Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 5 Bank Reconciliation Statement Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.
Bank Reconciliation Statement NCERT Solutions for Class 11 Accountancy Chapter 5
Bank Reconciliation Statement Questions and Answers Class 11 Accountancy Chapter 5
Test Your Understanding – I
I. Read the following transactions and identify the cause of difference on the basis of time gap or errors made by business firm/bank.
Put a sign (✓) for the correct cause.
Answer:
1. Time gap
2. Errors made by business/bank
3. Time gap
4. Time gap
5. Time gap
II. Fill in the blanks :
(i) Passbook is a copy of …………. as it appears in the ledger of the bank.
(ii) When money is withdrawn from the bank, the bank …………. the account of the customer.
(iii) Normally, the cash book shows a debit balance, passbook ……….. shows balance.
(iv) Favourable balance as per the cash book means …………… balance in the bank column of the cash book.
(v) If the cash book balance is taken as starting point the items which make the cash book balance smaller than the passbook must be ………….. for the purpose of reconciliation.
(vi) If the passbook shows a favourable balance and if it is taken as the starting point for the purpose of bank reconciliation statement then cheques issued but not presented-for payment should be …………… to find out cash balance.
(vii) When the cheques are not presented for payment, favourable balance as per the cash book ………… is than that of the passbook.
(viii) When a banker collects the bills and credits the account passbook overdraft shows balance.
(ix) If the overdraft as per the passbook is taken as the starting point, the cheques issued but not presented are to be ………….. in the bank reconciliation statement.
(x) When the passbook balance is taken as the starting point items which makes the passbook balance ……………. than the balance in the cash book must be deducted for the purpose of reconciliation.
Answer:
(i) customer account
(ii) debit
(iii) credit
(iv) debit
(v) added
(vi) deducted
(vii) lower/less
(viii) less/lower
(ix) added
(x) higher
Test Your Understanding -II
Select the Correct Answer :
Question 1.
A bank reconciliation statement is prepared by :
(a) Creditors
(b) Bank
(c) Account holder in a bank
(d) Debtors
Answer:
(c) Account holder in a bank
Question 2.
A bank reconciliation statement is prepared with the balance :
(a) Passbook
(b) Cash book
(c) Both passbook and cash book
(d) None of these
Answer:
(c) Both passbook and cash book
Question 3.
Passbook is a copy of:
(a) Customer account
(b) Bank column of cash book
(c) Cash column of cash book
(d) Receipts and payments
Answer:
(a) Customer account
Question 4.
Unfavourable bank balance means :
(a) Credit balance in passbook
(b) Credit balance in cash book
(c) Debit balance in cash book
(d) None of these
Answer:
(b) Credit balance in cash book
Question 5.
Favourable bank balance means :
(a) Credit balance in the cash book
(b) Credit balance in passbook
(c) Debit balance in the cash book
(d) Both (b) and (c)
Answer:
(d) Both (b) and (c)
Question 6.
A bank reconciliation statement is mainly prepared for :
(a) Reconcile the cash balance of the cash book
(b) Reconcile the difference between the bank balance shown by the cash book and bank passbook
(c) Both (a) and (b)
(d) None of these
Answer:
(b) Reconcile the difference between the bank balance shown by the cash book and bank passbook
Test Your Understanding -III
State whether each of the following statements is True or False.
1. Passbook is the statement of account of the customer maintained by the bank.
2. A business firm periodically prepares a bank reconciliation
statement to reconcile the bank balance as per the cash book with the passbook as these two show different balances for various reasons. ’
3. Cheques issued but not presented for payment will reduce the balance as per the passbook.
4. Cheques deposited but not collected will result in increasing the balance of the cash book when compared to passbook.
5. Overdraft as per the passbook is less than the overdraft as per cash book when there are cheques deposited but not collected by the banker.
6. The debit balance of the bank account as per the cash book should be equal to the credit balance of the account of the business in the books of the bank.
7. Favourable bank balance as per the cash book will be less than the bank passbook balance when there are unpresented cheques for payment.
8. Direct collections received by the bank on behalf of the customers would increase the balance as per the bank passbook when compared to the balance as per the cash book.
9. When payments made by the bank as per the standing instructions of the customer, the balance in the passbook will be more when compared to the cash book.
Answer:
1. True
2. True
3. False
4. True
5. False
6. True
7. True
8. True
9. False
Short Answer Type Questions
Question 1.
State the need for the preparation of a bank reconciliation statement.
