lof Bani econcilistion Steternest nportance of Bank Reconclistion atenent Difference between Cash took and Banik fatement Cant Fast Bock Eulences bi of tank Reconclistion Aatemert of Bank Reconcilistion Statement Br of Bank Reconciliation Statement when extxacts Of Cash Bock ant Zar Fess Tonk are iver: Bank Keconciliation Statement is a statement pre by the ccomunt folder onc particular date (which may be any date of the ear) 10 LeCDEUZ IBZ PEPE EcLon 8 eT Cash Book (record of the account holder) w balance as per-Bank Statement or Bank Paws-Book (record of the bank) showing ent betweenthe two balances) ‘The account holder records the deposits in the bank in Cash Book on the debit side (Le, Receipts side) and wi (ie. Payments es ne a Bank also m: an account of the account bolder in its books of account. Depes: made by the account holder are recorded on the credit side of the eocount bolder’ account and withdrawals on the debit side. A oopy of it is given to the account hol in the form of Bank Statement or Bank Pass Book for its records and reconciliation. Briefly, Debit entries recorded in the Cash Book are shown in the credit side of the Bank Statement or Bank Pass Book, while credit entries recorded in the Cash Book are shown in the debit side of the Bank Statement or Bank Pass Book. Transactions of deposits and withdrawals during the period being recorded in both Cash Book and Bank Statement or Bank Pass Book, balances shown by the two records at the end of the period should normally be same. But normally the two balances differ. If the two balances differ, it is necessary to determine the reasons for the difference 4s it may require entry to be passed in the books of account. ‘The difference may be because of an error in recording transactions in the Cash Book or Bank Statement/Bank Pass Book or it not having been recorded. A statement showing the reasons or causes of differences. is prepared. ‘This statement is termed Bank Reconciliation Statement.oo” a Double Entty Book Keeping~cyse "4 Rank Reeonciliation Statemont is not a part of Double Fy ms . “ntry System of Book Kee, +R Method by which hank balnnee in Cash eae ee balan sesh, ment or Bank Pass Book aro reconciled te ag ne corrected transactions, ifomitted, are recontod ae 08 per Bank State nsure that errors, if any, ULSD dcy Ghee “dae Bank Statement or Bank Pass Rook ia.a Copy of account of the-account holde f the bank, It ssued [Link] bank to the Account holder so that entries in th ere or Bank Pass Book can he compared with tec in the Cash Boo “rences dotormined| N debit balance inthe Biel Statement or Bank Pass Boot means an amount payable by the account holder to the bank, whereas credit balance ns amount payable by the bank to the account holder, i., an amount receivable ch is lying deposited) by the necount helen from the bank: TiN the NEED AND IMPORTANCE SATA) TTY We Ce) Uae Bank Reconciliation Statement isan important statement prepared because of the: following reasons: 1, Errors, if any, committed in recording transactions either in the Cash Book or Bank Statement or Bank Pass Book are identified. - Undue delay in the clearance of cheques deposited is known from the reconciliation. . Regular reconciliation discourages embezzlements. +. Reconciliation helps to verify the accuracy of entries recorded in the Cash Book and keep track of cheques, drafts, etc., that are deposited with the bank for collection, TER aoa BETWEEN BALANCES AS|BER CASH BOOK AND SEATS enc ener ce BOOK Balances as per Cash Book and Bank Statement or Bank Pass Book may differ under some situations. We can broadly classify these situations into three categories: 1. Difference Due to Timing in Recording Entries ; There is always a time gap between recording a transaction in the Cash Book cand i being recorded by the bank. For example, a cheque issued is recorded in the Cas! en on it being issued but the bank records it when it is presented for Laat a cheque deposited is recorded in the Cash Book on it being deposited wherea: bank credits it when it is cleared, i.e., bank has received the amount. 2. Transactions Recorded by the Bank but not by Account Holder : Sometimes transactions are recorded by the bank, which are not aoe to a wig the holder. The account holder records them ii ah ‘is/her books of account after Le separ intimation from bank or Bank Statement or Bank Pass Book. Ae aaa eae charged or allowed, bank charges, etc., are known from the perk al ean ie tae Pass Book. Such transactions in the Bank Statement or Bank a coe Statetaaa difference between the balance as per Cash Book and balance as per Bai or Bank Pass Book.sank Reconciliation Statement 133 3, Errors Errors may be committed by the bank or by the account holder and th. in difference in the balances of Cash Book and Bank Statement or Bank Pace Boe For example, wrong balance may be carried forward, a transaction may not have been\ ~~ recorded in the Cash Book or a transaction ma S y have been wrongly recorded in an account? Let us elaborate on the reasons or causes of diffe A aS rrences. Pits: 1. Difference Due to Ti ies) $ 2 SE 2 Se iS Ent Fs (i) Cheques Issued but not Presented for Payment —\ oe pes ‘Cheque issued for payment is recorded in the Cash Book immediately én ir being issued. But the bank will record the entry when the cheque is presented to it for ayment. Thus, there is gap of few days between entry recorded in the Cash Book \d in the Bank Statement or Bank Pass Book. If Bank Reconciliation Statement is prepared on a date between the date of issue of cheque and its presentation to the bank for payment, difference will arise. th For example, a cheque of % 20,000 is issued on 29th March, 2022 which is presented to the bank on 2nd April, 2022. Issue of cheque will be recorded in the Cash Bock on 29th March, 2022 whereas the bank will record it on 2nd April, 2022. On 31st March, 2022, Cash Book balance will be less by € 20,000 due to this reason. (if Cheques Deposited into Bank but not yet Cleared Cheques deposited into bank-~are-recorded-in the bank column on the receipts, i.e., lebit side of the Cash Book on the date of deposit. But, bank credits it in the account hen it has received the payment from the other bank, i.e., when cheques have been leared. Thus, there is gap of few days between the deposit of cheques and credit by e bank. Therefore, difference will arise on a particular date in the bank balance as per the Cash Book and the Bank Statement or Bank Pass Book. For example, a cheque of = 10,000 is deposited into the bank on 30th March, 2022 which is collected by the bank on 4th April, 2022. If the balances are compared on 31st March, 2022, Cash Book balance will be higher by & 10,000. _2. Transactions Recorded by the Bank but not by the Account Holder (ii) Interest Credited by the Bank but not Recorded in the Cash Book Ifthe bank allows interest to the account holder, it credits the account holder's account and his balance would increase in the books of the Bank, i.e., Bank Statement or Bank Pass Book. But the account holder will record the entry in the Cash Book at a later date when it is known to him. Till that time, the balance as per Bank Statement or Bank Pass Book would be higher than the balance as per Cash Book. (tv) Bank Charges and Interest Charged by Bank but not Recorded in the Cash Book Bank renders services to its customers for which it levies service charge called Bank Charges. Similarly, bank provides overdraft facility for which it charges interest. Bank debits the account holder's account in its books with the amount of Bank Charges or Interest on Bank Overdraft and thus reduces the balance in account holder’ 's account in its books. But the account holder records the entry in the Cash Book, i.e, credits the ’ank column in the Cash Book when Bank Statement (or Bank Pass Book) is received. Till that time, balance as per Bank Statement (or Bank Pass Book) would be lower than the balance as per Cash Book.a 13.4 Double Entry Book Keeping —~ casey (&) Interest and Dividends Collected by the Bank | Bank may collect interest and dividend on behalf of the account holder and credit the, to the account holders’ account, The account holder records it in the Cash Book when Bank Statement or Bank Pass Book is recived from the bank. Till that time, balance as pet the Bank Statement or Bank Pass Book will be higher than the balance as per Cash Booy (vi) Direct Payments by the Bank Bank may have been given standing instructions for payments say, payment of insurangy premium. When the bank makes the payments, it debits the account holder's account, In thiscase also, the account holder may come to know of the payment when Bank Statement is received. Entries in the Bank Statement or Bank Pass Book and in the Cash Book will thus be on different dates and, therefore, the difference in balance will exist, (vii) Direct Deposit in the Account ~Ifamount is deposited directly in the account, Bank will record it in the account holder's account. The account holder will record the deposit at a later date when he ives the Bank Statement or Bank Pass Book. Till that time, balance as per Bank “Statement or Bank Pass Book will be higher than the balance as per Cash Book, (viii) Dishonour of a Bill Discounted with the Bank If the bank does not receive payment against Bills of Exchange or Promissory Note discounted by it, it will debit account holder's account along with charges that it may have incurred. The account holder may know the amount debited when Bank Statement or Bank Pass Book is received. Therefore, the account holder will record the entry at a later date. But till the time such entry is recorded, the balances shown by Cash Book and Bank Statement or Bank Pass Book will differ. (éx) Bills Collected by the Bank on Behalf of the Customer If goods are sold, its documents may be sent through the bank. If the bank collects the amount, it will credit the account holder's account. The account holder will record the entry when Bank Statement (or Bank Pass Book) is received. 