1 Bank Reconciliation Statement (BRS)

Introduction
A Bank Reconciliation Statement (BRS) is a statement prepared to reconcile the differences between the bank
balance as per the cash book and the passbook (bank statement) on a particular date.
Why is BRS Prepared?
• To identify errors in recording transactions.
• To detect any fraudulent transactions.
• To ensure accuracy in bank transactions.
• To update the cash book with missing entries.

Reasons for Differences Between Cash Book and Passbook

Reason Cash Book Passbook

Cheques issued but not yet presented for payment Deducted (credited) Not yet deducted

Cheques deposited but not yet cleared Added (debited) Not yet added

Bank charges Not recorded Deducted

Interest credited by the bank Not recorded Added

Direct deposits by customers (credit side) Not recorded Added

Direct payments made by the bank (standing instructions) Not recorded Deducted

Errors in recording May differ May differ

Important Points to Remember

• Favourable Balance: When the cash book shows a debit balance and the passbook shows a credit
balance (bank’s perspective).
• Unfavourable Balance (Overdraft): When the cash book shows a credit balance (overdraft) and the passbook
shows a debit balance.
• Errors: If there is any mistake in recording (e.g., wrong amount), it should be adjusted accordingly.

1. By whom is the bank Statement Prepared?

Ans. It is prepared by the bank.

2. State whether bank reconciliation statement is a statement or an account.

Ans. Bank reconciliation statement is a Statement which reconciles the balance as per cash book with the balance as
per passbook, by showing all the causes of difference between the two.
3. State the causes of difference occurred due to time lag.
Ans. The causes of difference occurred due to time lag are
(i) Cheques issued by the bank but not yet presented for payment.
(ii) Cheques paid into the bank but not yet collected.

4. What is a bank overdraft?

Ans. When a firm withdraws more than its deposits from the bank, it is bank overdraft.

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2 Bank Reconciliation Statement (BRS)

5. Bank reconciliation statement is prepared only once i.e., at the end of the year? Comment.
Ans. No, bank reconciliation can be prepared at any time of the year e.g. Every month or every quarter or half yearly
or yearly.

6. Which account is credited in addition to debit to bank account when a customer directly deposits an amount in
the bank?
Ans. Debtor's personal account will be credited.

7. Is bank reconciliation statement, a part of double entry system?

Ans. No, it is not a part of double entry system. It is a method to reconcile the balances.

8. When bank column of a cash book shows a debit balance, what does it mean?
Ans. It means balance lying with the bank or the deposits made by the firm are more than its withdrawals.

Practical Question

1. From the following particulars of Preeti, prepare a Bank Reconciliation Statement showing the balance as per
Pass Book on 31st March, 2021:
₹
(i) Debit balance of Bank Column as per Cash Book on 31st March, 2021 60,000
(ii) Cheques deposited but not yet credited by the bank 14,000
(iii) Cheque deposited but not honoured 4,800
(iv) Cheque issued but not yet presented for payment 24,000
(v) Cheques of ₹ 9,600 received from a customer, although entered in the Cash Book but not yet sent to bank.
(Ans: Cr Balance as per pass book: 55,600)

2. Cash Book showed a balance of 12,500. On comparing the Cash Book with the Pass Book, the following
discrepancies were noted:
₹
(i) Cheques issued but not yet presented for payment 6,000
(ii) Cheques deposited in bank but not collected 9,000
(iii) Bank paid insurance premium 5,000
(iv) Bank charges 300
(v) Directly deposited by a customer 8,000
(vi) Interest on investment collected by bank 2,000
Prepare Bank Reconciliation Statement.

3. From the following particulars of Mr. Vinod, prepare bank reconciliation statement as on March 31, 2017.
1. Bank balance as per cash book ₹ 50,000.
2. Cheques issued but not presented for payment ₹ 6,000.
3. The bank had directly collected dividend of ₹ 8,000 and credited to bank account but was not entered in the
cash book.
4. Bank charges of ₹ 400 were not entered in the cash book.
5. A cheques for ₹ 6,000 was deposited but not collected by the bank.
(Ans Balance as per Pass book ₹57,600)

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3 Bank Reconciliation Statement (BRS)

4. From the following particulars of Anil & Co. prepare a bank reconciliation statement as on August 31, 2017.
1. Balance as per the cash book ₹54,000.
2. ₹ 100 bank incidental charges debited to Anil & Co. account, which is not recorded in cash book.
3. Cheques for ₹ 5,400 is deposited in the bank but not yet collected by the bank.
4. A cheque for ₹ 20,000 is issued by Anil & Co. not presented for payment.
(Ans Balance as per Pass book ₹68,500)

5. From the following particulars, prepare a bank reconciliation statement as on March 31, 2017.
(a) Debit balance as per cash book is ₹ 10,000.
(b) A cheque for ₹1,000 deposited but not recorded in the cash book.'
(c) A cash deposit of ₹ 200 was recorded in the cash book as if there is not bank. column therein.
(d) A cheque issued for ₹ 250 was recorded as ₹ 205 in the cash column.
(e) The debit balance of balance ₹1,500 as on the previous day was brought forward as a credit
(1) The payment side of the cash book was under cast by ₹100.
(g) A cash discount allowed of ₹ 112 was recorded as ₹ 121 in the bank column.
(h) A cheque of ₹500 received from a debtor was recorded in the cash book but not deposited in the bank for
collection.
(i) One outgoing cheque of ₹300 was recorded twice in the cash book.
(Ans: Balance as per Pass book ₹13,529)

6. The cash book of Rahul shows ₹ 16,728 as the balance at bank as on 31st December, 2022 but you find that this
does not agree with the balance as per the bank passbook. On scrutiny, you find the following discrepancies
(i) On 15th December, the payments side of the cash book was undercast by ₹ 200.
(ii) A cheque for ₹ 262 issued on 25th December, was recorded in the cash column.
(iii) One deposit of ₹ 300 in the bank was recorded in the cash book as if there is no bank column therein.
(iv) On 18th December, the debit balance of ₹ 3,052 on the previous day, was brought forward as a credit balance.
(v) Of the total cheques amounting to ₹ 23,028 drawn in the last week of December, cheques aggregating ₹ 15,630
were encashed in December.
(vi) Dividends of ₹ 500 collected by the bank and subscription of ₹ 200 paid by it were not recorded in the cash book.
(vii) One out-going cheque of ₹ 700 was recorded twice in the cash book.
Prepare a bank reconciliation statement as on 31st December, 2016.
Ans: Credit balance as per pass book: ₹31068

7. Prepare a bank reconciliation statement from the following particulars on 30th June, 2016, when bank statement
showed a favourable balance of ₹ 9,214.
(i) On 29th June, 2016 the bank credited the sum of ₹ 1,650 in error.
(ii) Certain cheques, valued at ₹ 4,500 issued before 29th June, 2016 were not cleared.
(iii) A hire purchase payment of ₹ 950, made by a standing order was not entered in the cash book.
(iv) A cheque of ₹ 600 received, deposited and credited by bank, was accounted as a receipt in the cash column of
the cash book.
(v) Other cheques for ₹ 8,500 were deposited in June but cheques for ₹ 6,000 only were cleared by the bankers.
Ans: Debit balance as per Cash book: ₹5914

8. From the following particulars, prepare the bank reconciliation statement of Arun as on 31st March, 2022.
(i) Balance as per passbook is ₹ 10,000.
(ii) Bank collected a cheque of ₹ 500 on behalf of Arun but wrongly credited it to Varun account (another customer).

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4 Bank Reconciliation Statement (BRS)

(iii) Bank recorded a cash deposit of ₹ 1,589 as ₹ 1,598.

(iv) Withdrawal column of the passbook undercast by ₹ 100.
(v) The credit balance of ₹ 1,500 on page 5 of the passbook was recorded on page 6 as the debit balance
(vi) The payment of a cheque of ₹ 350 was recorded twice in the passbook. .
(vii) The passbook showed a credit for a cheque of ₹ 1,000 deposited by Shri Kishan (another customer of the bank).
Ans: Debit balance as per Cash book: ₹12,741

9. From the following Particulars, prepare a bank reconciliation statement as on 31st March, 2021.
(i) Bank balance as per cash book is ₹ 1,00,000.
(ii) A cheque for ₹ 10,000 deposited but not recorded in the cash book. Bank has collected and credited this cheque.
(iii) A bank deposit of ₹ 2,000 was recorded in the cash book as if there is no bank column therein.
(iv) A cheque issued for ₹ 2,500 was recorded as ₹ 2,050 in the cash column. Bank has made the payment of this
cheque.
(v) The debit balance of ₹ 15,000 as on the previous day was brought forward as a credit balance.
(vi) The payment side of the cash book (bank column) was undercast by ₹ 1,000.
(vii) A cash discount allowed of ₹ 1,120 was recorded as ₹ 1,210 in the bank column.
(viii) A cheque of ₹ 5,000 received from a debtor was recorded in the cash book but not deposited in the bank for
collection.
(ix) One outgoing cheque of ₹ 3,000 was recorded twice in the cash book.
Ans: Credit balance as per pass book: ₹1,35,290

10. On 30th June, 2022, the bank column of cash book showed a debit balance of ₹ 6,000. On checking the cash book
with bank statement you find that
(i) Cheques paid into bank ₹ 4,000, but out of these cheques of ₹ 3,250 were cleared and credited by the bankers
upto 30th June.
(ii) Cheques of ₹ 4,600 were issued but out of these only cheques of ₹ 3,500 were presented for payment upto 30th
June.
(iii) The receipt column of the cash book has been undercast by ₹ 100.
(iv) The passbook shows a credit of ₹ 165 as interest on investments collected by bankers and debit of ₹ 30 for bank
charges.
(v) On 29th June a customer deposited ₹ 1,500 direct in the bank account but is was entered only in the passbook.
Prepare a bank reconciliation statement.
Ans: Credit balance as per pass book: ₹8,085

11. On 31st December, 2016, the cash book of Nikhil showed an overdraft of ₹ 5,600. From the following particulars
make out a bank reconciliation statement.
(i) Cheques drawn but not cashed before 31st December, 2016 amounted to ₹ 3,946.
(ii) Cheques paid into the bank but not credited before 31st December, 2016 amounted to ₹ 4,891.
(iii) A bill receivable for ₹ 520 previously discounted with the bank had been dishonoured and bank charges debited
in the passbook amounted to ₹ 55.
(iv) Debit is made in the passbook for ₹ 120 on account of interest on overdraft.
(v) The bank has collected interest on investment and credited ₹ 760 in the passbook.
Ans: Debit balance as per pass book: ₹6480

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5 Bank Reconciliation Statement (BRS)

12. On 31st March my cash book (bank column of account no. 1) showed a bank overdraft of ₹ 29,610. Ongoing
through the bank passbook for reconciling the balance, I found the following
(i) Out of cheques drawn on 26th March, those for ₹ 2,220 were cashed by the bankers on 2nd April.
(ii) A crossed cheque for ₹ 450 given to Abdul was returned by him and a bearer cheque was issued to him in lieu on
1st April.
(iii) Cash and cheques amounting to ₹ 2,040 were deposited in the bank on 29th March, but cheques worth ₹ 780
were cleared by the bank on 1st April and one cheque for ₹ 150 was returned by them as dishonoured on the latter
date.
(iv) According to my standing instructions, the bankers have on 31st March paid ₹ 192 as interest to my creditors,
paid a second call of ₹ 360 on shares held by me and lodged with the bankers for sale custody. They have also
received ₹ 90 as dividend on my shares and recovered an insurance claim of ₹ 480 as their charges and commission
on the above being ₹ 9. On receipt of information of the above transaction, I have passed necessary entries in my
cash book on 1st April.
(v) My bankers seem to have given me a wrong credit for ₹ 300 paid in by me in no. 2 account and a wrong debit in
respect of a cheque for ₹ 180 drawn against my no. 2 account.
Prepare a bank reconciliation statement as on 31st March.
Ans: Debit balance as per pass book: ₹27,837

13. On 30th June, 2022, passbook showed a balance of ₹ 10,400. Prepare bank reconciliation statement from the
following particulars
(i) Out of total cheques amounting to ₹ 32,000 deposited, cheques amounting to ₹ 18,000 were credited in June,
2022, cheques amounting to ₹ 6,000 were credited in July, 2022, and the rest have not been collected so far.
(ii) Out of total cheques amounting to ₹ 90,000 drawn, cheques amounting to ₹ 15,000 were presented in June 2022,
cheques amounting to ₹ 36,000 were presented in July 2022, and the rest have not been presented so far.
(iii) Amount wrongly credited by bank ₹ 6,800.
(iv) Payment side of the cash book has been undercast by ₹ 400.
(v) Cheques recorded in the cash book in June, 2022 but sent to bank in July, 2022 ₹ 5,000.
(vi) A cheque of ₹ 40,000 deposited in the bank has been dishonoured but no intimation was received till June, 2022.
Ans: Credit balance as per Cash book: ₹12,000

14. On 31st March, 2016 passbook of Shri Rajendra shows a debit balance of ₹ 10,000. From the following prepare a
bank reconciliation statement.
(i) Cheques amounting to ₹ 8,000 drawn on 25th March, 2016 of which cheques of ₹ 5,000 were encashed on 2nd
April, 2016.
(ii) Cheques paid into the bank for collection ₹ 5,000 but cheques of ₹ 2,200 could only be collected in March, 2016.
(iii) Bank charges ₹ 25 and dividend of ₹ 350 on investments collected by the bank could not be shown in the cash
book.
(iv) A bill of ₹ 10,000 was retired by the bank under rebate of ₹ 150 but the full amount was credited in the cash
book.
(v) The payment of a cheque for ₹ 550 was recorded twice in the passbook.
(vi) Withdrawal column of the passbook undercast by ₹ 200.
(vii) ₹ 500 in respect of dishonoured cheque were entered in the passbook but not in the cash book.
Ans: Credit balance as per Cash book: ₹11825

15. Following information has been given by Rajendra. Prepare a bank reconciliation statement as on 31st December,
2015, showing balance as per cash book.

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6 Bank Reconciliation Statement (BRS)

(i) Debit balance shown by the passbook ₹ 17,800.

(ii) Cheques of ₹ 21,600 were issued in the last week of December but only cheques of ₹ 14,800 were presented for
payment.
(iii) Cheques of ₹ 10,750 were presented to the bank. Out of them, a cheque of ₹ 4,200 was credited in the first week
of January, 2016.
(iv) A cheque of ₹ 1,200 was debited in the cash book but was not presented in the bank.
(v) Insurance premium paid by the bank ₹ 1,450.
(vi) A bills of exchange of ₹ 6,200 which was 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.
Ans: Credit balance as per Cash book: ₹11,200

16. Prepare a bank reconciliation statement.

(i) Overdraft shown as per cash book on 31st December, 2016, ₹30,000.
(ii) Bank charges for the above period also debited in the passbook ₹ 300.
(iii) Interest on overdraft for six months ending 31st December, 2016, ₹ 1,140 debited in the passbook.
(iv) Cheques issued but not encashed prior to 31st December, 2016 amounted to ₹ 6,450.
(v) Interest on investment collected by the bank and credited in the passbook, ₹1,800.
(vi) Cheques paid into bank but not cleared before 31st December, 2016 were ₹ 3,300.
Ans: Debit balance as per pass book: ₹26,490

17. From the following particulars, prepare a bank reconciliation statement in the books of Varun as on 30th June,
2022.
(i) Balance as per passbook on 30th June, 2022 ₹ 12,000.
(ii) Out of total cheques amounting to ₹ 75,000 drawn by Sh. Kansal, cheques aggregating ₹ 10,000 were encashed in
June, 2022, cheques aggregating ₹ 8,000 were encashed in July, 2022 and the rest have not been presented at all.
(iii) Out of total cheques amounting to ₹ 24,000 deposited, cheques aggregating ₹15,000 were credited in June.
2022, cheques aggregating ₹ 4,000 were credited in July, 2022 and the rest have not been collected at all.
(iv) Bank has charged ₹ 54 as its commission for collecting outstation cheques and has allowed interest ₹ 660 on his
bank balance.
(v) Amount wrongly debited by bank ₹ 4,800.
(vi) A cheque of ₹ 2,400 was entered in the cash book in June, 2022, but was sent to the bank in July, 2022.
(vii) A cheque of ₹ 26,600 paid into the bank was returned dishonoured but no intimation was received from the
bank till June, 2022.
Ans: Credit balance as per Cash book: ₹10,806

18. On 31st January 2022 Pass book shows a debit balance of ₹ 41,000. Prepare a bank reconciliation statement from
the following particulars
(i) Cheques amounting to ₹ 15,600 were drawn on 27th January, 2022. Out of which cheques for ₹11,000 were
encashed upto 31st January, 2022.
(ii) A wrong debit of ₹ 800 has been given by the bank in the passbook.
(iii) A cheque for ₹ 200 was credited in the passbook but was not recorded in the cash book.
(iv) Cheques amounting to ₹ 21,000 were deposited for collection. But out of these, cheques for ₹7,400 have been
credited in the passbook on 5th February, 2022.
(v) A cheque for ₹ 1,000 was returned dishonoured by the bank and was debited in the passbook only
(vi) Interest on overdraft and bank charges amounted to ₹ 100 were not entered in the cash book.
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7 Bank Reconciliation Statement (BRS)

(vii) A cheque of ₹500 debited in the cash book was omitted to be banked.
Bank Reconciliation Statement as on 31st January, 2022
Ans: Credit balance as per Cash book: ₹36,000

19. In the following bank reconciliation statement, determine the missing amounts.
Bank Reconciliation Statement
as on 31st March, 2022
Particulars Plus (₹) Minus(₹)
Credit Balance as per Passbook 60,000
(i) Cheques of ₹20,000 issued but a cheque of ₹12,000 not yet presented for payment … ...
(ii) Cheques of ₹50,000 deposited into bank but cheque of ₹26,000 not credited by bank … …
(iii) Interest credited by bank but not recorded in cash book … 850
(iv) Cheque deposited into bank but not entered in cash book … 10,000
Debit Balance as per Cash Book … …
86,000 86,000

Preparation of Bank Reconciliation Statement with Amended Cash book Balance

20. From the following particulars, ascertain the bank balance and prepare bank reconciliation statement as on 31st
December, 2022.
(i) Debit balance as per cash book ₹ 20,000.
(ii) A cheque for ₹ 1,000 issued in favour of Karan has not been presented for payment.
(iii) A bill for ₹ 1,400 retired by bank on our behalf under a rebate of ₹ 40, the full amount of the bill was credited in
cash bank.
(iv) A cheque for ₹ 590 deposited in bank has been dishonoured.
(v) A sum of ₹ 1,600 deposited in the bank has been credited as ₹ 1,600 in the passbook.
(vi) Payment side of cash book has been undercast by ₹ 400.
(vii) A bill receivable for ₹ 2,000 (discounted with the bank in November, 2022 dishonoured on 31st December 2022,
but the dishonour was not recorded in the cash book.
Ans: Credit balance as per Pass book: ₹16,610

21. From the following particulars, ascertain the bank balance and prepare bank reconciliation statement as on 31st
March, 2021

(i) The bank balance as per the Cash Book on 31st March, 2021 ₹ 40,000.
(ii) Cheques issued but not presented for payment up to 31st March, 2021 were of ₹ 10,000.
(iii) Cheques paid into the bank, but not cleared up to 31st March, 2021 were of ₹ 15,000.
(iv) Interest on investments collected by the bank but not recorded in the Cash Book ₹ 500.
(v) Cheques deposited in the bank but not recorded in the Cash Book ₹ 12,500.
(vi) Bank charges debited in the Pass Book but not recorded in the Cash Book ₹ 100.

22. The Bank Pass Book of Account No. 5678 of Mrs. Rani showed an over- draft of ₹ 33,575 on 31st March 2018. On
going through the Pass Book, the accountant found the following:

(i) A Cheque of ₹ 1,080 credited in the pass book on 28th March 2018 being dishonoured is debited again in the
pass book on 1st April 2018. There was no entry in the cash book about the dishonour of the cheque until
15th April 2018.

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8 Bank Reconciliation Statement (BRS)

(ii) Bankers had credited her account with₹2,800 for interest collected by them on her behalf, but the same has
not been entered in her cash book.
(iii) Out of ₹ 20,500 paid in by Mrs. Rani in cash and by cheques on 31st March 2018 cheques amounting to
₹7,500 were collected on 7th April, 2018.
(iv) Out of Cheques amounting to ₹7,800 drawn by her on 27th March, 2018 a cheque for ₹2,500 was encashed
on 3rd April, 2018.
(v) Bankers seems to have given here wrong credit for ₹ 500 paid in by her in Account No. 8765 and a wrong
debit in respect of a cheque for ₹300 against her account No. 8765.
(vi) A cheque for ₹ 1,000 entered in Cash Book but omitted to be banked on 31st March, 2018.
(vii) A Bill Receivable for ₹5,200 previously discounted (Discount ₹200) with the Bank had been dishonoured but
advice was received on 1st April, 2018.
(viii) A Bill for ₹10,000 was retired/paid by the bank under a rebate of ₹175 but the full amount of the bill was
credited in the bank column of the Cash Book.
(ix) A Cheque for ₹ 2,400 deposited into bank but omitted to be recorded in Cash Book and was collected by the
bank on 31st March, 2018.
Prepare Bank Reconciliation Statement as on 31st March, 2018.

23. On 31-3-2020, Mahesh's Cash Book Showed a Bank overdraft of ₹ 98,700. On comparison he finds the following:
(1) Out of the total cheques of ₹ 8,900 issued on 27th March, one cheque of ₹7,400 was presented for payment
on 4th April and the other cheque of ₹1,500 handed over to the customer, was returned by him and in lieu
of that a new cheque of the same amount was issued to him on 1st April. No entry for the return was made.
(2) Out of total cash and cheques of ₹ 6,800 deposited in the Bank on 24th March, one cheque of ₹2,600 was
cleared on 3rd April and the other cheque of ₹ 500 was returned dishonoured by the bank on 4th April.
(3) Bank charges ₹ 35 and Bank interest ₹2,860 charged by the bank appearing in the passbook are not yet
recorded in the cash book.
(4) A cheque deposited in his another account of ₹1,550 wrongly credited to this account by the bank.
(5) A cheque of ₹800, drawn on this account, was wrongly debited in an- other account by the bank.
(6) A debit of ₹ 3,500 appearing in the bank statement for an unpaid cheque returned for being 'out of date' had
been re-dated and deposited in the bank account again on 5th April 2020.
(7) The bank allowed interest on deposit ₹1,000.
(8) A customer who received a cash discount of 4% on his account of ₹1,00,000 paid a cheque on 20th March,
2020. The cashier erroneously entered the gross amount in the bank column of the Cash Book.
Prepare Bank Reconciliation Statement as on 31-3-2020.

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