amount

$ Bank

1/11/20xx Balance B/FwdNIL

2/11/20xx 001 CHQ M. Moon H. Clause 011 2 weeks rent 1,000 1,000

7/11/20xx 002 CASH J. June P. Cox 012 2 weeks rent 1,000 003 CASH J. June Rental bond board 013 Bond 2,000 3,000

16/11/20xx 004 CHQ M. Moon H. Clause 011 3 weeks rent 1,500 1,500

21/11/20xx 005 CASH M. Moon H. Clause 011 3 weeks rent 1,500 1,500

Step 1- Add receipts 7,000 7,000

1/12/20xx Step 5 Balance B/FWd2,500

Trust Cash Book Payments JournalExercise No.PM 1 TCB No. 01

Date ChequeNo. PAYEE On Account Of Account

Number Transaction Bank

11/11/20xx 001 Rental Bond Board Rental bond Board 013 Bonds 2,000

14/11/20xx 002 B. Black P. cox 012 Shower repair 340

19/11/20xx ------- --------------------- H. Clause 011 Dishonoured Cheque 1,500

23/11/20xx 003 Sydney Realty Pty Ltd P. Cox 012 Management fees 77

23/11/20xx 004 P. Cox P. Cox 012 Settlement 583

Step 2. Total Payments 4,500

Step 4. Record balance C/Fwd2,500

Step 3 Calculate Balance carried forward 7,000-4500= 2,500 7,000

Trust Ledger Accounts.Exercise No. PM -1

Account Name: Trust bank Account Property ManagementsAccount Number: 010

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/11/20xx Balance B/FwdNIL

30/11/20xx Receipts 01 7,000 7,000 DR30/11/20xx Payments 01 4,500 2,500 DRAccount Name: H. ClauseAccount Number: 011

Date Particulars TCBNumber Debit

$ Credit

$ Balance

2/11/20xx 2 weeks rent - Moon 01 1,000 1,000 CR16/11/20xx 3 weeks rent Moon 01 1,500 2,500 CR19/11/20xx Dishonoured Chq Moon 01 1,500 1,000 CR21/11/20xx 3 weeks rent Moon 01 1,500 2,500 CRAccount Name: P. CoxAccount Number: 012

Date Particulars TCBNumber Debit

$ Credit

$ Balance

7/11/20xx 2 weeks rent June 01 1,000 1,000 CR14/11/20xx Shower repair 01 340 660 CR23/11/20xx Management fee 01 77 583 CR23/11/20xx Settlement 01 583 NIL

Account Name: Rental Bond Board Account Number: 013

Date Particulars TCBNumber Debit

$ Credit

$ Balance

7/11/20xx Bond June 01 2,000 2,000 CR11/11/20xx Bond 01 2,000 NIL

TRIAL BALANCE AS AT

_______________30/1120xx___________________________

Name Account

Number Debit ($) Credit ($)

Trust bank account 010 2,500 H. clause 011 2,500

TOTAL 2,500 2,500

Solution Sales Exercise No.1

Trust Cash Book Receipts JournalSales Trust AccountExercise No. ST Ex01TCB No. 01

Date Receipt

No. Receipt

Type Received From On Account Of AccountNumber Transaction Amount

$ Bank

1/11/20xx Balance b/FwdNIL

2/11/20xx 001 ChqJ. Lots S. Pleat to J. Lots 011 Deposit 25,000 25,000

3/11/20xx 002 CHQ P. Gold P. Gold 012 Advertising 720 3/11/20xx 003 B/ChqL. Snow Thong to Snow 013 10% Deposit 235,000 235,720

20/11/20xx 004 CHQ C. Lowman Pauly to Lowman 014 Preliminary deposit 40,000 40,000

24/11/20xx 005 ChqC. Lowman Pauly to Lowman 014 Balance of 10% deposit 70,000 70,000

30/11/20xx 06 CHQ Citibank Thong to snow 013 10% deposit + Interest 237,100 237,100

Total receipts 607,820 607,820

1/12/20xx Balance B/Fwd135,720

Trust Cash Book Payments JournalExercise No.TCB No.

Date ChequeNo. PAYEE On Account Of Account

Number Transaction Bank

3/11/20xx 001 Citibank Thong to snow 013 Invest 10% deposit 235,000

30/11/20xx 002 Sydney Realty Pty Ltd Thong to snow 013 Commission 162,440

30/11/20xx 003 Snow Thong to Snow 013 interest earned 1,050

30/11/20xx 004 Thong Thong to Snow 013 Settlement + interest 73,610

Total Payments 472,100

Rec Payments = Bal C/Fwd 135,720Balance C/Fwd135,720

607,820

Trust Ledger Accounts.Exercise No. Sales 01

Account Name: Sales Trust AccountAccount Number: 010

Date Particulars TCBNumber Debit

$ Credit

$ Balance

1/11/20xx Balance B/FwdNIL

30/11/20xx Receipts 01 607,820 607,820 DR30/11/20xx Payments 01 472,100 135,720 DRAccount Name: Pleat to LotsAccount Number: 011