Answer:
Need and Importance of Bank Reconciliation Statement –
It is essential to prepare a bank reconciliation statement due to the
following reasons :
(1) A bank reconciliation statement locates the errors or omissions that may have been committed either on the part of the customer or the bank. The error so detected can be rectified accordingly.
(2) By preparing a bank reconciliation statement, the customer becomes sure of the correctness of the bank balance shown by the cash book. It helps him in making the further transactions with the bank. For example, suppose the cash book shows a bank balance of Rs. 20,000, whereas the balance shown by the pass book is Rs. 15,000. By reconciling the two, it is disclosed that cheques for Rs. 5,000 were deposited into the bank but have not
been collected so far (or some of these have been dishonoured). In such a case, further cheques will be issued by assuming the bank balance of Rs. 15,000 only.
(3) A reconciliation statement facilitates the preparation of a revised cash book. For example, the entries relating to bank charges, interest allowed or charged by the bank, direct payment by the bank on our behalf etc. will be recorded in the pass book but for which there is no entry in the cash book, such entries will now be recorded in the cash book as well.
(4) Periodic preparation of this statement reduces the chances of embezzlement by the staff of the firm or even that of the bank. For example, if a cashier merely makes an entry in the cash book but does not deposit the cash and cheques into the bank, it will be disclosed by preparing a bank reconciliation statement.
(5) A reconciliation statement helps in revealing the unnecessary delay in the collection of cheques by the bank.
(6) It also helps in keeping a track of cheques which have been sent to the bank for collection.
Question 2.
What is bank overdraft?
Answer:
Meaning of Bank Overdraft -Generally, cash book balance shows that there is enough money in the bank, but businesses sometimes have overdraft at the bank.
Overdraft are where the bank account becomes negative and the businesses in effect have to borrow from the bank. It is also known as cash book (credit) balance, while preparing bank reconciliation statement. An overdraft is treated as negative figure on a bank reconciliation statement.
The items added and deducted from overdraft balance of cash book are as follows :
Items to be added :
(i) Cheque sent to bank for collection but not yet credited by the bank or dishonoured.
(ii) Direct payment made by the bank on behalf on customers.
(iii) Cheque issued but omitted to be recorded.
(iv) Debit made by bank for bank cheques, interest on overdraft and any other payment made.
Items to be deducted :
(i) Cheque issued but not yet presented for payment.
(ii) Amount directly deposited by customers in our bank.
(iii) Interest and divided collected by the bank.
Question 3.
Briefly explain the statement “Wrongly deposited by the bank” with the help of an example.
Answer:
Differences caused by errors – Sometime the difference between the two balances may be accounted for due to wrong entries made by businessman or bank. Errors committed by bank in recording the transactions –
Omission or wrong recording of transactions relating to cheques deposited and wrong totalling etc. committed by the bank, while position entries in the pass book also cause differences between pass book and cash book balance. Bank cheques debited by the bank in firm’s currect account is an example of such error.
Omission or wrong recording of transactions relating to cheques issued, cheques deposited and wrong totalling etc. committed by the firm while recording entries in the cash book cause differences between pass book and cash book balance.
Question 4.
State briefly the causes of difference occurred due to time lag.
Answer:
Causes of differences due to time lag – The factors or causes affecting time gap in recording the transaction related either payments or receipts includes the followings :
(1) Cheque issued by the bank but not yet presented for payment – When cheques are issued by the firm to suppliers the creditors are immediately entered in cash book but it may happen that those may not be presented for payment by the receiving parties. This reduces the bank balance in the cash book. Generally, there is a time lag between issue and presentation of cheques etc.
(2) Cheque paid into bank but not yet collected – This increases the bank balance in the cash book, however, bank credits the customer’s account only when the amount of cheques are actually realised. This leads to a cause of difference between the bank balance shown by cash book and balance shown by the bank pass book.
(3) Amounts directly’deposited in the bank account – In such a case, bank records the receipts in firm’s account directly, but the firm remains unaware of the payment. Firm makes entries in the bank column of cash book only after receiving information in this region from the banks which cause a difference in the balance of pass book and cash book.
(4) Direct debits made by bank on behalf of customer – Sometimes, bank deducts directly from customer’s account the amount of interest on overdraft; incidental charges etc. As a result, the balance as per pass book will be more than the balance as per cash book.
(5) Direct payments made by bank on behalf of customers – Bank sometimes make payments regularly on the instruction of customer to third parties like telephone bills, insurance premium, rent, taxes etc. As a result, the balance as per bank pass book would be less than that of cash book.
(6) Cheques deposited dishonoured – Cheques or bills of exchange drawn by the same is debited to customer’s account by the bank. Firm’s book will not carry that entry as the information is not available to the firm immediately. As a result, the balance as per pass book would be less than the cash book.
Question 5.
Briefly explain the term ‘favourable balance as per cash book’,
Answer:
The debit balance as per cash book means the balance of deposits held at the bank. This is also called credit balance as per pass book. Such a balance exists when the deposits made by the firm are more than its withdrawals. It indicates the favourable balance as per cash book.
Dealing with favourable balances – In case of favourable balance of cash book, the following amounts are deducted :
(i) Cheque deposited but not yet collected.
(ii) Cheque deposited into bank but dishonoured.
(iii) Direct payment made by the bank on behalf of customers.
(iv) Debits made by the bank for commission, bank charges etc.
(v) Cheque issued but omitted to be recorded in cash book. Items to be added
Following amounts are to be added while favourable balance as per cash book is given in the problem :
(i) Cheque issued but not yet presented for payment.
(ii) Credit made by the bank for interest.
(iii) Amount directly deposited by the customers in bank account.
(iv) Interest and dividend collected by the bank.
(v) Cheques paid into the bank but omitted to be recorded in the cash book.
Question 6.
Enumerate the steps to ascertain the correct cash book balance.
Answer:
Various items that normally cause the difference between the pass book balance and the cash book balance because of the reason that they have not been recorded in the cash book. Such entries should be recorded in the cash book and they having been recorded in it.
cash book gives the corrected cash book balance which is known as Aufurted (Corrected) cash book balance. Following steps should be taken for preparing corrected cash book.
(1) Entries in respect of items that appear in pass book – Bank cheques, interest charged on overdraft, interest allowed by bank, dividend, interest, direct payment by bank under the standing instructions of customers are the claims appeared only in pass book are rectified.
(2) Rectifying entries in respect of errors committed in cash book – Cheque issued but recorded in cash, wrong amount over or undercast of bank column, error in balancing the bank column are adjusted in cash book.
Bank Reconciliation Statement with correct cash book is prepared to correct the below-mentioned causes of disagreement:
(i) Cheque issued but not yet presented for payment.
(ii) Cheque deposited but not yet credited by bank.
(iii) Cheque issued but not yet sent to payee.
(iv) Cheque received and recorded in bank column but not sent to bank for collection,
(v) Wrong entry in the pass book.
Long Answer Type Questions
Question 1.
What is a bank reconciliation statement? Why it is prepared?
Answer:
Meaning of bank reconciliation statement – Usually, all the firms open a current account with a bank and in order to record the transactions entered into with the bank, maintain a Bank Column in the Cash Book. Bank also opens a separate account for each firm in its ledger and enters all the transactions in it. Periodically, bank supplies a copy of the firm’s account in its ledger to the firm for information. This copy of the firm’s account supplied by the bank is called bank pass book or bank statement.
Since all the transactions entered with the bank are recorded in both the books, there should be no difference between the balance shown by the cash book and the pass book. The balance of the two books must tally with each other, because when the money is deposited into the bank, the firm enters it on the debit side of the bank column of the cash book and at the same time bank also enters it on the credit side of the firm’s account maintained by the bank. On the other hand, when money is withdrawn from the bank, firm enters it on the credit side of the bank column of cash book and at the same time bank also enters it on the debit side of the firm’s account in its books.
Hence, all the entries recorded on the debit side of the cash book must tally with the entries recorded on the credit side of the pass book and conversely, all the entries recorded on the credit side of the cash book must tally with the entries recorded on the debit side of the pass book. Therefore, at any time, the bank balance shown by the cash book must tally with the balance shown by the pass book.
However, sometimes it so happens, that these two balances do not tally. This is, because on a certain date it is possible that there may be some entries which may have been recorded in the cash book but not in the pass book and vice versa. A statement is therefore prepared to identify the reasons of the difference and to reconcile the balances of the two books. Such a statement is called ‘Bank Reconciliation Statement’.
Definition – “Bank reconciliation statement is a statement prepared mainly to reconcile the difference between the ‘Bank Balance’ shown by the Cash Book and Bank Pass Book.”
Procedure of preparing Bank Reconciliation Statement – A Reconciliation statement is prepared when an account holder gets the duly completed pass book from the bank. Immediately on receiving the pass book, he tallies in case of any difference, items appearing in the pass book are checked and ticked with the items appearing in the cash book. Unticked items in both the books will be the points of difference.
There will be noted on a piece of paper and then, with the help of these causes of difference, a statement of reconciliation will be prepared. A bank reconciliation statement can be prepared by taking the balance either as per cash book or as per pass book as a starting point. If the statement is started with the balance as per bank column of the cash book, the answer arrived at the end will be the balance as per pass book. Alternatively, if the statement is started with the balance as per pass book, the answer arrived at in the end will be the balance as per cash book.
The balance as per cash book may be either debit or credit and similarly the balance as per pass book may also be either debit or credit
1. (a) Dr. Balance as per cash book indicates that the trader has so muchq balance of deposit at the bank.
(b) Cr. Balance as per cash book indicates the amount which has been withdrawn in excess of the deposits. Credit Balance as per cash book is also called ‘Overdraft Balance as per Cash Book’.
2. (a) Cr. Balance as per pass book indicates that the trader has so much balance of deposit at the bank.
(b) Dr. Balance as per pass book indicates the amount which has been withdrawn in excess of the deposits. Debit Balance
as per pass book is also called ‘Overdraft as per Pass Book’. Method of preparing a bank reconciliation statement from each of the above balances is explained below :
Method of preparing Bank Reconciliation Statement by Debit Balance of Bank Column of Cash Book – Entries on account of which the debit balance of the cash book is lesser in comparison to the credit balance of the pass book will be added while preparing a bank reconciliation statement and vice versa.
Items to be added :
(1) Cheques issued but not yet presented for payment – When a businessman issues cheques to its creditors, he immediately enters them on the credit side of his cash book. It reduces the balance of his cash book but the pass book balance will remain the same because the cheques have not been presented for payment in the bank. As such, the cheques should be added to the balance of the cash book in order to make it equal to the pass book balance.
(2) Credit made by the bank for interest – When the bank allows interest to a customer, the bank credit the customer’s account with the amount of such interest. It increases the pass book balance but the balance of the cash book will be the same, as there is no entry of interest in the cash book. Hence, it should be added to the cash book balance.
(3) Amount directly deposited by the customers in our bank account – Such deposits must have increased the balance of the pass book but the cash book will show an unchanged balance. Therefore, this amount should be added to the cash balance.
(4) Interest and dividend collected by the bank – The bank must have credited these amounts to the customer’s account. As such, the pass book balance must have increased whereas the cash book will show an unchanged balance. Therefore, this amount should be added to the cash balance.
(5) Cheques paid into the bank but omitted to be recorded in the cash book – Bank must have credited these cheques in the customer’s account, but as there is no entry in the cash book it shows a lesser balance. Hence, the amounts should be added to the cash book balance.
Items to be deducted :
(1) Cheques sent to the bank for collection but not yet credited by the bank – When the cheques were deposited into bank, entry must have been made on the debit side of the cash book. The balance as per cash book must hace increased but the bank will not enter them unless they have been collected. As such, the cash book will show an increased balance in comparison to the pass book. Hence, the amount will be deducted while preparing a bank reconciliation statement.
(2) Cheques sent to the bank for collection but dishonoured by the bank – Such cheques must also have been entered on the debit side of the cash book but there will be no entry in the pass book, as the cheques have dishonoured. As a result, the cash book will show an increased balance in comparison to the pass book. Therefore, the cash book balance will be deducted in order to make it equal to the pass book,balance.
(3) Direct payment made by the bank on behalf of customers – The bank makes payment for insurance premium, rent etc. and debits the customer’s account. As such, the pass book balance is reduced whereas the cash book balance remains the same. Hence, this amount should be deducted from the balance of the cash book.
(4) Debits made by the bank for commission and charges etc. – It also reduces the pass book balance whereas the cash book balance remains the same. Hence, the amount of bank commission and charges should be deducted from the balance of the cash book.
(5) Cheques issued but omitted to be recorded in the cash book – The bank, while making payment of these cheques, will debit the customer’s account. Hence, the balance of the pass book will be reduced, whereas the cash book balance will remain unchanged. i. e. increased as compared to pass book. Hence, the amount of such cheques should be deducted from the cash book balance.
Question 2.
Explain the reasons on account of which the balance shown by the bank pass book does not agree with the balance as shown by the bank column of the cash book.
Answer:
Causes or reasons for difference – The difference may arise on account of the following causes or reasons :
(i) Cheques issued but not yet presented for payment – Whenevei a cheque is issued for payment, the entry in the cash book is made immediately. But the entry will be made by the bank only when the cheque is presented for payment. There will, thus, be a gap of some days between the entry in the cash book and in the pass book. And, if the bank reconciliation statement is prepared on a date between the issue of cheque and its presentation to bank for payment, a difference will arise.
Let us clear this point with the help of an example. Suppose, a customer issued a cheuqe of Rs. 2,000 on December 27, 2011 which is presented to the bank of January 2, 2012. The customer will record it in the cash book on December 27, 2011 whereas the bank will record it in the pass book on January 2, 2012 only. On December 31, 2011, the cash book balance will be less by Rs. 2,000 due to this reason.
(ii) Cheques paid into the bank not yet cleared – As soon as cheques are sent to the bank, entries are recorded in the bank column on the debit side of the cash book. But usually banks credit the customer’s account when they have received the payment from the bank concerned – in other words, when the cheques have been cleared.
Again there will be some gap between the depositing of the cheques and the credit give by the bank. For example, the customer deposited a cheque of Rs. 1,000 into the bank of March 30, 2005 which is collected by the bank on April 4, 2005 only. Now, if the balances on March 31,2005 are compared, the cash book will be higher by Rs. 1,000.
(iii) Interest allowed by the bank – If the bank has allowed interest to the’customer, the entry will normally be made in the customer’s account and later shown in the pass book. The customer usually comes to know of the amount of the interest by persuing the pass book and only then he makes the relevant entry in the cash book.
(iv) Interest and expenses charged by the bank – Like (iii) above, the interest charged by the bank and the amount of the bank charged are entered in the customer’s account and later in the pass book. The customer makes the required entries in his cash book only after he sees the pass book.
(v) Interest and dividends collected by the bank Sometimes investments are left with the bank in safe custody. The bank itself .sees to it that the interest or the dividend is collected on the due dates and are credited in the customer’s accounts. The bank sends the necessary information to this effect to the customers. Naturally, the customers record it in their cash book either on receiving such information from the bank or noticing it from their pass books. The entries in the pass book and in the cash book may thus be on different dates.
(vi) Direct payment by the bank – The bank may be given standing instructions for certain payments such as for insurance premium. When the bank makes such payments, it immediately debits the customer’s account. In this case also the customer may come to know of the payment only on seeing the pass book. The entries in the pass book and in the cash book may thus be on different dates.
(vii) Direct payment into the bank by a customer – If such a payment is received by the bank, it will be entered in the customer’s account and also in the pass book. The account holder may come to know of the amount on some later date only when he sees the pass book.
(viii) Dishonour of a bill discounted with the bank – If the bank is not able to receive payment on promissory notes discounted by it. it will debit the customer’s account together with any charges that it may have incurred. The customer will naturally make the entry only when he sees the pass book. But till such entry is passed, the balances shown by cash book and pass book would differ.
(ix) Errors committed – It may be possible that while recording the transactions in the cash book, a cheque of Rs. 1,000 deposited into the bank is recorded as Rs. 10,000. Similarly, the bank may also commit mistake while recording the transactions in the pass book. For example, a cheque collected on behalf of Mohan is entered in the account of Mahesh. Such errors would also lead to differences in the balances between the cash book and the pass book.
Question 3.
Explain the process of preparing bank reconciliation statement with amended cash balance
Answer:
Preparation of Bank Reconciliation Statement with Adjusted Cash Book Balance – Bank account having been reconciled – will show the items that have caused difference between the balances of cash book and bank statement.
Few of these differences may be because of the reason that entries have not been recorded in the cash book. Such entries should be recorded in the cash book and they having been recorded in the cash book gives the new cash book balance which is known as Adjusted Cash Book Balance. Bank Reconciliation Statement is thereafter prepared on the basis of amended adjusted cash book balance.
Adjusted cash book balance is ascertained by passing :
(i) Entries in respect of items that appear in pass book (e.g., bank charges, interest charged on overdraft, interest allowed by bank, dividend/interest/bills receivable directly collected by bank, direct payment by bank under the standing instructions of customers).
(ii) Rectifying entries in respect of errors committed in the cash book, (e.g., cheque issued but recorded in cash on discount column, cheques issued recorded in bank column with wrong amount, over as under cost of bank column, error in balancing the bank column, errors in carrying forward of bank balance).
By rectifying the above items, the balance shown by cash book is known as corrected or adjustment cash book balance. Following example may be given for the amended cash book.
Javed’s cash book on 30th June, 2005 showed an overdraft balance of Rs. 10,100 on his account No. 1 at the bank. On checking it is found that-
(i) Cheque issued amounting Rs. 6,200 had not been presented to the bank for payment.
(ii) Cheque for Rs. 1,600 entered in cash book and paid into the bank had not been credited by the bank.
(iii) The receipt side of cash book had. been undercast by Rs. 800.
(iv) Bank cheque of 150 entered in the bank statement had not been entered in the cash book.
(v) A cheque for Rs. 4,200 drawn on the account No. 1 had been checked by bank in qrror to the account No. 2.
(vi) A dividend of Rs. 500 paid direct to the bank had not been entered in the cash book.
(vii) A cheque of Rs. 1,200 received from customer paid into bank dishonoured and shown as such by the bank but no entry for dishonour had been made in the cash book.
You are required :
(a) To make necessary adjustments to be made in the cash book, and
(b) to prepare bank reconciliation statement for the account No. 1 as at 30th June, 2005.
Solution : In the books of Javed
Numerical Questions
Question 1.
From the following particulars, prepare a bank reconciliation statement as on March 31,2005.
(i) Balance as per cash book Rs. 3,200.
(ii) Cheque issued but not presented for payment Rs. 1,800.
(iii) Cheques deposited but not collected upto March 31,2005 Rs. 2,000.
(iv) Bank charges debited by Bank Rs. 150.
(Ans. Balance as per pass book Rs. 2,850.)
Answer:
Question 2.
On March 31, 2005 the cash book showed a balance of Rs, 3,700 as cash at bank, but the bank pass book made up to same date showed that cheques for Rs. 700, Rs. 300 and Rs. 180 respectively had not presented for payment, also cheque amounting to Rs. 1,200 deposited into the account had not been credited. Prepare a bank reconciliation statement.
(Ans. Balance as per pass book Rs. 3,680.)
Answer:
Question 3.
The cash book shows a bank balance of Rs. 7,800 on
comparing the cash book with pass book the following discrepancies were noted :
(a) Cheque deposited in bank but not credited — Rs. 3,000
(b) Cheque issued but not yet present for payment — Rs. 1,500
(c) Insurances premium paid by the bank — Rs. 2,000
(d) Bank interest credited by the bank — Rs. 400
(e) Bank charges — Rs. 100
(f) Directly deposited by a customer — Rs. 4,000
(Ans. Balance as per pass book Rs. 8,600.)
Answer:
Question 4.
Bank balance of Rs. 40,000 showed by the cash book of Atul on December 31,2005. It was found that three cheques of Rs. 2,000, Rs. 5,000 and Rs. 8,000 deposited in the month of December were not credited in the pass book till January 2,2005. Two cheques of Rs. 7,000 and Rs. 8,000 issued on December 28, were not presented for payment till January 3, 2005, in addition to bank had credited the Atul for Rs. 325 as interest and had debited him
Rs. 50 as bank charged for which there were not correspondence entries in cash book. Prepare a Bank Reconciliation Statement as on December 31, 2005.
(Ans. Balance as per pass book Rs. 40,275.)
Solution :
Question 5.
On comparing the cash book with pass book of Naman it is find that on March 31,2005 bank balance of Rs. 40,960 showed by the cash book differs from the bank balance. It is found that:
(a) Bank charges Rs. 100 on March 31,2005 are not entered in the cash book.
(b) On March 21, 2005, a debtor paid Rs. 2,000 into the company’s bank is settlement of his account, but no entry was made in the cash book of the company in respect of this.
(c) Cheques totalling Rs. 12,980 were issued by the company and duly recorded in the cash book before March 31, 2005 but had not been presented at the bank for payment until after that date. after that date.
(d) A bill for Rs. 6,900 discounted with the bank is entered in the cash book with recording the discount charge of Rs. 800.
(e) Rs. 3,520 is entered in the cash book as paid into bank on March 31, 2005 but not credited by the bank until the following day.
(f) No entry has been made in the cash book to record the dishonoured on March 15, 2005 of a cheque for Rs. 650 received from Bhanu. Prepare a reconciliation statement as on March 31, 2005.
(Ans. Balance as per pass book Rs. 50,870.)
Answer:
Question 6.
Prepare bank reconciliation statement as on December 31, 2004. On December 31, 2004 the pass book of Mr. Himanshu showed a balance of Rs. 7,000.
(a) Cheque of Rs. 1,000 directly deposited by a customer.
(b) The bank has credited Mr. Himanshu for Rs. 700 as interest.
(c) Cheques for Rs. 3,000 were issued during the month of December but of these cheques for Rs. 1,000 were not presented in the month of December.
(Ans. Balance as per cash book Rs. 4,300.)
Solution :
Question 7.
From the following particulars prepare a bank reconciliation statement showing the balance as per cash book on December 31,2005.
(a) Two cheques of Rs. 2,000 and Rs. 5,000 were paid into bank in October, 2005 but were not credited by the bank in the month of December.
(b) A cheque of Rs. 800 which was received from a customer was entered in the bank column of the cash book in December 2004 but was omitted to be banked in December 2004.
(c) Cheques for Rs. 10,000 were issued into bank in January 2005 but not debited by the bank on December 31,2005.
(d) Interest on investment Rs. 1,000 collected by bank appeared in the pass book. Balance as per Pass Book was Rs. 50,000.
(Ans. Balance as per cash book Rs. 46,800.)
Solution :
Question 8.
Balance as per pass book is 3,000 of Mr. Kumar.
(a) Cheque paid into bank but not yet cleared
Ram Kuhiar Rs. 1,000
Kishore Kumar Rs. 500
(b) Bank charges Rs. 300
(c) Cheque issued but not presented
Hameed Rs.2,000
Kapoor Rs. 500
(d) Interest entered in the pass book but not entered in the cash book Rs. 100
Prepare a bank reconciliation statement.
(Ans. Balance as per cash book Rs. 2,200.)
Answer:
Question 9.
The pass book of Mr. Mohit current account showed a credit balance of Rs. 20,000 on dated December 31,2004. Prepare a Bank Reconciliation Statement with the following information :
(i) A cheque of Rs. 400 drawn on his saving account has been shown on current account.
(ii) He issued two cheques of Rs. 300 and Rs. 500 on December 25, but first cheque was presented for payment.
(iii) One cheque issued by Mr. Mohit of Rs. 500 on December 25, but it was not presented for payment whereas it was recorded twice in the cash book.
(Ans. Balance as per cash book Rs. 18,900.)
Answer:
Question 10.
On 1 January 2005, Rakesh had an overdraft of Rs. 8,000 as showed by his cash book. Cheques amounting to Rs. 2,000 had been paid in by him but were not collected by the bank by 1 January 2005. He issued-cheques of Rs. 800 which were not presented to the bank for payment upto that day. There was a debit in his passbook of Rs. 60 for interest and Rs. 100 for bank charges. Prepare Bank Reconciliation Statement for comparing both the balance. ’(Ans. Overdraft as per pass book Rs. 9,360.)
Answer:
Question 11.
Prepare bank reconciliation statement.
(i) Overdraft shown as per cash book on December 31,2005 — Rs. 10,000.
(ii) Bank charges for the above period also debited in the pass book — Rs. 100.
(iii) Interest on overdraft for six months ending December 31,2005 Rs. 380 debited in the pass book.
(iv) Cheques issued but not in cashed prior to December 31, 2005 amounted to — Rs. 2,150.
(v) Interest on investment collected by the bank and credited . in the pass book — Rs. 600.
(iv) Cheques paid into bank but not cleared before December 31, 2005 were — Rs. 1,100.
(Ans. Overdraft as per pass book Rs. 8,830.)
Solution :
Question 12.
Kumar find that the bank balance shown by his cash book on December 31,2005 is Rs. 90,600 (credit) but the pass book shows a difference due to the following reasons :
A cheque (post dated) for Rs. 1,000 has been debited in the bank column of the cash book but it could not have been presented in any case. A cheque of Rs. 8,000 drawn in favour of Manohar has not yet been presented for payment. Cheques totalling of Rs. 1,500 deposited in bank have not yet been collected and cheque for Rs. 5,000 has been dishonoured.
(Ans. Overdraft as per pass book Us. 90.100.)
Answer :
Question 13.
On 31st December 2005, the book on Mittat Bros showed an overdraft of Rs. 6,920. From the following particulars make out a Bank Reconciliation Statement and ascertain the
balance as per pass book:
(1) Debited by bank for Rs. 200 on account of interest on overdraft and Rs. 50 on account of charges for collecting bills.
(2) Cheques drawn but not cashed before December 31,005 for Rs. 4,000.
(3) The bank has collected interest and has credited Rs. 600 in pass book
(4) A bill receivable for Rs. 700 previously discounted with the bank had been dishonoured and debited in the pass ‘book.
(5) Cheques paid into bank but not collected and credited before December 31, 2005 amounted Rs. 6,000.
(Ans, Overdraft as per pass book Rs. 9,270.)
Answer:
Question 14.
Prepare Bik Reconciliation statement of shri Bhandari as on December 3l, 2005.
(i) The payment of cheques Rs. 550 was recorded twice in the pass book.
(ii) Withdrawal column of the pass book undercast by Rs. 200.
(iii) A cheque of Rs. 200 has been debited in the bank column of the cash book but’it was not sent to bank at all.
(iv) A cheque of Rs. 300 debited to bank account of the cash book had been omitted to be banked.
(v) Rs. 500 in respect of dishonoured cheque were entered in the pass book but not in the cash book.
Overdraft as per pass book is Rs. 20,000.
(Ans. Overdraft as per cash book Rs. 18650.)
Answer:
Bank Reconciliation Statement as on December 31,2005
Question 15.
overdraft shown by tie pass book of,Mr. Muni is Rs. 20,000. Prepare Bank Reconciliation Statement on dated December 31,2005.
(i) Bank charges debited as er pass book Rs. 500.
(ii) Cheques recorded in tasb book but not sent to the bank for collection Rs.2O0
(iii) Received a payment dirçctly from customer Rs. 4,600.
(iv) Cheque issued but not presented for payment Rs. 6,980.
(v) Jntelest credited by pass book Rs. 100.
(vi) LIC paid by bank Rs. 2,500.
(vii) Cheques deposited with the bank but not collected Rs. 3,500.
(Ans. Overdraft as per cash book Rs. 22,680.)
Answer:
Question 16.
Raghav & Co. have two bank accounts – Account No. I and Account No. II. From the following particulars relating to Account No. I, find out the balance on that account on December 31, 2005 according to the cash book of the firm.
(i) Cheques paid into bank prior to December 31,2005 but not credited until after that date for Rs. 10,000.
(ii) Transfer of funds from Account No. II to Account No. I recorded by the bank on December 31,2005 but entered in the cash book after that date for Rs. 8,000.
(iii) Cheques issued prior to December 31, 2005 but not presented until after that date for Rs. 7,429.
(iv) Bank charges debited by bank not entered in the cash book for Rs. 200.
(v) Interest debited by the bank not entered in the cash book Rs. 580.
(vi) Overdraft as per pass book Rs. 18,990.
(Ans. Overdraft as per cash book Rs. 23,639.)
Answer:
Question 17.
Prepare a Bank Reconciliation Statement from the following particulars and shows the balance as per cash book :
(i) Balance as per pass book on December 31, 2005 overdrawn Rs. 20,000.
(ii) Interest on bank overdraft not entered in the cash book Rs. 2,000.
(iii) Rs. 200 insurance premium paid by bank has not been entered in the cash book.
(iv) Cheques drawn in the last week of December 2005, but not cleared till date for Rs. 3,000 and Rs. 3,500.
(v) Cheques deposited into bank on November 2005, but yet to be credited on dated December 31,2005 Rs. 6,000.
(vi) Wrongly debited by bank Rs. 500.
(Ans. Overdraft as per cash book Rs. 17,800.)
Solution :
Question 18.
The pass book of Mr. Randhir showed an overdraft of Rs. 40,950 on March 31,2005.
Prepare Bank Reconciliation Statement on March 31,2005.
(i) Out of cheques amounting to Rs. 8,000 drawn by Mr. Randhir on March 27 a cheque for Rs. 3,000 was encashed on April 3.
(ii) Credited by bank with Rs. 3,800 for interest collected by them, but the amount is not entered in the cash book.
(iii) Rs. 10,900 paid in by Mr. Randhir in cash and by cheques on Mnrch 31, cheques amounting to Rs. 3,800 were collected on April 7.
(iv) A cheque of Rs. 780 credited in the pass book on March 28 being dishonoured in debited again in the pass book on April 01, 2005. There was no entry in the cash book about the dishonour of the cheque until April 15.
(Ans. Overdraft as per cash book Rs. 36,350.)
Solution:
