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Question-1


From the following particulars of Anil & Co. prepare a bank reconciliation statement as on August 31, 2005.

1. Balance as per the cash book Rs. 54,000.

2. Rs. 100 bank incidental charges debited to Anil & Co. account, which is not recorded in cash book.

3. Cheques for Rs. 5,400 is deposited in the bank but not yet collected by the bank.

4. A cheque for Rs. 20,000 is issued by Anil & Co. not presented for payment.

 


Solution:
                     

Bank Reconciliation Statement of Anil & Coas on August 31, 2005

 

Particulars

(+)
Amount
Rs.

(-)Amount
Rs.

1. Balance as per Cash book

54,000

 
2. Cheques issued but not presented for payment 20,000  
3. Cheques deposited but not credited by the Bank   5,400
4. Bank incidental charges debited by the Bank   100
5. Balance as per pass book


74,000

68,500
74,000

Question-2


On March 31, 2005 the bank column of the cash book of Agrawal Traders showed a credit balance of Rs. 1,18,100 (Overdraft). On examining of the cash book and the bank statement, it was found that:

1. Cheques received and recorded in the cash book but not sent to the bank of collection Rs. 12,400.

2. Payment received from a customer directly by the bank Rs. 27,300 but no entry

was made in the cash book.

3. Cheques issued for Rs. 1, 75,200 not presented for payment.

Interest of Rs. 8,800 charged by the bank was not entered in the cash book. