NCERT Solutions Class 11 Accountancy Chapter 5 Bank Reconciliation Statement

Question 1. State the need for the preparation of bank reconciliation statement?
Answer: Preparing a bank reconciliation statement is crucial for several key reasons:

• It verifies that the balances and records in both the passbook and the cash book are correct.
• It helps identify any mistakes made in the cash book regarding banking activities so they can be corrected.
• Making this statement on a regular basis is useful for stopping fraudulent activities.
• It highlights any unnecessary holdups in logging transactions or clearing cheques.
• This allows businesses to take prompt measures to avoid any extra delays.
• It acts as a cross-check on the precision of records written in both documents.
• It assists in keeping the cash book up to date by aligning it with the passbook.

In simple words: This statement helps businesses check if their own records match the bank's records, find any mistakes, and prevent fraud.

Exam Tip: Highlighting at least four distinct points such as error detection, fraud prevention, cash book updates, and verifying accuracy is generally sufficient to score full marks in short-answer questions on this topic.

 

Question 2. What is a bank overdraft?
Answer: An account holder or business creates a bank overdraft by pulling out more money than what is currently in their bank account, leading to a negative balance. This negative balance is referred to as an overdraft. Simply put, it represents the amount by which withdrawals exceed total deposits and must be treated as a liability by the account holder.
In simple words: A bank overdraft is when you withdraw more money than you actually have in your bank account, which means you owe that extra money back to the bank as a liability.

Exam Tip: Remember to always specify that an overdraft is classified as a liability for the account holder, as this is a key technical point that examiners look for.

 

Question 3. Briefly explain the statement ‘wrongly debited by the bank’ with the help of an example.
Answer: We use the phrase 'wrongly debited by the bank' when a financial institution incorrectly takes money out of a client's account. This erroneous deduction lowers the client's available balance. These mistakes usually happen because a transaction was entered incorrectly or the wrong figure was processed. Typical situations where this happens include:

• When a client holds multiple accounts with the same bank: For instance, a cheque for Rs. 4,000 written against their savings account is mistakenly cleared from their current account.
• When cheque figures are recorded incorrectly: For example, a cheque transaction of Rs. 60,000 is accidentally entered in the passbook as only Rs. 6,000.

In simple words: This refers to a mistake where the bank accidentally takes money out of your account or charges you the wrong amount, which reduces your balance by mistake.

Exam Tip: When answering this question, providing clear examples with specific monetary amounts (like the ones given above) helps demonstrate a complete understanding and ensures full marks.

 

Question 4. State the causes of difference occurred due to time lag.
Answer: Differences arising from a timing delay happen due to the following reasons:

1. Cheques issued but not presented for payment at the bank.
   When a business issues a cheque to a creditor or vendor, it immediately updates its cash book. However, some time may pass before the recipient presents this cheque to the bank. The bank will only record the transaction and adjust the account balance once the cheque is actually brought in for clearance.
2. Cheques paid or deposited but not collected and credited by the bank.
   As soon as a firm gets a cheque from a customer, it writes it down in the cash book, raising the cash book balance. But the bank will only credit this money to the firm's account after it has successfully collected the funds from the issuing bank.

In simple words: This happens when a business writes or receives a cheque and records it right away, but the bank takes a few days to clear it and update the actual bank account.

Exam Tip: Be sure to explicitly use the terms 'issued but not presented' and 'deposited but not cleared' as these are standard accounting expressions highly valued by examiners.

 

Question 5. Briefly explain the term favourable balance as per cash book.
Answer: A favourable balance occurs when the total on the debit side of the cash book's bank column is larger than the total on its credit side. This is also referred to as having a debit balance in the cash book. Simply put, it means that the total funds deposited are greater than the total amount withdrawn.
In simple words: A favourable balance in your cash book means you have a positive bank balance because you have put in more money than you have taken out.

Exam Tip: Always associate a 'favourable balance as per cash book' with a 'debit balance', as matching these two concepts is fundamental in reconciliation theory.

 

Question 6. Enumerate the steps to ascertain the correct cash book balance.
Answer: Several entries that cause discrepancies between the two records are often found only in the bank statement. To find the correct adjusted cash book balance, we must first write these transactions into the cash book before making the reconciliation statement. The procedure to prepare this amended cash book includes the following:

• Step 1: Note down the current bank balance shown in the cash book.
• Step 2: Identify and correct any mistakes that were made in the cash book itself.
• Step 3: Take any entries that appear only on the credit side of the passbook and write them on the debit side of the cash book.
• Step 4: Take any entries that appear only on the debit side of the passbook and write them on the credit side of the cash book.
• Step 5: Balance the cash book to find the final figure, which will then be used to create the bank reconciliation statement.

In simple words: To find your true cash book balance, you start with your recorded balance, fix any errors you made, add items that the bank credited (like interest), subtract items the bank debited (like charges), and then calculate the new total.

Exam Tip: Remember that only errors in the cash book and items appearing solely in the passbook are adjusted in the amended cash book. Timing differences (like outstanding cheques) are never entered here.

 

Long Answer Type Questions

 

Question 1. What is a bank reconciliation statement? Why is it prepared?
Answer: Commercial enterprises use a cash book to record all their cash and banking transactions, showing the closing balances at the end of a given financial period.

In the same manner, the bank keeps a ledger account for every client. Deposits made by the customer are shown on the credit side of this ledger, whereas withdrawals are recorded on its debit side.

The bank provides a copy of this account to the customer, which is known as a bank statement or passbook. Firms use this statement to cross-check their bank transactions against their cash book entries. Ideally, the ending cash book balance should match the passbook balance.

However, because these two records are kept by separate entities, their ending balances often differ. To address this, the entries in both records are compared to locate and correct any discrepancies. The document prepared to explain and resolve these differences is known as a bank reconciliation statement.
In simple words: A bank reconciliation statement is a report used to match your own cash records with the bank's statement so you can find out why the two balances don't match.

Exam Tip: Be sure to highlight that deposits are credited and withdrawals are debited by the bank, which is the exact opposite of how they are treated in the business's cash book.

 

Specimen of Bank Reconciliation Statement:

Format 1

Bank Reconciliation Statement of XYZ as on ......

Format 2

Bank Reconciliation Statement of XYZ as on ......

 

Question 2. Explain the reasons where the balance shown by the bank passbook does not agree with the balance as shown by the bank column of the cash book.
Answer: Discrepancies between the cash book and passbook balances arise due to two main reasons:

A. Timing differences in entering transactions
When comparing both books, certain entries are recorded in one book but not yet in the other. This occurs because of a delay in processing or recording receipts and payments.

1. Transactions recorded in the cash book but missing in the passbook:

• Cheques issued but not presented for payment at the bank: When a business writes cheques for vendors or suppliers, it records this reduction immediately in its cash book. However, the bank only makes an entry once the holder actually brings the cheque to the bank for payment.
• Cheques paid or deposited but not collected and credited by the bank: When a firm receives cheques from clients, it posts them in the cash book, raising its balance. However, the bank only credits these funds to the firm's account after successfully collecting the money from the payer's bank.

2. Transactions recorded in the passbook but missing in the cash book:

• Direct bank charges, commission, and interest debited by the bank: Banks charge fees for various services, directly deducting these amounts from the customer's account. The business only discovers these charges when they review the bank statement. Examples include interest on bank overdrafts, fees for unpaid cheques, and collection service charges.
• Expenses directly paid by the bank on behalf of the customers: Following standing instructions, the bank may pay recurring bills for the customer. The bank records this by debiting the customer's account, but the firm only updates its cash book after receiving the bank statement. This keeps the passbook balance lower than the cash book balance in the interim. Examples include rent, insurance premiums, and utility bills.
• Amounts directly deposited in the customer’s account: Sometimes, clients or debtors pay money directly into the business's bank account. This increases the bank balance immediately, but since the business is unaware of the deposit, there is no corresponding entry in the cash book until the statement is received.
• Incomes directly collected by the bank on behalf of the customer: Based on prior agreements, the bank might collect earnings like dividends or rents directly, crediting them to the account. This increases the passbook balance while leaving the cash book balance lower until updated.
• Cheques deposited or bills discounted that are dishonoured: If a deposited cheque or discounted bill of exchange fails to clear on maturity, the bank debits the customer's account. Since the firm lacks immediate notice of this dishonour, it does not record it in the cash book, leading to mismatched balances.

B. Errors in recording transactions by either the firm or the bank
Mistakes can be made by either the bank or the firm's staff. These include incorrect entry amounts for cheques, mistakes in calculating totals, or omitting transactions entirely, all of which cause differences between the two records.

• Example of Bank Error: A bank clerk might post an entry to the wrong account due to a similarity in customer names, or make a computational error.
• Example of Firm Error: A cheque received might be deposited into the bank without any entry being made in the cash book, or an entry might be made in the cash book but the cheque is accidentally not sent to the bank.

In simple words: The cash book and passbook balances might not match because of time delays (like a cheque that hasn't cleared yet) or due to direct bank transactions (like fees or direct deposits) that haven't been recorded in the business's books yet, as well as simple errors.

Exam Tip: To score maximum marks, divide your answer clearly into timing differences (and list transactions under cash book and passbook separately) and errors, using bullet points for clarity.

 

Question 3. Explain the process of preparing bank reconciliation statement with amended cash balance.
Answer: Preparing a bank reconciliation statement with an adjusted cash book balance involves the following procedure:

• Step 1: Identify and record the opening bank balance from the cash book.
• Step 2: Correct any bookkeeping errors that occurred within the cash book.
• Step 3: Post any transactions that are only found on the credit side of the bank statement onto the debit side of the cash book.
• Step 4: Post any transactions that are only found on the debit side of the bank statement onto the credit side of the cash book.
• Step 5: Determine the final closing balance of the cash book by totaling it. Use this revised figure as the basis for the bank reconciliation statement.

The template for a bank reconciliation statement using the adjusted balance is shown below:

Bank Reconciliation Statement, as on ____________

In simple words: This process means you first update your cash book to fix errors and add bank-only items, and then use that new balance to reconcile timing differences (like outstanding cheques) with the bank statement.

Exam Tip: Highlighting that only unadjusted items (timing differences) go into the final bank reconciliation statement after amending the cash book is key to demonstrating a proper understanding of this method.

 

Numerical Questions

 

Question 1. From the following particulars, prepare a, bank reconciliation statement as at March 31, 2014.
1. Balance as per cash book Rs. 3,200.
2. Cheque issued but not presented for payment Rs. 1,800.
3. Cheque deposited but not collected Rs. 2,000.
4. Bank charges debited by bank Rs. 150.
Answer:

Bank Reconciliation Statement, as on March 31, 2014

In simple words: We start with our cash book balance. We add back cheques we wrote that haven't been cashed yet (which increases our bank balance). We subtract cheques we deposited but aren't cleared yet, and also subtract bank charges, which gives us the correct bank statement balance.

Exam Tip: Ensure that you clearly label the 'Plus' and 'Minus' columns. Always show the balancing figure calculation, like (5,000 - 2,150), to show the examiner how you arrived at Rs. 2,850.

 

Question 2. On March 31 2014 the cash book showed a balance of Rs. 3,700 as cash at bank, but the bank passbook made up to same date showed that cheques for Rs. 700, Rs. 300 and Rs. 180 respectively had not presented for payment, Also, cheque amounting to Rs. 1,200 deposited into the account had not been credited. Prepare a bank reconciliation statement.
Answer:

Bank Reconciliation Statement, as on March 31, 2014

In simple words: We start with our cash book balance. We add the total of the three unpresented cheques (Rs. 1,180) because that money hasn't actually left our bank account yet. We subtract the uncollected deposit of Rs. 1,200 to find our passbook balance.

Exam Tip: When multiple cheques are issued but not presented, show their individual addition (700 + 300 + 180) in the particulars column to clearly show the working of your final added figure.

 

Question 3. The cash book shows a bank balance of Rs. 7,800. On comparing the cash book with passbook the following discrepancies were noted:
1. Cheque deposited in bank but not credited Rs. 3,000.
2. Cheque issued but not yet present for payment Rs. 1,500.
3. Insurance premium paid by the bank Rs. 2,000.
4. Bank interest credit by the bank Rs. 400.
5. Bank charges Rs. 100.
6. Directly deposited by a customer Rs. 4,000.
Answer:

Bank Reconciliation Statement

In simple words: Starting with our cash book balance, we add timing additions like unpresented cheques, bank interest, and direct deposits. We then subtract timing deductions like uncredited cheques, insurance premium, and bank charges to arrive at our actual bank statement balance.

Exam Tip: Be cautious with items directly handled by the bank (such as insurance premiums and bank charges); since they reduce your bank balance, they must always be placed in the minus column.

 

Question 4. Bank balance of Rs. 40,000 showed by the cash book of Atul on December 31, 2013. It was found that three cheques of Rs. 2,000, Rs. 5,000 and Rs. 8,000 deposited during the month of December were not credited in the passbook till January 02, 2014. Two cheques of Rs. 7,000 and Rs. 8,000 issued on December 28 were not presented for payment till January 03, 2014. In addition to it bank had credited Rs. 325 as interest and had debited him with Rs. 50 as bank charges for which there were no corresponding entries in the cash book. Prepare a bank reconciliation statement as on December 31, 2013.
Answer:

Bank Reconciliation Statement of Atul as on December 31, 2013

In simple words: We calculate our bank statement balance by taking the cash book starting balance, adding unpresented cheques and bank interest, then subtracting the outstanding deposits and bank charges.

Exam Tip: Pay attention to dates: cheques cleared or presented after December 31, 2013 (even if on January 2nd or 3rd) are considered timing differences on the reconciliation date and must be included in the statement.

 

Question 5. On comparing the cash book with passbook of Naman it is found that on March 31, 2014, bank balance of Rs. 40,960 showed by the cash book differs from the bank balance with regard to the following:
1. Bank charges Rs. 100 on March 31, 2014, are not entered in the cash book.
2. On March 21, 2014, a debtor paid Rs. 2,000 into the company’s bank in settlement of his account, but no entry was made in the cash book of the company in respect of this.
3. Cheques totaling Rs. 12,980 were issued by the company and duly recorded in the cash book before March 31, 2014, but had not been presented at the bank for payment until after that date.
4. A bill for Rs. 6,900 discounted with the bank is entered in the cash book with recording the discount charge of Rs. 800.
5. Rs. 3,520 is entered in the cash book as paid into bank on March 31st, 2014, but not credited by the bank until the following day.
6. No entry has been made in the cash book to record the dishonor on March 15, 2014 of a cheque for Rs. 650 received from Bhanu.
Prepare a reconciliation statement as on March 31, 2014.
Answer:

Bank Reconciliation Statement of Naman as on March 31, 2014

In simple words: We find the correct bank statement balance by adding positive adjustments like direct deposits and unpresented cheques to our cash book balance, then deducting items that reduce our funds like bank charges, unrecorded discount fees, uncredited deposits, and a dishonoured cheque.

Exam Tip: Be extra careful with dishonoured cheques (which must be subtracted because the money we thought we had was actually rejected) and omitted discounting charges (which also reduce our cash book balance).

 

Question 6. Prepare bank reconciliation statement as on December 31, 2014. On this day the passbook of Mr. Himanshu showed a balance of Rs. 7,000.
1. Cheques of Rs. 1,000 directly deposited by a customer.
2. The bank has credited Mr. Himanshu for Rs. 700 as interest.
3. Cheques for Rs. 3,000 were issued during the month of December but of these cheques for Rs. 1,000 were not presented during the month of December.
Answer:

In simple words: This statement helps us match the passbook balance with the cash book balance. Since we started with the passbook balance, we subtract deposits, interest, and unpresented cheques to find the cash book balance of Rs. 4,300.
Exam Tip: Remember that when starting with a favorable balance as per the Passbook, directly deposited cheques and interest allowed by the bank must be subtracted because they increase the passbook balance relative to the cash book.

 

Question 7. From the following particulars prepare a bank reconciliation statement showing the balance as per cash book on December 31, 2014. Balance as per Passbook was Rs. 50,000.
1. Two cheques of Rs. 2,000 and Rs. 5,000 were paid into bank in October, 2014 but were not credited by the bank in the month of December.
2. A cheque of Rs. 800 which was received from a customer was entered in the bank column of the cash book in December 2014 but was omitted to be banked in December, 2014.
3. Cheques for Rs. 10,000 were issued into bank in November 2014 but not credited by the bank on December 31, 2014.
4. Interest on investment Rs. 1,000 collected by bank appeared in the passbook.
Answer:

In simple words: This BRS reconciles the bank passbook balance of Rs. 50,000 back to the cash book balance of Rs. 46,800. We add uncleared deposits and omitted cheques, and subtract unpresented cheques and direct collections by the bank.
Exam Tip: Be careful with cheques deposited but not cleared. They are added back when starting with a favorable passbook balance, as the cash book has already increased this amount but the bank has not.

 

Question 8. Balance as per passbook of Mr. Kumar is 3,000.
1. Cheque paid into bank but not yet cleared
Ram Kumar Rs.1,000
Kishore Kumar Rs.500
2. Bank Charges Rs.300
3. Cheque issued but not presented
Hameed Rs.2,000
Kapoor Rs.500
4. Interest entered in the passbook but not entered in the cash book Rs.100.
Answer:

In simple words: This statement converts the bank's book balance of Rs. 3,000 into the company's cash book balance of Rs. 2,200 by adjusting uncleared checks, unpresented checks, bank charges, and interest.
Exam Tip: When multiple cheques are listed (e.g., Ram Kumar Rs. 1,000 and Kishore Kumar Rs. 500), combine them into a single line-item total (Rs. 1,500) in the statement to keep the presentation neat and clean.

 

Question 9. The passbook of Mr. Mohit current account showed a credit Balance of Rs.20,000 on dated December 31, 2014. Prepare a Bank Reconciliation Statement with the following information.
1. A cheque of Rs. 400 drawn on his saving account has been shown on current account.
2. He issued two cheques of Rs. 300 and Rs. 500 on of December 25, but only the 1st cheque was presented for payment.
3. One cheque issued by Mr. Mohit of Rs. 500 on December 25, but it was not presented for payment whereas it was recorded twice in the cash book.
Answer:

In simple words: This reconciles Mohit's bank balance of Rs. 20,000 to his cash book balance of Rs. 18,900. Adjustments are made for a personal savings check wrongly debited to the current account, as well as outstanding checks.
Exam Tip: Pay special attention to double-recorded entries in the cash book. Since the Rs. 500 cheque was written twice, we must adjust Rs. 1,000 instead of Rs. 500 to correct both the outstanding check error and the duplication error.

 

Question 10. On 1st January 2014, Rs. 8,000 as showed by his cash book. Rs. 2,000 had been paid in by him but were not collected by the bank by January 01, 2014. He issued cheques of Rs. 800 which were not presented to the bank for payment up to that day. There was a debit in his passbook of Rs. 60 for interest and Rs. 100 for bank charges. Prepare bank reconciliation statement for comparing both the balance.
Answer:

In simple words: This statement starts with a cash book overdraft of Rs. 8,000. By adding uncleared checks, interest, and bank fees, and then subtracting unpresented checks, we find the bank passbook overdraft is Rs. 9,360.
Exam Tip: When starting with an overdraft as per the Cash Book, remember that the rules are reversed. Items that increase the bank balance (like unpresented cheques) are subtracted, while items that decrease the bank balance (like bank charges and uncleared deposits) are added.

 

Question 11. Prepare bank reconciliation statement.
1. Overdraft shown as per cash book on December 31, 2014 Rs. 10,000.
2. Bank charges for the above period also debited in the passbook Rs. 100.
3. Interest on overdraft for six months ending December 31, 2014 Rs. 380 debited in the passbook.
4. Cheques issued but not encashed prior to December 31, 2014 amounted to Rs. 2,150.
5. Interest on Investment collected by the bank and credited in the passbook Rs. 600.
6. Cheques paid into bank but not cleared before December, 31 2014 were Rs. 1,100.
Answer:

In simple words: This reconciles a cash book overdraft of Rs. 10,000 to a passbook overdraft of Rs. 8,830. Unrecorded charges and uncleared deposits increase the overdraft, while unpresented checks and collected interest lower it.
Exam Tip: Clearly show the sub-totals of added and subtracted items in the 'Amount Details' column before carrying the net totals over to the main 'Amount' column. This prevents calculation errors and makes your statement easy to grade.

 

Question 12. Kumar find that the bank balance shown by his cash book on December 31, 2005 is Rs. 90,600 (Credit) but the passbook shows a difference due to the following reason:
A cheque (post dated) for Rs. 1,000 has been debited in the bank column of the cash book but not presented for payment. Also, a cheque for Rs. 8,000 drawn in favour of Manohar has not yet been presented for payment. Cheques totaling Rs. 1,500 deposited in the bank have not yet been collected and cheque for Rs. 5,000 has been dishonoured.
Answer:

In simple words: Kumar's cash book overdraft of Rs. 90,600 is adjusted. We add a post-dated check, an uncleared deposit, and a returned dishonored check, then subtract an unpresented check to get a bank overdraft of Rs. 90,100.
Exam Tip: A credit balance in the Cash Book means an overdraft. Remember to treat dishonoured cheques as additions because they decrease the bank's actual balance, thereby increasing the bank overdraft compared to the Cash Book.

 

Question 13. On December 31, 2014, the cash book of Mittal Bros showed an overdraft of Rs. 6,920. From the following particulars prepare a Bank Reconciliation Statement and ascertain the balance as per passbook.
1. Debited by bank for Rs. 200 on account of interest on overdraft and Rs. 50 on account of charges for collecting bills.
2. Cheques drawn but not encashed before December, 31 2014 for Rs. 4,000.
3. The bank has collected interest and has credited Rs. 600 in passbook.
4. A bill receivable for Rs. 700 previously discounted with the bank had been dishonoured and debited in the passbook.
5. Cheques paid into bank but not collected and credited before December 31, 2014 amounted Rs. 6,000.
Answer:

In simple words: This statement starts with Mittal Bros' cash book overdraft of Rs. 6,920 and adjusts for interest, collecting charges, returned bills, and uncredited deposits to find the passbook overdraft of Rs. 9,270.
Exam Tip: A discounted bill receivable that gets dishonored is directly debited by the bank, which reduces our bank account balance. Since this increases our actual overdraft, it must be added to the Cash Book overdraft.

 

Question 14. Prepare bank reconciliation statement of ShriBhandari as on December31, 2005.
1. The payment of a cheque for Rs. 550 was recorded twice in the passbook.
2. Withdrawal column of the passbook under cast by Rs. 200.
3. A cheque of Rs. 200 has been debited in the bank column of the Cash Book but it was not sent to bank at all.
4. A cheque of Rs. 300 debited to bank column of the cash book was not sent to the bank.
5. Rs. 500 in respect of dishonoured cheque were entered in the passbook but not in the cash book. Overdraft as per passbook is Rs. 20,000.
Answer:

In simple words: This statement starts with a bank passbook overdraft of Rs. 20,000. It corrects errors like the bank recording a payment twice and checks that were written down but never actually deposited, arriving at a cash book overdraft of Rs. 18,650.
Exam Tip: If the withdrawal column of the passbook is undercast (totals up to less than it should), it means our actual bank balance is lower (and overdraft is higher) than what is shown. Therefore, we add this amount when starting from the Passbook overdraft.