Date Particulars TCBNumber Debit

$ Credit

$ Balance

2/11/20xx Deposit 01 25,000 25,000 CRAccount Name: P. GoldAccount Number: 012

Date Particulars TCBNumber Debit

$ Credit

$ Balance

3/11/20xx Advertising 01 720 720 CR

Account Name: Thong to SnowAccount Number: 013

Date Particulars TCBNumber Debit

$ Credit

$ Balance

3/11/20xx 10% deposit 01 235,000 235,000 CR3/11/20xx Invest 10% deposit 01 235,000 NIL

30/11/20xx 10% dep + Interest 01 237,100 237,100

30/11/20xx Commission 01 162,440 74,660 CR30/11/20xx interest 01 1,050 73,610 CR30/11/20xx Settlement + Int 01 73,610 NIL

Account Name: Pauly to LowmanAccount Number: 014

Date Particulars TCBNumber Debit

$ Credit

$ Balance

20/11/20xx Prelim deposit 01 40,000 40,000 CR24/11/20xx Bal 10% Dep 01 70,000 110,000 CRTRIAL BALANCE AS AT

______________30/11/20xx____________________________

Name Account

Number Debit ($) Credit ($)

Trust bank Account 010 135,720 Pleat to Lots 011 25,000

P. Gold 012 720

Pauly to Lowman 014 110,000

TOTAL 135,720 135,720

Bank reconciliation Exercise 1- Solution

Sydney Property Services Pty Ltd

Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

Dec 1 Balance B/Fwd813 Dec 2 Payments 501 266

9 Receipts 341 11 Payments 502 260

20 Receipts 1,520 16 Payments 503 385

28 Receipts 2,550 18 Payments 504 380

31 Receipts o/s 3,202 27 Payments 505 98

29 Payments 506 310

31 Payments 507 450

Payments 508 31

Sub/Total 2,180

Bal C/Fwd6,246

8,426 8,426

Jan 1 20xx 6,246 Sydney Property Services Pty Ltd

Trust Bank Reconciliation as at 31/12/20xx

$ $

Credit balance as per bank statement 31/12/20XX 4,220

Add: Outstanding deposit 31/12/20xx 3,202 3,202

Less: Unpresented cheques Chq No 503 385 506 310 507 450

508 31 1,176

Debit balance as per Trust Cash Book as at 31/12/20xx 6,246

Bank reconciliation Exercise 2- Solution

TOP Property services Pty Ltd Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

June 1 Balance B/Fwd32,676 June 1 Payments 910 175

5 Receipts 10,070 3 Payments 911 2,120

10 Receipts 4,093 7 Payments 912 2,163

15 Receipts 10,782 12 Payments 913 1,124

20 Receipts 830 20 Payments 914 295

25 Receipts 19,347 21 Payments 915 4,090

30 Receipts O/S 1,460 21 Payments 916 174

5 Deposit error 1.00 23 Payments 917 81

Adjust - error 914 (2.00)

Sub/Total 10,220

Bal C/Fwd69,039

79,259 79,259

1 July 20xx Bal B/Fwd69,039 TOP Property services Pty Ltd

Trust Bank Reconciliation as at 30/6/20xx

$ $

Credit balance as per bank statement 30/6/20XX 73,578

Add: Outstanding deposit 30/6/20xx 1,460 1,460

75,038

Less: Unpresented cheques Chq No 873 463 908 1,190 910 175 915 4,090 917 81 5,999

Debit balance as per Trust Cash Book as at 30/6/20xx 69,039

Bank reconciliation Exercise No 3 - Solution

Charlestown Property Services Pty Ltd Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank$

May 1 Balance B/Fwd8,450 May 3 Payments 611 555

5 Receipts 3,400 7 Payments 612 480

8 Receipts 2,100 16 Payments 613 65

28 Receipts 2,450 21 Payments 614 810

31 Receipts O/S1,800 30 Payments 615 120

Payment 616 262

17 Adjust for error 611 (30)

2,262

Bal C/Fwd15,938

18,200 18,200

1 June Balance B/Fwd15,938 Charlestown Property Services Pty Ltd

Trust Bank Reconciliation as at 31/05/20xx

$ $

Credit balance as per bank statement 31/05/20XX 14,520

Add: Outstanding deposit 31/05/20xx 1,800 1,800

16,320

Less: Unpresented cheques Chq No

615 120

616 262 382

Debit balance as per Trust Cash Book as at 31/05/20xx 15,938

Bank reconciliation Exercise No 4 - Solution

Sydney Property Services Pty Ltd

Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

Feb 1 Balance B/Fwd6,208 Feb 6 Receipts 770 5 Payments 561 510

15 Receipts 1,840 14 Payments 562 3,020

23 Receipts 860 18 Payments 563 1,260

28 Receipts O/S 2,460 22 Payments 564 Error 415

23 Direct Deposit1,100 28 Payments 565 920

16 Dishon Chq250

23 Adj for error 564 36

Sub/Total 6,411

13,238 13,238

1/3/20xx Bal B/Fwd6,827 Sydney Property Services Pty Ltd

Trust Bank Reconciliation as at 28/2/20xx

$ $

Credit balance as per bank statement 28/2/20XX 5,637

Add: Outstanding deposit 31/12/20xx 2,460 Bank fee in error 40 Dishonoured chq fee 95 2,595

8,232

Less: Unpresented cheques Chq No Still unpresented from last month 558 485 565 920 1,405

Debit balance as per Trust Cash Book as at 28/2/12/20xx 6,827

Bank reconciliation Exercise No 5 - Solution

TOP Property Services Pty Ltd Trust Cash Book (SIMPLIFIED)

Cash Receipts Journal Cash Payments Journal

Date20xx Particulars

Bank$ Date20xx Particulars

Chq No.

Bank

June 1 Balance B/Fwd3,500 June 1 Payments 1827 2,200

5 Receipts 10,071 6 Payments 1828 407

10 Receipts 4,093 11 Payments 1829 BE 1,305

12 Receipts 10,582 14 Payments 1830 1,102

24 Receipts 230 21 Payments 1831 293

30 Receipts 1,500 28 Payments 1832 240

2 Direct Deposit 450 Sub/Total 5,547

Bal C/Fwd24,879

30,426 30,426

1 July Bal B/Fwd24,879 TOP Property services Pty Ltd

Trust Bank Reconciliation as at 30/6/20xx

$ $

Credit balance as per bank statement 30/6/20XX 26,709

Add: Bank fees in error 24 24

26,733

Less: Unpresented cheques Chq No

1828 407 1830 1,102 1,102

1832 240 Adjustment for bank error 1829 5 1,752

24,979

Less: Bank error deposit overbanked 25/6/20xx 100

Debit balance as per Trust Cash Book as at 30/6/20xx 24,879

References:Property and Stock Agents Act 2002 No 66Current version for 1 September 2021

https://legislation.nsw.gov.au/view/html/inforce/current/act-2002-066Property and Stock Agents Regulation 2014Current version for 1 September 2021

https://legislation.nsw.gov.au/view/html/inforce/current/sl-2014-0563Supervising an agency

https://www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/running-a-property-agencyAudit requirements

https://www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/running-a-property-agency/trust-accounts

Knowledge assessment 3 of 3

Criteria

Unit code, name and release number

CPPREP4125 - Transact in trust accounts (1)

Qualification/Course code, name and release number

CPP41419 - Certificate IV in Real Estate Practice (1)

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Student number

Student name

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Date created:03 July 2020

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This assessment can be found in the: Learning BankThe contents in this document is copyright TAFE NSW 2020, and should not be reproduced without the permission of the TAFE NSW. Information contained in this document is correct at time of printing: DATE @ "d MMMM yyyy" * MERGEFORMAT 26 August 2021. For current information please refer to our website or your teacher as appropriate.

Assessment instructions

Table SEQ Table * ARABIC 1 Assessment instructions

Assessment details Instructions

Assessment overview The objective of this assessment is to assess your knowledge as would be required to conduct transactions in real estate trust accounts.

Assessment event number 3 of 3

Instructions for this assessment This is a written assessment that will assess your knowledge of the unit.

This assessment is in one part:

Part 1: 7 Short answer questions

The assessment also contains an assessment feedback form.

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Part 1: Short answer

Read the question carefully.

Explain how authorisation is given for payments made from the trust accounts, in the following circumstances:

Activity Your answer

Settlement of a sale and payment of commission to the agent Payment of an invoice on behalf of a landlord

Payment of management fees from a landlord Payment of advertising expenses on behalf of a vendor Summarise the actions an Agent would need to take if they received an invoice for an emergency plumbing repair at a Landlords property. The invoice is for an amount more than the amount specified in the Management agreement. The plumber has given 30 days to pay the account.

Summarise the actions the licensee would need to take if there were unclaimed funds in the trust account.

Explain how long and where a licensee is required to keep all trust account records. Include in your answer the correct section from the Property and Stock Agent Act 2002 and/or the Property and Stock Agent Regulations 2014 (NSW).

Discuss how password security and electronic tracking of transactions assist in the security and maintenance of the trust accounts.

The licensee in charge has legislative responsibilities, under the Property and Stock Agents Act 2002 to schedule external audits of the trust accounts, and obligations to schedule regular internal audits of the trust accounts.When should the licensee schedule the following:

External audits

Internal audits/Review

Outline the maximum penalty for not paying trust monies collected on behalf of a client into the trust account. In your answer refer to the correct section of the Property and Stock Agents Act 2002.

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September 2021 | Learners GuideCPPREP4125 Transact in trust Accounts

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