3. Errors (x) Errors and Omissions Errors and Omissions either in the Cash Book or-in the Bank Statement or Bank Pass Book is another reason for difference between the balances as per Cash Book and Bank Statement or Bank Pass Book. It is possible that while recording the transactions in the Cash Book, a cheque of € 1,000 deposited into the bank is recorded as % 10,000 or Bank Column in the Cash Book is overcasted or undercasted. Similarly, bank may also commit a mistake while recording the transactions in the Bank Statement or Bank Pass Book. For example, a chéque collected on behalf of Manish is entered in the account of Mahesh. VE ie? Determining the Reasons or Causes of the Differen The first step to prepare Bank Reconciliation State: because of which the two balances differ. It may recorded in the Cash Book but are not recorded a Statement and vice versa. The process of identifying it by comparing the entries in Cash Book with those in the Bank Pass Book or Bank Statement. in the ae=irtion Swatomnent pank RELORTRRY 7 pank Rosoneiliation Statement is prepared by addi cy araaiter, Bank Recor: ion : ae Thereafter, difference, ee = amounts CRUST ENC and it, 1 take an example to unders at us takes Rank Pass Book or Bank Statement are compared agi of the Cash Book, Thereafter, Bank Reese a h Book Balance and reaching elon Bank arting with the balance as per Bank i Pa Beak 3S or entries which canse the the entries Entries in the Statement is column starting either with € Ps 1 ook or Ba Statement or Pass Rook of Mand reaching balaneo as per Cash Book. The : and or deducted from the starting belages NK STATEMENT OR BANK PASS BOOK gar, Now Delhi 110 024 in a New Delhi, SANK STATEMENT OR BANK PASS BOOK at fe Colony ig, Tall & Shot es Ga pase. Bank, MCC, Defence 2}ay Ge dn 4 Fontan Daves Utd & an dan, 4] To Dos Co e ae Jon. 10] By 4odrs0 & Co's cheque o pod Jan. 12] To Roy S James a 35000 Jan. 15] By 8 BabuS Cols cheque a es lan. 16} By Cash & 25600 yn, 20] To Cash a 2600 27] By [Link] & Bros. cheque a 24,900 31 To Insurance Premium paid as per standing instructions a 22900 . 2300 Jan, 31] To. Bank charges Jan. 31} By Interest collected on Government 2 Securities ee CASH BOOK (BANK COLUMNS ONLY) Date _| Particulars x Date _| Particulars, 2022 2022 de Jan, 2/To Cash A/c 40,000 | Jan. 2] By Furniture Dealers Utd. Jan. 8] To J. Johnson & Co. 3500/7 | Jan, 2] By Roy &James Jan. 10} To B, Babu & Co. 7,600 | Jan, 4} By Das &Co Jan. 16} To cash ale 3,000¥ | Jan, 17 | By K Nagpal & Co. Jan. 201 To 41. Raj & Bros. 4300¥ | Jan. 20] By Cash Ale Jan. 22} To. M, Mohan & Co. 10,500} Jan. 25] By capi Fan. 311 To [Link] & Sons 3.400 _| Jan. 25 | By Balance: 72,300 os J 4 fed 110 patance bid acon || await Reread Book and Cash Book moan these entries have Entcies marked with (V) in both Bank Statement or Bank Pass I centries are the Ncorrecth ded in both the books. Unmarked reasons or causes for difference in two balances. ly recorded in both the books. § are rere APSO ION™ 136 Double Entry Book Keeping —cese Unmarked entries are explained as follows: (i. Following two cheques issued by the account holder have not been presented for paymeny. (a) K. Nagpal & Co. 7,001 otal € 15,100 (6) B. Babu & Co. 7,800 As a result, Cash Book balance is lower than the Bank Pass Book balance, If starting point is Cash Book balance, € 15,100 should be added to the Cash Boo, balance to reach the Bank Pass Book balance. If starting point is Bank Pass Book balance, it should be deducted from balanee as per Bank Pass Book to reach the balance as per Cash Book. As a result, the two balances will match. i) Following two amounts in the Bank Pass Book are not recorded in the Cash Book: (@) Insurance Premium Paid % 2,500) rotal & 2,600 (v) Bank Charges % 100 As a result, Cash Book balance is higher than the Bank Pass Book balance, If starting point is Cash Book balance, % 2,600 should be deducted from Cash Book balance to reach the Bank Pass Book balance. If starting point is Bank Pass Book balance, it should be added to Bank Pass Book balance to reach the Cash Book balance. As a result, the two balances will match. (ii) Following two cheques had been deposited by the account holder which have not | been credited by the bank: | (@ M. Mohan & Co, % 10,500 () N. Nandy & Sons % 3,400, Tota! 13,900 | As a result, Cash Book balance is higher than the Bank Pass Book balance. | If starting point is Cash Book balance, € 13,900 should be deducted from Cash Book balance to reach the Bank Pass Book balance. If starting point is Bank Pass Book balance; it should be added to reach the Cash Book balance. As a result, the two balances will match. (iv) Amount credited by Bank but not recorded in Cash Book: Interest Collected % 2,000 As a result, Cash Book balance is lower than the Bank Pass Book balance. If starting point is Cash Book balance, % 2,0 balance to reach the Bank Pass Book balance. Y If starting point is Bank Pass Book balance, it shi Cash Book balance. e As a result, the two balances will match, Se) SHY TON ESEMe op 33 ; rth Although, the differences are identified but they need to be presented in a manner that is understandable. Hence, a statement named ‘Bank Reconciliation Statement’ is prepared starting with either Cash Book Balance or Bank Pass Book or Statement Balance to which entries causing difference are added or deducted. Bank Reconciliation Statement in the case of above example will be as follows:jp NIAAA TOOT 44,7 (oy Whon startin polit bebatanoe me por Oral Nook HANK NECONCIIATION STATEMENT itn AVA oninnry, 2009 ARAN ena eat i pace apartbe Gah ook (ON) renee eee saves ast NEL YEE Osea Tor Payment K NAGE OD BR RANINE. 1300 sngoest cect anh on Gowernmant Secures cteied =e Jaan tank Pass BOOK NU MOL yeE entered inthe Cash ook seas Chagos de) suited Dut NOL YR Clete: ss ie AL Mahan & CO [Link] & S008 hanges recorted in the By ese eaniuimy paid and bank ak eos see utnotyet ret the Cash Book patance as per the Bank Pass Book (Cr) Or Whon starting point is balance as por Bank Pass Book or Bank Statement BANK RECONCILIATION STATEMENT as. on 31st January, 2022 ‘as perthe Bank Pass Book (Cr) 24,300; Cheques deposited but not yet credited: : NUMohan & Co, [Link] & Sons 13,900 Premium paid and bank charges entered in the Bank Pass Book but not yet entered in the Cash Book : 40,800 tess Cheques issued but not yet presented for payment: K Nagpal & Co, 7,300 B Babu &Co, 25,700 Less: Interest collected by bank on Government Securities credited by bank but not yet recorded in the Cash Book Balance as per the Cash Book (Dr.) Alternative Presentation of Bank Reconciliation Statement In the alternative presentation of a Bank Reconciliation Statement, two columns are given, one to show entries that increase the balance (Plus items) and another to show entries that reduce the balance (Minus items). Balances as per the Cash Book anc Bank Statement or Bank Pass Book are written as the starting balance as follows: 1. Debit balance of Cash Book is written in the ‘Plus items’ column. 2 Credit balance of Cash Book is written in the ‘Minus items’ column. 8. Debit balance of Bank Statement or Bank Pass book is written in the Minus items’colum 4. Credit balance of Bank Statement or Bank Pass Book is written in the ‘Plus items’ columiDouble Entry Book Keeping~-CBSE xi mounts for causes of difference, two columns are totalled and ss Qetermined. Difference is written in the column having the shorter total, ‘Dye @iArre js the balance as per Cash Book, if balance as per Bank asal ar Rak Pass Book is taken as the starting balance and it is balance as per Bank tor Rank Pass Book, if balance as per Cash Book is taken as Ea starting «The Bank Reconciliation Statements given above are redrawn below: (z) When starting point is balance as per Cash Book BANK RECONCILIATION: STATEMENT as on 31st January, 2022 Balance as per the Cash Book (Dr) ‘Cheques issued but not yet presented for payment: K Nagpal & Co. B. Babu & Co. Interest collected by bank on Government Securities credited by bank in the Bank Pass Book but not yet recorded in the Cash Book Cheques deposited but not yet eared: ‘[Link] & Co. N Nandy & Sons Premium paid and bank charges recorded in the Bank Pass Book ‘but nat recorded in the Cash Book Balance as per the Bank Pass Book (Cr) (2 40,800 -% 16,500) Or (6) When starting point is balance as per Bank Pass Book or Bank Statement BANK RECONCILIATION STATEMENT os on 31st January, 2022 Balance 2s per the Bank Pass Book (Cr) Cheques deposited but not yet cleared ‘[Link] & 0. BL Nandy & Sons Fremium pad and ben charges recorded Gene ari Baek bt not et cated the Cah Book sued be nat yet presented fr payment: |<) K Nagpal & Co. 6 BBabunca : ‘nserest collected by banicon si Goverment Securit : 10 We Bank Pass Gack bit tt jet recoded in the Ke Ss: Per the Cash Book iD) (¢ 49,200 - 17,300) 2juaik Hee oneiiatien Staternent PREPARATION GF BANK RECONCHIATION STATESAEMT Hitting inde ohendll be begt iA, While preqearing the Lank Menronailicationn Stetameapl (0H Date The date an whieh te Hank Necaneiiation Se, Seas wall Cy Balance Mi Tile regen Mt shicaeall tie leecgie je mind toes beep (a) Wislinice is goer Hes Coed Verde erieseties thie Aonlerien ws poet hens ardeanmesed Cansbs Berl. (hy Debit bilinice ie a favenuraite baliece in Cab Weade, it muses that the anweaet in Lying deponited (rece valley in thee bine nee X16 OR Ghee entity, Mh is ag weraect of the fem, wy dithilanceisuntavourablebalencein thet’ ash Hook. it meanshankeverdraft, Je, withdrawal of AmOnoL In excess Of simon deperiten. bis w lisbibity of the firms, Le, ie payable to the hank, () Credit balance ae per Bank Statement or Bante Pass Yoke is favourable Iilanee, Le, that much aroun is lying deported (receivable) in the bank, it re, Jan asket of the firme () Dehithalancens per Hank Btatementor bank Pars Bookisuntavourablebalance, Le. withdrawal of ainaunt in excess of amount Aepenited. It in a liability of the firm, Le, is payable to the bank, Hoaides the shove, following should also be kept in mind: (a) Debiting an item in the Cash Book increases balance ax per Cash Book and crediting decronnes it, (6) Dobitiog an item in the Bank Staternent or Bank Pas Thok decreaus the Pank Statement or Bink Pans Book balance or increases the bank overdraft balance find crediting inereanes the balance ar decreases the hank. overdraft balance. (i) Proparing Bank Reconciliation Statement Bank Reconciliation Statement is prepared by adding or deducting (as the case is) the amotints of entries that have caused difference to the balance taken as a starting point, Le, Cash Book Halanes or Bank Statement or Pass Book Balance, Many banks Issue Bank Statements Instead of Pats Books. Both, Bank Statement aod Bart Pass Hook have us fame meaning, the only diference is that Bank Statement is in Soose forrn whereas Bank Pars Book is in hook form rs aaa ‘ech harna IMPORTANT NOTES ea: * Debit Balance os per Cath Hook and Credit Balance as per Bank Pats Book mean favourable balance, * Credit Halonce at per Cash Rook and Debit Balance as per Bank Pays Book mean urdayourable balance. | + Altansaction wich ig comectly recorded in both Cath Bok and the Bank Statement or Bank Pass Bock | within (he date of prepating the Bank Reconciliation Statement 1s hot the reason of cause for difference, * The eniies which have been recorded in the Cath Book and not in the Bank Pass Book or have been fecorded In the Bank Past Book and not in the Cash Book are the teatons or causes for differenceasr0 Double Entry Sook Keeping —CBse yy A. Preparation of Bank Reconciliation Statement Starting with Cash Book Balance Cash Book may have debit, ie., favourable balance; or credit, £e., unfavourable balance 2. Starting with Debdit, ie. Favourable Balance as per Cash Book. The entries leading to difference between the balances of Cash Book ang Bank S or Bank Pass Book are determined. Thereafter. each entry of difference is analysed to determine its effect on Cash Book balance, i-e., whether it hes led to se or decrease in the Cash Book balance. Entries thar have led to decrease in Cash Book balance (e.g., cheques issued but not presented for payment, interest credited by the bank but not recorded in the Cash Book. direct deposit in the bank not recorded in the Cash book, etc.) are edded to the bslance as per Cash Book. Entries that have led to increase in Cash Book balance (e.g., cheques deposited but not credited by hank. bank charges charged by the bank, etc.) are deducted from the balance as per Cash Book. These amounts when added to or deducted from Cash Book balance, give the balance as per Bank Statement or Bank Pass Book. Starting with Credit, ie, Unfavourable balance or bank overdraft as per Cash Book. The entries leading to difference between the overdraft balances in Cash Book and Bank Statement or Bank Pass Book are determined. Thereafter, each entry of difference is analysed to determine its effect on Cash Book balance, ie, whether it has led to increase or decrease in overdraft balance as per Cash Book. Entries that have led to increase in bank overdraft Cash Book balance (eg, cheques issued but not presented for payment, interest credited by the bank. etc.) are deducted from bank overdraft balance as per Cash Book. Entries that have led to decrease in bank overdraft balance as per Cash Book (eg.. cheques deposited but not credited by bank, bank charges charged by the bank, direct payment by bank not recorded in the Cash Book, etc.) are added to the bank overdraft balance as per Cash Book. The deduction and addition of above amounts lead us to the balance as per Bank Pass Book. Preparation of Bank Reconciliation Statement Starting with Bank Pass Book Balance 4. Starting with Credit, i.e, Favourable balance as per Bank Statement or Bank Pass Book. The entries leading to difference between the balances of Bank Statement or Bank Pass Book and Cash Book are determined. Thereafter, each entry of difference is analysed to determine its effect on Bank-Pass Book balance, ie. whether it has led to increase or decrease in the balance as per Bank Statement or Bank Pass Book. s 2 j j Entries that have led to increase in Bank Statement or Bank Pass Book balance (e.g., cheques issued but not presented for payment, interest credited by bank but not recorded. in the Cash Book, etc.) are deducted from the Bank Statement or Bank Pass Book balance. 2nank Reconciliation Statement 13.117 Entriesthathaveled tothe decrease} d inBanks| (e.g. chegues deposited but not credj pocoment ted’ or Bank Pass Book balance etc.) are added to the Bank Statemest oaks ban k charges charged by bank, nt or Bank Pass Book balance. The adjustments of above amounts lead to the balance as per Cash Book. a pe a Starting with Debit, ie, Unfavourable balance or bank overd: Bank Statement or Bank Pagg Book, nuieea The entries leading to difference between th i eer aaa eee causing dite e two balances are determined. Bank Pass Book balance, Le. whether j draft balance as per Bank Statemen; to over » Entries that have led to decrease in by ‘or Bank Pass Book (e.g., cheques ig ank overdraft balance as per Bank Statement : : sued but not presented for payment, interest credited by bank, etc.) are added tothe bank overdraft balance of Bank Statement or Bank Pass Book. The adjustments of above amounts lead us to the balance as per Cash Book. ‘Let us now discuss how Bank Reconciliation Statement is prepared under each of the following situations: CASE L WHEN STARTING POINT IS DEBIT, ie, FAVOURABLE BALANCE AS PER CASH BOOK. “hit or favourable balance as per Cash Book means the amount in deposit with the ik. When Debit Balance as per Cash Book is taken as the starting balance to reach the ‘balance as per Bank Statement or Bank Pass Book, adjustments are made for entries “ausing differences, i.e., are added to or deducted from the Cash Book balance as follows: Fas [en for Adlsinent Transactions recorded in Cash Book but not recorded in Bank Statement or Bank Pass Book ‘Attet to Cast Book Balance ae Bc fed but not presented for | This transaction decreases the bank balance in Cash Book. Therefore, to pa a the balance of Cash Book at par with the balance as per Bank Statement or Bank Pass Book, this amount is added. 1 Gregus Seoosned but not collected these amounts are deducted.Entry Book Keeping — casey, Tensactions acarted in ganic Statement or Bank Pass Bock but not recorded in Cash Book These ransactions incense the balance of Bank Pass Bock but notthe Cay Sok dalance since they arent recorded in Cash Bock. Therefore: to ring: | the talon ch Baka roth ees sd oa ) game @ass Seok, thent amounts are added. | | ves ransactions decease the balance of fank Pass Book butrotthe Cash nck Balance since they are net recorded in Cash Bock. Therefore to bring the balance of Cash Seek at car with the balance as per Bank Statement gy | Bark ss ok, these amounts are deducted, i sendinty etalon’ #1, era grein st Eases Committed i Casit Sooke Plast York Solace i W CRerwnes doceitec sane Sut not | This amount is not recorded in the Cash Bock but Bank Pass Bock balance sesntetin Lash tank fas increased: Therefore, te bring the balance of Cash Book at par withthe’ talance as per #ank Statement or Bank Pass Book. this amount is added. | Sacco sm Cath Sok Salamce Sh Recwes icouad ant sot ecard amount is nor recorded in the Cash Bok but Bank Pass Book balance has decreased Therefore, to bring the balance of Cash Book at par with the Loh Sent | catance as cer dank Statement or Bank Pass Book, this amount is deducted Spel ars Sach Yank alana 3 Gi) Gencecing, ser i Se ecztcts Sde | oth the arors increase the balance of Cash Book. Therefore, to bring the fe widisntorcatingumor tte taymants Salance of Cash Book at car with the balance as per Bank Statement te f Cah tore Sark Pass Book, these amounts are deducted. tank Sakon | | piney sor Se tectipts Side | doth the errors decrease the balance of Cash Book. Therefore, to bring. ib wrsicactinrs arr rite Pepments | the balance of Cash Sock at par with the balance as per Bank Statement or Shah YH Bank Pass Book these amounts are added 9 EHO ComeweiCad je) Zale Statercent or Bank Pass Book =. PORES OR HAN Blaser Gi) Whee coset fumes yy He ante ‘Gebacd hon tok i binntn Bh Wri Beir spose ty to anc Cash tacks Therefore, to bring Ealarice a5 per Bank Statement orbs 353 qo2. the Cash Book of Baj showed deiyn 4 22, 3 haan a Pass Book showed credit belenor of £ 374068 ot $8600, Bank ‘Book were compared and the Uillowiny dommes cn oat “am %9,000 and of Mohan 15600 wise dave p 3ist March, 2022. » espoatie ne were ine ited a cheque of % 5.00 43 QUE GS BLIIS Cizenthy trey tine 3 erest of T 500. Pr % 10.000 issued to Ramesh was not presemed t ected for permemt 1 6,000, being insurance premium paid as per suanding inraesi ed Z 100, being bank charges. mer ation Statement as on 3ist March, 3037. RECONCILIATION STATEVENT os on 27st March, 2222 pe Gas Sook (De) Sy Geposted by Ramesh, not recorded im Cash Book i, oct recorded in Cash Book 22 Out not yet presented for payment (Ramesh) cos Cecues denested bet not yet collect Sen Moran rewrarte Premium p2id by the bank, not recorded in Cash Booke Sankcargs debited by bark but nct recorded in Cash Book dlance sper Bank Pass Book (Cr) tion Statement as on xing information, prepare Bank Reconciliat 000 and Mohan % 2,400 were deposited into credited by the bank on 3rd April. 2022. 27th March, 2022 were ® Cheques from Ram & 2,500: Shyam 3; 2eeount on 29th March. 2022 but were sed to Kabir € 5,000 and Sameer 7 6,000 on payment on 7th April, 2022. acustomer was recorded in the Cash cheque for 2 1,000 which was received from Book on 2o-h March, 2022 but was deposited in bank on 5th April, 2022. ement shows a credit of % 2,500 for interest and a debit of % 500 for i ges. ©) Belance as per the Cash Book was? 1 bowed 2 credit balance of € 1,84,100- 80,000 Dr.) whereas the Bank Statement 2es-SaNeen a sentiNEA aeaN Double Entry Book Keeping C84 yy pare Sotation: BANK RECONCILIATION STATEMENT as on 31st March, 2022 Ratices ‘Selbace as per Cash Book (Or) Aut Cheques issued but not yet presented for payment: sabe Somer deaenest credited by bank not recorded in Cash Book fess Cheques depested but not yet collected: Rr Syen Mohan ‘Gheque recorded in Cash Book but not deposited Sank Charges charged by Sank but not recorded in Cash Book ‘Saleace as per Bank Statement (Cr) Illustration 3. From the following information, prepare Bank Reconciliation Statement as op Mareh, 2 Debit Balance of Bank Column as per Cash Book as on 31st March, 20222 12.0119, Balance (Credit) as per Bank Statement as on that date & 16,500. (éi2) Out of the total cheques issued of % 7,000, cheques of % 4,000 were debited am 5th April, 2022 and the remaining have not been presented yet. (ix) Cheques deposited of € 3,500 were credited on 4th April, 2022. (2) Bank had debited 100 as bank charges and had collected ¢ 200 as interest on investments. vi) A cheque issued to S Ltd. for € 3,400 was recorded in the Cash Book ss 4,301. olution: BANK RECONCILIATION STATEMENT as on 31st March, 2022 articulars lance 2s per Cash Book (Dr) 2 Cheques issued but not yet presented for payment Interest credited by Bank but not recorded in Cash Book Greque paid to Sid fx 23,400 wrongly entered in the Cash Bookas%4300 | Cheques deposited but not yet credited x Bank ches dare by Sark nt rece Cah Book nce 2s per Bank Statement {Cx} :Reconciliation “vakement gat ernativel> Alt ice as per Cash Book (Dr) sa Peas issued but not yet presented for Payment cee deposited but not yet credited serest alowed by the bank skchages charged by bank coequ paid 013400 wrongly enteredin Cash Book at 4300 saance sper Bank Statement (Cr) 20,109 3,690) qustration 4, oncomparing the Cash Book of Saksham with the gist March, . Bank Pass Book for the year ended » following discrepancies were noticed: (@ Outof® 35,000 paidinby cheques: ‘intothebankon25thMarch, chequesamountingto % 15,000 were collected on Sth April. (6) Out of cheques drawn amounting to Z 15,600 on 28th March a cheque for % 5,000 was presented on 3rd April. i () Acheque for € 2.000 entered in Cash Book but omitted to be banked on 31st March, Acheque for T 1.200 deposited into bank but omitted to be recorded in Cash Book d was collected by the bank on 29th March. il receivable for T 1.00 previously discounted (discount % 40) with the bank honoured but advice was recived on 3rd April. % 20,000 was retired/paid by the bank under a rebate of € 300 but the bill wes credited in the bank ovlamn of the Cash Book. 1 Ind Are13.16 Double Entry Book Keeping—cese y Solution: BANK RECONCILIATION STATEMENT ason 31st March, 2022 Particulars ‘Amount Detalls @) z Balance as per Cash Book (Dr.) ‘Add: (b) Cheques issued on 28th March but not yet presented for payment (d) A cheque deposited into bank but not recorded in Cash Book (f) Rebate on bill not entered in Cash Book (Note) (@) Cheque wrongly credited by bank (i) Cheque drawn on Savings Bank A/c but wrongly recorded in Current A/c 5,000) 1,200 300 5,000 400 Less: (a) Cheques deposited on 25th March but not yet collected till 31st March (€. Acheque entered in Cash Book but not yet banked (e) Discounted Bills Receivable dishonoured but not recorded in Cash Book (h) Amount Wrongly debited by the Bank Balance as per Bank Pass Book (Cr.) Note: Bank retired the bill of 20,000 at a rebate of 300, ie, bank paid only & 19,700, However, amountofthe bile, 20000 20,000 ‘was recorded on the payments side of the Cash Book. Therefore, & 300 will be added in Cash Book Balance. Mllustration 5. Bank Reconciliation Statement is prepared as on 31st March, 2022 starting with debit balance as per Cash Book. State whether the following transactions will be shown in Sthe Bank Reconciliation Statement by adding or deducting from the given balance giving reason: (i) Bank had wrongly credited the account by % 25, 000 « on 1st March, 2022 and was reversed on 3rd April, 2022. (i) Receipts Side of the Cash Book was overcast by ® 1,000. (iii) Payments Side of the Cash Book was overcast by € 100. (iv) Receipts Side of the Cash Book was undercast by & 10,000. (v) Payments Side of the Cash Book was undercast by = 10,000. (vi) Cheque for = 5,000 was issued but was not recorded in the Cash Book. (vii) Bill of Exchange of % 10,000 was deposited for collection which was not recorded in the Cash Book. Bank had collected the bill and had credited the account. Solution: () The amount & 25,000) will be added to the Cash Book balance since it is not recorded in the Cash Book. By adding the amount, Cash Book balance will increase and will be at par with Bank Pass Book balance. (i) The amount @ 1,000) will be deducted from the Cash Book balance since Cash Book balance is erroneously increased by the amount. (iii) The amount @ 100) will be added to the Cash Book balance since Cash Bak balance is erroneously decreased by the amount.hotion Statement 13.17 got The amount @ 10,000) will be ad sme nmount & 10,000) will be 4 . leducted asian = 2 jount 5,000) . “ as areas a he deducted from the Cash Book balance because if the crans . it would have shown the balance at lower amount. seas ey we be added to the Cash Book balance because if the transac 's Tecorded, it would have shown the balance at higher amount. i (ea fiustration 6. inte any Six Teasons when the balance as per Cash Book will be higher than the joiance as per Bank Pass Book or Bank Statement. Solution: Balance BE iatement in Cash Book will be higher than the balance as per Bank Pass Book or Bank ii Cheque recorded in the Cash Book but not deposited in Bank. igi) Iuterest debited by bank but not recorded in the Cash Book. jank Charges debited by bank but not recorded in the Cash Book. by bank as per standing instructions, not recorded in Cash Book. () Payment (ci) Wrong debit by bank. sons when Cash Book balance will be lower than balance as per Bank nik Pass Book. Bia Sour re Biatement or Bi Sulution: ues issued but not presented for payment. deposited but not recorded in Cash Book. by the bank but not recorded in Cash Book, or interest charged reversed by bank. POINT IS CREDIT, t.c., FAVOURABLE BALANCE PASS BOOK, give STARTING TATEMENT OR BANK PAS wee nk Statement or Bank Pass Book means amount lune os er Maing. Bank Buatement or Bak Ves ook je the Ait balance in the Bank Statement or Bank Pas Book means Si payable by the bonk to the ween holder, When balance as per Bank Biatement or Tank Pas Book ie taken aa the basis lance ws per Cash Book, adjustinents are made for entries eattslng pe added to or deducted from the balance ox per Bank Statement ov Benin an Plows: per Bal13.18 rouble Entry Hook Keeping Case y When, " is give the Credle Balance as por Hank Statement or Bao Poa Hayy ere Tanti Transactions recorded in ash Book but not recorded in Bank Statement ox Bank Pass Book ee aad Deducted from Bank Pass Book Bilance TARE {) heute or | Tatar drei oboe ei permet rele toring the blanco Banks Book apa tt bey, I rash Bo tian deduced. : ‘Added to Bank Pass Book Balance ae a 1) Cheques deposited at ot cece | Tee vant iene bce fa Bok bt Ut i ot credited by the bank inBak Therefore obi he balance of ank Fas Book at pa Wht i i) Cheques deposited but dshonoured | balance a pe Cath Book, these acs ate a. i) Cheques recorded but ot deposited Transactions recorded in Bank Stat fement or Bank Pass Book but not recorded In Cash Book ee a Deducted fom Bank Pas Book Balance i 1) Cheque of Gah dept dec | These vances ices the cof Bank Ps Bk i othe inthe bak saline ofCsh Bok Therefor rng he balance of Bank Pats ook i) Interest alowed by the bank a par with he balance as pe Cash Book these amounts are subtracted, i) lnterest and Dividend colected bythe fank Bis of xchange ealed ‘ded ss Book Balance = (0) Bank charges charged These varsctions decrease the blince of Bank Pas ook bu nl talaceof Cah Book. Tere to bring the balance of Bank Ps Book, (i leters charged by Bank (i), DicurtedBllfxhargeDshorce | at par wih he ble of Cash Bok, thee amounts are added, 1a) Dect payment by the bank as pe standing instructions 9, uty bil, Ingurance premiam pad et. pees Errors Committed in Cash Book ‘Dedacted rom Bank Pas Book Balance i 0) Cheques deposited In bank but not | This amounts not recoded inthe Cash Book but Bank Pass Book blanc recorded in Cash Book has icreased Thereore, to bring the balance of Bank Pass Book tp wth the balance as pt Cath ook, hs amount i deducted, ‘Added to Bank Pas Book Balance sed 1) Cheques issued but not recorded in | This amount is not recorded inthe Cash Book ba Bani Pass Book balance GashBeok tasdeczensed Theretore to big the balsnce of Bark Pas Bock a pa the bale a er ah Boo thant i ade, ‘Added to Bank Pass Book Balance 1) Once nthe ces | oth the eras zeae the bance cf Cash back. Thr, toa pyri | the balance of Bank Pass Book at par with the balance as pet Ch Bo ‘Dead ton Bik Pes Book ale | Wh Undeocasting err i the recegts side | sed recasting ents the payments ideo ah la‘ gaarerent or Bank Pass Book yniserror increases the bal qherefore,to bring the bala jper Cash BOOK, this moun sobtracter, Tis evar decreases the balance of Book. Therefore, to bring ama ss aes es tat CON Buck ot arcacieaias a 2, Bank Statement of Dinesh showed a credit bet belemen? "rowed debit balance of € 15,200. The reasons far che di goa to Roshan for & 6,000 and to Daniel er “ganged 850 for Dank charges, which was not rex directly deposited & 8,160 {nto the Bank Account of the rads wish wts ered in the Cash Book. os yam for = 5,150 and another from Revises not ent ques one from Shy {j) Two che’ ere collected by bank on 2nd April, 2022 although they were Seas a9th March, 2022. (0) Interest credited by bank was £450, which was not recorded #2 Cast Re, Prepare Bank Reconciliation Statement as on 31st March, 2022, Solution: BANK RECONCILIATION STATEMENT ‘ason3istMarch, 2022, Talance as per Bank Statement (Cr.) ‘Add: Cheques deposited but not yet collected: Shyam Kailash Bank charges debited by the bank but not recorded in cash Book less. Cheques issued but not yet presented for payment: Roshan Daniel Direct deposit in bark by Nites? t ae Interest recited bythe bank bt not seconded in COREE Balance as per Cash Book (D1) Z| iY 13.20 Double Entry Book Keeping—cosey Mlustration 9, Prepare Bank Reco information: 'iliation Statement as on 31st March, 2022 from the following | Bank Statement showed a credit, ic. favourable balance of % 9,214. | () On 29th March, 2022 bank credited a sum of % 1,650 in error. | (ii) Cheques totalling % 4,500 issued on 29th March, 2022 were not cleared. | (iii) Life Insurance Premium of € 950, paid by a standing order was not recorded i, | the Cash Book. (iv) A cheque of ¥ 600 received, deposited and credited by bank, was accounted as receipt in the cash column of the Cash Book. (v) Other cheques for % 8,500 were deposited on 27th March, 2022 but cheques for % 6,000 were collected by the bank on 31st March, 2022 and remaining on 2na April, 2022. Solution: BANK RECONCILIATION STATEMENT as on 31st March, 2022 Particulars ‘Amount | Amount Details (%) z Balance as per Bank Statement (Cr) 9218 ‘Add: Life Insurance Premium as per standing instructions not recorded in Cash Book 950 Cheques deposited but not cleared 2500 3450 12,665) Less: Amount wrongly credited by Bank 1,650 Cheque deposited but wrongly debited in Cash Column of Cash Book 600 Cheques issued but not presented for payment 4,500 Balance as per Cash Book (Dr.) Illustration 10. Prepare Bank Reconciliation Statement of Krishan as on 31st March, 2022: () Balance as per Bank Pass Book as on the date is = 10,000. (ii) Bank collected a cheque of ¥ 500 on behalf of Krishan but wrongly credited it to Kishan’s Account (another customer). (iii) Bank recorded a cash deposit of € 2,589 as % 2,598. (iv) Withdrawal column of the Pass Book undercasted by ¥ 100. (v) Credit balance of € 1,500 as on Page 10 of the Pass Book was recorded on Page 11 as a debit balance. (vi) Payment of a cheque of € 350 was recorded twice in the Pass Book. (vii) Pass Book showed a credit for a cheque of & 1,000 deposited by Shri Kishan (another customer of the Bank). (viii) Dividend collected by bank % 125.jiation Statement recon! jon! BANKR 13.21 gol ECONCILIATION STATEMENT ‘ason 31st Me paricuats arch, 2022 ace as per Pass Book (Cr.) Plus i Minus Items srongly credited to anoth z aque wrong! ler Customer's ori orying forward 'er's account ‘my ge recorded twice : = s credit for Cash Deposit ee ating of withdrawal column . credit for a cheque of another account holder 100 ippiden collected by bank ‘ae pannce as percash Book (Dr) 13,850-21,234) 533 12,616 73.850| 13,850 fiustration 11. on sist March, 2022, Bank Statement of A i on oe Cash Book showed debit balance of Arman shoe credit balance of % 33,570 Ttwas observed that the differences were because of the following: () Cheques and drafts sent to the bank but not collected and credit 27.900 while cheque for € 2,000 was received unpaid. (i) Three cheques drawn for & 3,000; % 1,500 ‘and & 2,000 respectively were not presented for payment till 30th April, 2022. (ii) Bank has paid a bill payable of f 10,000 but it has not been entered in the Cash Book and a bill receivable of & 5,000 which was discounted with the bank was dishonoured by the drawee on the due date. (iv) Bank has charged & 130 as its commission for had credited an interest of & 100 in the account. (v) Awrong debit of 5,000 was made by the bank, w1 ich was reversed on 4th April, 2022. Prepare Bank Reconciliation Statement as on 31st March, 2022. ited, amounted to collecting outstation cheques and Solutio BANK RECONCILIATION STATEMENT 0507 31st March, 2022 pastas amount | Details) Balance as per Bank Statement (Cr) it 7,900 | ve and drafts deposited but nt collected and credited oat paid by bank but nat recorded in Cash Book an Bill discounted dishonoured o Bank Commission not recordedin Cash Book as 61,600 (Dishonoured) i ‘edited by Bank but not recorded in. ‘Cash Book Balance as per Cash Book (DF)13.22 Double Entry Book Keeping—case y, Alternate presentation of Bank Reconciliation Statement is as follows: BANK RECONCILIATION STATEMENT as on 31st March, 2022 AGG Pusitems | Minas han x z Balance as per Bank Statement (Cr) se Cheques and drafts deposited but not yet collected and credited 7900 Cheque deposited returned unpaid (Dishonoued) 2000 Cheques issued but not yet presented for payment 10,000 500 Bils payable paid by the bank but not entered inthe Cash Book on Bil discounted dshonoured “130 Bank Commission not recorded in Cash Book interest credited by the bank but not recorded in Cash Book eu 1 Wrong Debit by Bank Balance as per Cash Book (Dr) (¥ 61,600 ~% 8,600) S00 oe Illustration 12. Bank Reconciliation Stateme! credit balance as per Bank Pass Book. St: be shown in the Bank Reconciliation Statemen given balance giving reason: () Bank had collected interest and credited the account by & 5,000. (ii) Bill of Exchange for & 10,000 realised by the bank was not recorded in Cash Book, (iii) Interest charged by the bank of & 1,000. (iv) Bank had paid cheques of 20,000 which were issued but not recorded in the Cash Book, (v) Payments Side of the Cash Book was undereast by € 10,000. i), Payments Side of the Cash Book overcast by € 1,000. nt is prepared as on 31st March, 2022 starting with ate whether the following transactions wi)) by adding or deducting it from the lution: {@ The amount (6,000) will be deducted from the Bank Pass Book balance sinceit js not recorded in the Cash Book and Bank Pass Book shows higher balance. By deducting the amount, Bank Pass Book balance will decrease and will be at par with Cash Book balance. (ii) The amount 10,000) will be deducted from the Bank Pass Book balance since it is not recorded in the Cash Book and Bank Pass Book shows higher balance, By deducting the amount, Bank Pass Book balance will decrease and will be at par with Cash Book balance. The amount (& 1,000) will be added to the Bank Pass Book balance since it has s, decreased the bank balance. As a result, bank balance will increase and will be it par with the Cash Book balance. amount € 20,000) will be added to the Bank Pass Book balance since it has sed the bank balance. As a result, bank balance will increase and will be with the Cash Book balance.ciliation Statement ea 13.23 The amount & 10,000) will be added to the Bank Pass Book balance wince Cash shows higher b : ook shows higher balance, As a result, bank balance will also increase bringing jt at par with the Cash Book balanee ) G yi The amount @ cn will be deducted from the Bank Pass Book balance since it has decreased the Cash Book balance. As a result, bank balance will also decrease and will be at par with the Cash Book balance. qrostration 13. {p On dist March, 2022, the Bank Pass Book of Radha Enterprises showed a credit palance of & 15,000. (i Before thatdate, shehadissuedchequesamounting to% 8,000 outofwhichchequesof £3,200 were presented for payment till 31st March, 2022. a) A cheque of & 2,200 deposited by her into the bank on 28th March, 2022 is not yet credited in the Bank Pass Book. (iv) She had also received a cheque of % 500 which although entered by her in the bank column of Cash Book, was omitted to be paid into the bank. (v) On 30th March, 2022, a cheque of & 1,570 received by her was paid into the bank but the same was omitted to be recorded in the Cash Book. (u) There was a credit of % 150 for interest on current account and a debit of % 25 for bank charges. (vi) Awrongcredit off 2,000 was given by bank on 27th March, 2022 and was reversed on 10th April, 2022. Prepare Bank Reconciliation Statement as on 31st March, 2022. Solution: BANK RECONCILIATION STATEMENT as on 31st March, 2022 Yalance as per Bank Pass Book (Cr) Adé Cheque deposited but not yet deared Cheque recorded in Cash Book but not deposited Bank charges debited by Bank 42t Cheques issued but not yet presented for Payment (Cheque deposited into Bank but not recorded in Cash Book Interest credited by Bank oN Wrong credit by Bank (Note) 85 per Cash Book (Dr) "ete: Bank has wrongly credited the Pass Book by ® 2.000. t means, Pass Book Balance i higher by € 2,000. To arrive at the Cash Book balance, % 2.000 will be deducted.13.24 Ty Double Entry Book Keeping ~CBsey, CASE 3. WHED (UNFAVOURABLE) Credit, ie., overdraft (unfavourable) balance as per Cash Book means amoune ; overdrawn and is payable to the Book is taken as the basis to reconcile the balance as per Bank Statement or Baay Pass Book, adjustments are made for the entries causing differences, i-e., are ade to or deducted from the credit or unfavourable balance as per Cash Book as follows, When Overdraft (Credit) Balance as per Cash Book is given STARTING POINT IS CREDIT, i-e., OVERDRAFT | BALANCE AS PER CASH BOOK. bank. When an overdraft or credit balance as per Cap Items of Difference Transactions recorded in Cash Book but not recorded in Bank Statement or Bank Pass Book Deducted from Cash Book Overdraft Balance: (Cheques issued but not presented for payment, ‘Added to Cash Book Overdraft Balance W) Cheques deposited but not collected or credited by the bank ii) Cheques deposited but dishonoured (id) Cheques recorded but not deposited (A) Bill Discounted Dishonoured Transactions recorded in Bank Stat. Deducted from Cash Book OverdraftBalance @ Cheques or Cash deposited directly into the bank (i) Interest allowed by the bank (it) Interest and Dividend collected by the Bank (i). Bills of Exchange realised (4) Cheque issued returned unpaid (ishonoured) ‘Added to Cash Book Overdraft Balance (i) Bank charges charged (il) Interest charged by Bank (bit). Discounted Billof ExchangeDishonoured (Direct payment by the bank as per standing instructions, eg, utility bills, insurance premium paid, etc. ‘Reason for Adjustment : ‘This transaction increases the overdraft balance of Cash Book and not of the Bank Pass Book. Therefore, to bring the overdraft balance of Cash Book at par with the balance as per Bank Pass Book, this amount is deducted, ‘These transactions decrease the overdraft balance of Cash Book. Therefore, to bring the overdraft balance of Cash Book at par with the balance as pe Bank Pass Book, these amounts are added. fement or Bank Pass Book but not recorded in Cash Book These transactions decrease the overdraft balance of Bank Pass Book Therefore, to bring the overdraft balance of Cash Book at par with the balance as per Bank Pass Book, these amounts are deducted. ‘These transactions decrease the credit balance as per Bank’P increase the overdraft balance of Bank Pass Book. ‘overdraft balance of Cash Book at par withthe ke Book, these amounts are added,tion Statement committed in Cash Book 13.25 re creques deposited in bank but not a ecordedin Cash Book 7 cash Book Overdraft Balance ip cheques sued but not recorded in Cash Book —tto ash Book Overdraft Balance ig, Overasting erorinthe receipts side and undercesting error in the payments side of C2sh Book pesetadfrom Cash Book OverdraftBalance 4) Undercasting error in the receipts side and overcasting error in the payments. side of Cash Book This amou Bank has os is not recorded tr Jock ince nthe Cash Book but credit balance a5 per overdraft balance decreases. Therefore, to bring the overd [sone Pus era balance of Cash Book at par with the balance as per ‘this amount is deducted. This a Bank Pass Boor tse in the Cash Sook but ced lnc 28 per bring the oven ee ceases OF overtaft balance increases. Therefore, 10 raft balance of Cash Bi Bank Pas Book thsamGuntisadded. hy Mn ne balone® 25 Pe eo th tor decrease the overdraft balance of Cash Book. Therefore, ring the overdraft balance of Cash Book at par with the balance as per Bank Pass Book, these amounts are added. Both the errors increase the overdraft balance of Cash Book. Therefore, to bring the overdraft balance of Cash Book at par with the balance as per Bank Pass Book, these amounts are deducted, Errors Committed in Bank Statement or Bank Pass Book ‘Deduced from Cash Book Overdraft Balance {) Wrong credit given by the bank This error decreases the overdraft balance of Bank Pass Book or increases the credit balance, Therefore, to bring the overdraft balance of Cash Book at par with the balance as per Bank Pass Book, this amount is deducted. ‘Hided to Cash Book Overdraft Balance {Wrong debit given by the bank Illustration 14. Following information is of Roshan who requires y' the Pass Book balance: Balance as per Cash Book (Cr.) Cheques is e Cheques dep; dit . . Additional Information: (2) Debit »: ed but not presented for payment ed but not credited le of the Cash Book (bank column) is i creditor has been entere This error increases the overdraft balance of Bank Pass Book or decreases the credit balance. Therefore, to bring the overdraft balance of Cash Book at par with the balance as per Bank Pass Book, this amount is added. ou to reconcile his Cash Book with z 2,800 3,440 < 22, 260 underéasted by % 500. x 4 by mistake in the Cash Column. (MSE Chandigarh)Double Entry Book Keeping— case ” 13.26 Solution: BANK RECONCILIATION STATEMENT son. Plus items | Minus Particulars z : ems Balance as per Cash Book (Overdraft, Le., Cr.) a 2800 Unpresented cheques Uncredited cheques 2.260, 500 Debit side of the Cash Book has been undercasted Wrongly credited in the cash column Bank charges not recorded in the Cash Book Balance as per Pass Book (Overdraft, 1.) ( 5,340 - % 3,940) 1,400 fey 5340 5340 Illustration 15, The Bank Column of Mukesh’s Cash Book as on 31st March, 2022 showed an. overdraft of & 1,80,000. His Bank Statement showed an overdraft of % 1,13,900. Prepare Bank Reconciliation Statement taking the following into account: © Cheque deposited into bank but entry is not passed in the Cash Book. (i) Cheque received and entered into the Cash Book but was not sent to bank. (iii) Credit side of the bank column casted short, (iv) Electricity bill paid by the bank under standing instructions was not recorded in the Cash Book. () Bank charges entered in the Cash Book twice, (i) Cheque ‘received’ returned by the bank but entry was not passed. (vii) Cheque ‘issued’ returned on technical grounds but entry was not passed. (viti) Bill discounted dishonoured. (ix) Bills Receivable directly collected by An amount of € 1,00,000 being collection of the account of Mukesh by the bank in his b the bank. 3,000 10,000 1,000 5,000 100 4,000 3,000 40,000 20,000 Mahesh’s cheque was wrongly credited to ank statement.yon Statement pecontial p Rec? yo BANK RECONCILIRTIOg 13.27 Det cafibalance a5 per Cash Book ote received and recorded in the Mt teat side of the bank COIUM casted shor sect bil paid dectly by the bank cheque received returned by the bank gil discounted dishonoured ath Book but not sere to the ay ‘ «cheque deposited int the bank but no entry way gank charges entered twice in the Cash Book Cheque issued returned on technical grounds gus Receivable diecty collected by the bank Passed in the Cath Bork Wirong credit given by bank overdraft Balance as per Bank Statement (Dr.) 5 126,108) L__1.43,900 atk ss flustration 16. fromthe followinginformation, determinethebalai fthe gist March, 2022: ince ofthe Bank Pass BookofAmritason () Bank overdraft of € 63,400 as per Cash Book on 31st March, 2022. (ii Interest on overdraft for 6 months ended 31st March, 2022, € 1,600 entered in the Bank Pass Book was not recorded in the Cash Book. (ii) Bank charges of ® 300 are debited in the Pass Book but are not recorded in Cash Book. (ix) Cheques issued but not presented for payment prior to 31st March, 2022. were 711,50. (v) Cheques deposited in the bank but not collected before 31st March, 2022 were for = 21,700. (vi) Interest on investments collected by the bank and credited in the Bank Pass Book, % 12,000. (vii) Credit side of the Bank column of the Cash Book was undercast by % 1,000. Solution: BANK RECONCILIATION STATEMENT as on 31st March, 2022 Particulars Overdraft Balance as per Cash Book (Cr.) Aad: Interest on Overdraft debited in the Bank Pass Book but no ank charges debited in the Bank Pass Book but not yet Cheques paid in but not yet credited by the bank Credit side ofthe Bank column of the Cash Book undercasted tyetenteredin the Cash Book entered in the Cash Book {ess Cheques issued but not yet presented Interest on Investments collected and credited By in the Cash Book Overdraft Balance as per Bank Pass Book (D1) the bank but 0!os Double Entry Book Keeping—-CBsE x) Alternate Presentation: "The above solution can also be presented with two columns using ‘Plus’ and ‘Minus’ method, BANK RECONCILIATION STATEMENT as on 31st March, 2022 Particulas Plus ses Minus tere ‘Overdraft Balance as per Cash Book (Cr.) Interest on Overdraft debited in the Bank Pass Book but not yet entered in the Cash Book (Cheques issued but not yet presented 11,680 Cheques paid in but not yet credited by the bank Bank charges debited in Bank Pass Book Credit side of the Bank column of the Cash Book undercasted Interest on Investments collected and credited by the Bank but not yet entered in the Cash Book 12,000 23,680 Overdraft Balance as per Bank Pass Book (Dr.) (¥ 88,000 - ¥ 23,680) 64,320 88,000 88,000, Illustration 17 (Overdraft as per Cash Book). Prepare Bank Reconciliation Statement as on 30th April, 2022 for Jyoti Sales Private Limited from the information given below: z () Bank overdraft as per Cash Book on 30th April, 2022. 1,10,450 (ii) Cheques issued on 20th April, 2022 but not yet presented. 15,000 (iii) Cheques deposited but not yet credited by the bank. 22,750 (iv) Bills sent for collection not advised by the bank but credited to the account. 47,200 (v) Interest debited by the bank on 27th April, 2022 but no advice received. 12,115 ) (wd Subsidy received from the authorities by the bank on our behalf, credited to the account. 22,000 (vii) Amount wrongly debited by the bank. 2,400 ‘(viii) Amount wrongly credited by the bank. 5,000 Solution: BANK RECONCILIATION STATEMENT as on 30th April, 2022 Particulars Amount | ~ Amount Details @) ee ‘Overdraft Balance as per Cash Book (Cr.) ‘Add: Cheques deposited but not yet credited 22,750 Interest debited by Bank but not recorded in Cash Book 12,115 Amour 2,400 oly debited by Bank 12s issued but not yet presented for payment Bils sent for collection credited by Bank but not recorded in Cash Book Subsidy received by Bank and credited but not recorded in Cash Book Amount wrongly credited by Bank Overdraft Balance as per Bank Pass Book (Dr)Wo ene yi! wih ule has 0 pi [00 yank had anid HON sOanh Hook at Hajendar ahioy rf shower ane . apart Hank Roconetliabion Bijan ral 5,00, From oaentod fay payment elope i fore Sat Mareh, 2022 ) 2022 amounted hut not eredited hefore Bist Mayeh, 2022 a i » 2 pMmounted ) previonsly: dise i 1 jily discounted with the hank had heen yes dobitod in the Hank Pass Book amounted to 56, ante for 88 pat hank ohare je Hank Pass Hook eotod Interest On ID wee 12 oe f for % 120 on account of interest on overdralt, int yostment and eredited = 760 in the Bank voll 1022 and incorroetly debited the account by © 5,000 an 2 y © 6,000 an 28th Mare jah April, 2022 sat INANK RECONCILIATION STATEMENT as on 31st March, 2022 ul "ai Plus items | Minus items 7 t aac #8 1 Gaal ook (Ce) j++ paves sued hot presented for payment 3946 , {prs deposed nto the Thank but Not yet credited aa ieee ishonaured previously ‘discounted with the bank a pankahaiges debited It the Hank Pass Hook ss erent on overt ne charged 120 ve renanvestment conected and credited 760 Wrong Debit dy Bank 5,000 Overdraft Balance as per Bank Pass Book {on 16,186 -% 4,706) 11,480 16,186, 16,186. = Mustration 19, Comparingy Mota the month of Nove () Cash Book shows (id) Payment (ii) A cheque fo on his Curr (Ww) Cheques am boon presen we ) Cheques amounting to % 60 ‘» en «lin the Cash Book } fink changes of & 750 a8 Pe Cash Book (i) Dividends « entered in the Cash Book. i Mt) Wrong ered Pop mn PAT Bank Re vw Cash Book with the Bank Statement of his overdraft necount for rg, following was noticed: of & 46,000. had been underet Accour pmibe ed an overdratt 0 k his Savings Jo of the Cash Book pat by & 1,500, 87,500 drawn on Ne has eon shown as drawn wont Account. nounting to & 70s ptod. 000 drawn and entered in the Cash Book have not » bank for collection, which though py the bank, yt heen recorded in the pave not b y Bank Statemen 5,000 have bee® paid directl¥ into the bank and not 1 and reversed it on imounting to ® on 29th November it for & 10,000 was Kiven by bank 2021, woncilintion somber, 2021 be goth Nov Statement onCable letty teh Mengeep tig 7 12.20 STRTLMEM! 0: 07 Yeh Movertton, X07 Sehwticone S000 EECONORISTION TEMES Ct UE Oneeticats Balance 4c paw Coch tan (C2) apres ston 0 Cath rb RAT. 1 Dec Cee or eet RELI RRL DS Re GA PURO GLE, Precawes teavnct tk ot yet peecontec Sot payee rere pail ts te ar tat rh pt esate Bae crarges ss: mere Fecstgt of tide ita th bars Weare, Condi by Bie Eahanien ws goes Banke Sentareonrt Wt 121, - 1 17 2S eerste ec thant tal A mia tre the Potace halaten Yom Birk w Corie Th ition 20. tan aintains bis Current Accrasnt with HDPC Bank. On tat March, 2902, the bank » Bae shurwed an triertbrals ch? S2,KN in his Carvens hermane. Peon oe particulars, preyare Bank Peconciliation Statement ason Diet March, 279. Ell Recxtvable of 2 1040 earlier disorunted with the bank Was & Gisborne zed bank charges debited in the Pass Book mere 2 110, It was nn recorded the Cash Bark. (4) Out A the ttal cheques of 7 1,090,900 izeued, cheques aggregating t DSO were A in March, cheques aggregating 2 40,000 mere debited in April, and the have not yer been debited. aide of the Cash Book is undercast by 7 2,000. A745 received from Om on Doth March, 2022 was recorded in the chumn of the Cash Book and was not banked. A? D),000 was retired by the bank under rebate of 2 200 but the full amount credited in the bank elumn of Cash Book. (i) 7 20 tor bank charges were recorded two times in the Cash Book whereas bank levied annual charges of 2 70, which were not recorded in the Cash Book. Solution: BANC FECONCI ATION STATEMENT a on 21t March, 1012 Ovettecht balacne v1 ger Cath Conkle} Mle: DN Gcbrreaated aot Bercostien chance dite by tak PAD +7 140) ide h Cah trae is erences 0M Page 1h recone in Cath tock Tae tah cet breasted te payment (2 VBMLO-2 2600 UD, testesesd wn Cah Bonde (WZ)_peconeiation Statement ne 13.31 ing * w ok balance Is under ah BOO Teast by F 3,0 7 ol n Barwon the additon site, 100, therefore to arrive at the Bank Pass Book balance, this amount ¥ xd the bill of & 20,000 pane retired 1,000 at a rebat: Rents ry thee ash Book Therefore, % S00 wae ever entire amount of € 20,000 was recorded 25 ve received from Om we leducted. 5 cree yas Tol record edna . ae discount column of Bank Column of the Cash Book. Besides, fatement. tion 21. pst? ae: k Reconciliation is prepared as on 31 sh Book, State whether the fai st March, 2022 starting with credit balance oe: State whether the following transactions will be shown in the Bank peonell ation State mont by adding or deducting it from the given balance giving reason: () Cheque of 10,000 deposited was dishonored. ga) Cheque of & 5,000 w: gape recorded in Cash Book but was not deposited. qi) A Bill of ¥ 20,000 discounted from Bank was dishonored. ix) A cheque issued to Ramesh for 5,500 was not recorded in Cash Book. @) Receipts Side of the Cash Book was overcast by % 1,000. Solution: @) The amount € 10,000) will be added to Overdraft Cash Book balance since it is not recorded in the Cash Book and Bank Pass Book shows higher overdraft or lower credit balance. By adding the amount, Overdraft Cash Book balance will increase and will be at par with Bank Pass Book balance. Gi) The amount (% 5,000) will be added to Overdraft Cash Book balance since it is recorded in the Cash Book but not deposited. Bank Pass Book shows higher overdraft balance or lower credit balance. By adding the amount, Overdraft Cash Book balance will increase and will be at par with Bank Pass Book balance. (ii) The amount & 20,000) will be added to the Overdraft Cash Book balance since it has increased the overdraft Pass Book balance. As a result, overdraft Cash Book balance will increase and will be at par with the Bank Pass Book balance. (i) The amount @ 5,500) will be added to Overdraft Cash Book balance since it has not been recorded in the Cash Book but has either decreased the bank balance or has increased the debit bank balance. As a result, Overdraft Cash Book balance will increase and will be at par with the Bank Pass Book balance. The amount € 1,000) will be added to Overdraft: Cash Book balance since the error has reduced the overdraft balance. By adding the amount to Overdraft Cash Book balance, the balance as per Cash Book and Bank Pass Book will be at par. & CASE 4. WHEN STARTING POINT IS DEBIT, i.e., OVERDRAFT BALANCE AS PER BANK STATEMENT OR BANK PASS BOOK. or Overdraft (unfavourable) balance as per Bank Statement or Bank Pass Book meane withdrawal of more amount than deposited, i.e., it is the amount payable to When an overdraft or debit balance as per the Bank Statement is taken as © to reconeile the balance as per the Cash Book, adjustments are made for entries resulting in differences, -e., are added to or deducted from the debit or unfavourable balance as per Bank Pass Book as follows:W AAS WO Balin OANA Neibn Gera conaesiogt ta Cand Book but SEWERS RAR eat ahane A RRSONRS CIN RAGAN RY [THs Tak ANAK DAN ne Saas BAR Daeieowe, 2 OWES eREUNTR aE et coer meek Seance Tramsactions recorded in Bank Stat Jugeeies Fmt Pass Book Overdraft Balance Cranes or Cash denoted directly into the bank Bills of Exchange realised ‘Deciucted from Bank Pass Book Overdraft Balance Bank charges charged crest charged by Bank 5 Discounted Billof Exchange Dishonoured is Direct payment by the bank as per standing instructions, eg, utility | insurance premium paid, etc. Errors Committed in Cash Book ‘Added to Bank Pass Book Overdraft Balance (i) Cheques deposited in bank but not recorded in Cash Book Deducted from Bank Pass Book Overdraft Balance Gi) Cheques issued but not recorded in Cash Book. ‘Deducted from Bank Pass Book Overdraft Balance Overcasting error in the receipt side lundercasting errorin the payment ‘of Cash Book Double Entry Book Keeping—CBSEX) Pass Book is given 4s pow Rank Statement or Banke P25 SOA Reason for Aste no ment or Bank Pass Book ot recorded in Bank State? is becseases the debit tion increases the onetttt tated Des anc nga core tt eae dite blance a: ga Cth 1H 1 BIOPET: y ats vatsece of ierease the debit oe angio rer dros balance of Bank Pass thee sats are deducted. ment or Bank Pass Book put not recorded in Cash Book i % balance of Bank Pass Book. These transactions decrease the overOraft 3 srercfore to bring the overdraft balance of Bank Pass Bookat par with the balance as per Cash Book, these amounts are. added. the overdraft balance of Bank Pass Book. raft balance of Bank Pass Book at par with the ‘These transactions increase ints are deducted. ‘Therefore, to bring the overds balance as per Cash Book, these amout ‘This amount is not recorded in the Cash Book but Bank Pass Book overdraft balance has decreased. Therefore, to bring the overdraft balance of Bank Pass Book at par with the balance as per Cash Book, this amount is added. This amount is not recorded in the Cash Book but Bank Pass Book overdraft, balance has increased. Therefore, to bring the ovesdraft balance of Bank’ Pass Book at par with the balance as per Cash Book, this amount is deducted. as Both the errors decrease the overdraft balance. Therefore, to bring” the overdraft balance of Bank Pass Book at par with the balance as per Cash’) Book, these amounts are deducted. 3 eg sting error in the receipt side casting error in the payment sh Book Both the errors increase the overdraft balance. Therefore, irs‘This error Gecrenses the crmmccatt bakerc of Pans Bact. Thetedone, to being te owertratt balance of Bak Pave Sesh a par wth ther balance Berek, tr, wernt wee ee This exror increases the vende balance of Barix Pans Book. Theretore, 10 bring the ovesdeatt balance of Bank Pass Book at par with the balance #3 (pet Cach Book, thes errant is Cacarted. z; 22 2, 2022, the Bank Pass Book of Tapan & Co. showed an overdraft of € 7,700, of the following particulars, prepare Bank Reconciliation Statement: s issued before 31st March, 2022but not yet presented for paymentamounted cor bests Cheque! nes paid into the Bank but a cheque amounting 2 2.600, has not been collected pet 5) Imerest oD Loan amounting to 7 554, debited by the Bank was not recorded in the Cash Book, os seponited 4,6000directlyintothe bankbut the information waxtecsived an 2022 side of Cash Book was totalled 2 1,000 short. BAD PECOMCLIATION STATEMENT 0% 0” Stet Moreh, 2022 Gorte Ealance 0s per Bank Pass D ms Cm mad bet nck prevented kar payers 7 che Cash Sock Pars beet rome af. thee Cant: Book per Bank Pass Book on 31st March, 2022 overdrawn T 20,000, pies March, 2022 but wa presented for payment till 2 6,000 and t 8.008.’ 13.34 Double Entry Book Keeping Case y ii) Interest on bank overdraft not entered in the Cash Book % 2,000, (iv) Cheque for % 80,000 deposited into bank on 29th March, 2022 was collected on 2nd April, 2022. | (v) © 10,000 Insurance premium paid by the bank as por the trader's standing instructions hns not been entered in the Cash Book. (vi) Chamber of Commerce feo & 3,000 paid by the bank for traders but not recordog in the Cash Book. (vii) Collection charges of & 1,000 charged by the bank but not entered in the Cash Book, (viii) Bill discounted dishonoured but not recorded in the Cash Book % 5,000, Solution: BANK RECONCILIATION STATEMENT as on 37st March, 2022 ‘Amount [~ Amountiny Particulars tenets Overdraft Balance as per Bank Pass Book (Or.) 80,000 ‘Add: Cheques issued but not yet presented for payment 28,000 1,08,000, Less: Interest charged by the bank but not recorded in Cash Book | Cheques sent for collection but not yet collected by bank Insurance premium paid by bank Fee of Chamber of Commerce paid by the bank but not recorded in Cash Book Collection charges charged by bank Discounted Bill dishonoured but not recorded in the Cash Book 51,000, Overdraft Balance as per Cash Book (Cr.) 57,000 Mlustration 24. On 3ist January, 2022, the Bank Pass Book of Rajender shows a debit balance of 41,000. Prepare Bank Reconciliation Statement from the following particulars: (i) Cheques of & 15,600 were drawn on 27th January, 2022. Out of which cheques for % 11,000 were encashed up to 31st January, 2022. (i) A wrong debit of 800 has been given by the bank in the Bank Pass Book. (iii) A cheque for % 200 was credited in the Bank Pass Book but was not recorded in the Cash Book. (iv) Cheques amounting to % 21,000 were deposited for collection. Out of these, cheques for € 7,400 have been credited in the Bank Pass Book on 5th February, 2022. __() A cheque for % 1,000 was returned dishonoured by the bank and was debited in Bank Pass Book only. t on overdraft and bank charges amounted to & 100 were not entered in the ue of % 500 debited in the Cash Book was not deposited.junk Necaneiliation Statement Notation WANK HIECONCI ATION fwtiautaly sa TATEMEMT Pluses Overdiatt Halance ay par Hank Pass Book (On) 4) Cheques Inved bub nat dented (15,6008 11,000) i) Ayton debit hy hank in Bay Hook (Nate) (i) Cheque depentted fh bank but omitted 10 be recorded in Cash Hook W) Cheques lepasited but not cleared {vy Chew allsionouredt by bank (v) ankcliatged interest and bank charges (vi) Cheque debited iy Cavh Book but omnited to be banked Overdeatt Halance as par Cash Book (Cr) (48,800 = € 9,400) Motor lank has wrongly debited the Hank Pave Book hy €H00, Iemeane 100.10 Rank Pass Hook halance Is tower by ive at the Cash Hook balance, € 400 will bo shown In the Pus tems, g Muatration 25, Vollowing information has boon given by Sahil, Propnre Bank Reconcilintion Statement ns on Sint Mareh, 2022, showing balance an por Cash Book, (i) Debit balance shown by Bank Statement % 17,800, (i) Cheques of & 21,600 wore issued in the last wook of Mareh but only cheques of % 14,800 were presented for payment, (iii) Cheques of 8 10,750 were deposited in the bank, Out of them, a cheque of % 4,200 was credited on 4th April, 2022, (iv) A cheque of 8 1,200 was debited in the Cash Book but was not presented in the bank. As per instruction, the bank on 28th March, paid out % 1,450 to a creditor, but by mistake, the same has not been entered in the Cash Book. (vi) A Bill of Exchange of % 6,200 which discounted with the bank was returned dishonoured but no entry was made in the Cash Book. (vii) Bank charges and interest charged by the bank are % 350. (viii) Debit side of the Cash Book was wrongly undorcast by % 500. Solution: BANK RECONCILIATION STATEMENT as on 31st March, 2022 Particulars mount | “Amount Details (%) z Overdraft Balance as per Bank Statement (Dr) ‘Add: Cheques issued but not yet presented for payment 6,800. Debit side of Cash Book wrongly undercast 500 Less: Cheques deposited but not yet credited 4200 Cheque recorded in Cash Book but not deposited in Bank 1,200 Bank paid to creditor, not recorded in the Cash Book i 2 1A50 J,» Discounted Bill dishonoured not recorded in Cash Book jane g 2 he 18200 Bank charges and interest charged by Bank not recorded in Cash Book 350 Overdraft Balance as per Cash Book (Cr)13.36 Double Entry Book Keeping —Cese Mlustration 26, Prepare Bank Reconciliation Statement aa on 318t March, 2022 from the following transactions: G) Balance as por Bank Pass Book (Dr,) % 12,000 as on Blat March, 2022, (i) On 28th Mareh, 2022 cheques had been issued for % 70,000 of which cheques of £50,000 only bad been debited up to 31st March, 2022, (iii) Cheques of 35,000 had been deposited into bank for collection but out of these cheques of & 3,000 had been credited in the Bank Pass Book. ps Gv) ‘The bank had charged % 500 as interest on overdraft and the intimation o¢ which was received on 2nd April, 2022. () Bank had collected % 600 interest on Aman‘s investment. Aman was not aware of jt, (vi) A cheque for 2 200 has been debited in bank column of Cash Book by Aman, but it was not deposited in bank, (vid) A cheque for 2 900 was debited twice in the Cash Book. (viii) A cheque of & 5,000 credited in the Pass Book on 28th March, 2022, on being dishonoured is debited in the Pass Book on Ist April, 2022. Entry in the Cash Book for dishonour of the cheque was not recorded until 15th April, Solution: BANK RECONCILIATION STATEMENT as on 31st March, 2022 Particulars ‘Overdraft Balance as per Bank Pass Book (Dr.) ‘Add: Cheques issued but not yet presented for payment (& 70,000 - % 50,000) Bank collected and credited interest on Investment Less: Cheques paid into bank but not credited (& 35,000 - % 3,000) Bank charges Interest on Overdraft ‘Cheque recorded in Cash Book but not deposited in Bank Cheque recorded twice in the Cash Book Balance as per Cash Book {Dr.) ee Note: A cheque of & 5,000 credited in the Pass Book on 28th March, later debited in Pass Book on 1st April does not affect Bank Reconciliation Statement as at 31st March, Illustration 27. From the following information provided by Gokul, prepare his Bank Reconciliation Statement as on 31st March, 2022: c z (i) Bank overdraft as per Bank Pass Book. 16,500 (i) Cheques issued but not presented for payment. 8,750 (ii) Cheques deposited with the bank but not collected. 30,500 (iv) Cheques recorded in the Cash Book but not sent to the bank for collection. 2,000 (v) Payments received from customers directly by the bank. 3,500 (vi) Bank charges debited in the Pass Book. : 200 (viii) A bill for % 3,000 (discounted with the bank for ¥ 2,850 in February) ~ . dishonoured on 31st March, 2022 and noting charges paid by the bank. (vii) Premium on life policy of Gokul paid by the bank on standing instruction. "1,980 . sahget tC SEA 3 i. EAN FECOOLST ON Trsczs sears secant | meat Comet | Gag aE PP Ce 7 ; — ee, CORE RE DA OR Yt eerten for cayman sr tirect payment by comtomers rte Bante i semi ae fee Cages depested wth bare bs ect collectors i xn} Cheques mecardad fs the Cash Sock bis nce sere to the tank fr clacton, j 2ax/ exe ages i =) Premiom paid by the bank | tse! oF bl ncugng vn 8 j | Dieter ing otis Charges (Note? , 3X0; oe ‘Eatznce 2s per Cash Book (Dr) | Loss Note: Thoush the Bal wes discounted for T 2850, at the time of dishonor: she hank wil debt Cosmmers Account for the full value of bil Gnciuding Noting Charges ie. % 2.120. Illustration 28. Prepare Bank Reconciliation Statement from the details given below and ascertain the balance as per Gami‘s Cash Book as on 31st March 2022 (i) Bank overdraft balance as per Pass Book was 12.000 whereas Cash Book showed credit balance of 33.760. (i) Cheques i ‘sued to creditors amounting to T 20,000 in the month of March, 2022 of which cheques of f 3.000 were presented to the bank up to 3ist March. 2022. (ii) A cheque of % 6,000 received from Raj was deposited in the Bank Account on 26th March, 2022 but no entry was passed in the Cash Book. The same was collected and credited to Gami's Account on 29th March. 2022. (iv) A cheque of t 2,000 received from Baria on 20th March, 2022 was recorded in cash column of the Cash Book and was also not banked. &) Abank draft for 5,000 favouring Rajesh was taken and recorded in Cash Book. But, bank charges of € 40 were not recorded. (t}) The Pass Book showed that the bank had collected % 4.000 as interest on Government Securities. The bank had charged interest % 500 and bank charges % 200. These were not recorded in the Cash Book. (vii) Gamihad issued a cheque of 7.500 as his LIC premium. The cheque was dishonoured due to technical reasons. He paid cash to LIC against the dishonoured cheque. gin the Cash Book for dishonour of cheque. No entry was paDouble Entry Book Keeping—Case y) 13.38 Solution: ‘BANK RECONCILIATION STATEMENT «son 31st March, 2022 Particula Plus tems. | Minus item] fe sad a Overdraft as per Pass Book (Dr) ‘Cheques issued but not yet presented for payment Cheque deposited and credited by the bank but nat entered in the Cash Book Interest on Government Securities collected and credited by the bank Interest on overdraft charged by the bank but not entered in the Cash Book Bank charges charged by the bank but not entered in the Cash Book (@ 200 + 2 40) Cheque of ® 7,500 issued to LIC dishonoured but not account Overdraft as per Cash Book (Cr, (® 40,500 - % 6,740) ted in Cash Book Note: Item at Serial No. (iv) will not affect Bank Reconciliation Statement since it has not been recorded in Bank Column of the Cash Book and also has not been banked. Illustration 29. Following are the entries recorded in the bank column of the Cash Book of Vikas for the month ended 31st March, 2022: on CASH BOOK (BANK COLUMN ONLY) G Date Particulars [Date Particulars x ay 2022 2022 : March 15| To Cash 36,000 | March 1| By Balance b/d | March 21] To Roy 24,000 | March 4 | By John March 22] To Kapoor 10,000 | March 6 | By Raj March 31 To Balance cid 7,840 | March 15 | By Kailash March 20 | By Joshi Vikas received his Bank Statement and identified following mismatches: (i) Cheques deposited but not credited by the bank % 10,000. (i) Interest on securities collected by the bank but not recorded in the Cash Book = 1,080. (iii) Credit transfer not recorded in the Cash Book ¥ 200. (iv) Dividend collected by the bank directly but not recorded in the Cash Book 1,000. (v) Cheques issued but not presented for payment & 37,400. (vi) Interest debited by the bank but not recorded in the Cash Book % 1,000. (vii) Bank charges not recorded in the Cash Book % 340, Prepare the Bank Reconciliation Statement.