 

Question 15. Overdraft shown by the passbook of Mr. Murli is Rs. 20,000. Prepare bank reconciliation statement on dated December 31, 2014.
1. Bank charges debited as per passbook Rs. 500.
2. Cheques recorded in the cash book but not sent to the bank for collection Rs. 2,500.
3. Received a payment directly from customer Rs. 4,600.
4. Cheque issued but not presented for payment Rs. 6,980.
5. Interest credited by the bank Rs. 100.
6. LIC paid by bank Rs. 2,500.
7. Cheques deposited with the bank but not collected Rs. 3,500.
Answer:

In simple words: This statement converts Murli's passbook overdraft of Rs. 20,000 into a cash book overdraft of Rs. 22,680 by correcting items like unpresented checks, bank charges, and payments directly made to the bank.
Exam Tip: Remember that any direct payment made by a customer into our bank account increases the bank balance (thereby decreasing the passbook overdraft). To reconcile this back to the Cash Book, we must add it back to the Passbook overdraft.

 

Question 16. Raghav and Co. have two bank accounts. Account No. I and Account No. II. From the following particulars relating to Account No. I, find out the balance on that account of December 31, 2014 according to the cash book of the firm.
1. Cheques paid into bank prior to December 31, 2014, but not credited for Rs. 10,000.
2. Transfer of funds from account No. II to account no. I recorded by the bank on December 31, 2014 but entered in the cash book after that date for Rs. 8,000.
3. Cheques issued prior to December 31, 2014 but not presented until after that date for Rs. 7,429.
4. Bank charges debited by bank not entered in the cash book for Rs. 200.
5. Interest debited by the bank not entered in the cash book Rs. 580.
6. Overdraft as per Passbook Rs. 18,990.
Answer:

In simple words: This statement starts with the passbook overdraft of Rs. 18,990 and converts it into a cash book overdraft of Rs. 23,639 by adjusting for internal bank transfers, unpresented checks, bank charges, and uncleared checks.
Exam Tip: Inter-account transfers (such as a transfer of funds from Account II to Account I) must be analyzed carefully. If recorded only in the bank passbook, they reduce the passbook overdraft. To reconcile back to the Cash Book, we must add them back.

 

Question 17. Prepare a bank reconciliation statement from the following particulars and show the balance as per cash book.
1. Balance as per passbook on December 31, 2014 overdrawn Rs. 20,000.
2. Interest on bank overdraft not entered in the cash book Rs. 2,000.
3. Rs. 200 insurance premium paid by bank has not been entered in the cash book.
4. Cheques drawn in the last week of December, 2014, but not cleared till date for Rs. 3,000 and Rs. 3,500.
5. Cheques deposited into bank on November, 2014, but yet to be credited on dated December 31, 2014 Rs. 6,000.
6. Wrongly debited by bank Rs. 500.
Answer:

In simple words: This statement reconciles an overdraft of Rs. 20,000 on the passbook to an overdraft of Rs. 17,800 in the cash book by adjusting unpresented checks, bank overdraft interest, and incorrect bank debits.
Exam Tip: A bank error (like an incorrect debit of Rs. 500) increases the passbook overdraft. To reconcile back to the cash book balance, we must deduct this incorrect debit from the Passbook overdraft.

 

Question 18. The passbook of Mr. Randhir showed an overdraft of Rs. 40,950 on March 31, 2014. Prepare bank reconciliation statement on March 31, 2014.
1. Out of cheques amounting to Rs. 8,000 drawn by Mr. Randhir on March 27, a cheque for Rs. 3,000 was encashed on April 2014.
2. Credited by bank with Rs. 3,800 for interest collected by them, but the amount is not entered in the cash book.
3. Rs. 10,900 paid in by Mr. Randhir in cash and by cheques on March, 31 cheques amounting to Rs. 3,800 were collected on April, 07.
4. A Cheque of Rs. 780 credited in the passbook on March 28 being dishonoured is debited again in the passbook on April 01, 2014. There was no entry in the cash book about the dishonour of the cheque until April 15.
Answer:

In simple words: This statement converts Mr. Randhir's passbook overdraft of Rs. 40,950 to a cash book overdraft of Rs. 44,730 by adjusting unpresented checks, bank collections, and uncleared deposits.
Exam Tip: Pay attention to the cut-off date (March 31). Any cheques encashed or cleared in April (such as the Rs. 3,000 check encashed in April and Rs. 3,800 collected on April 7) are considered outstanding as of March 31.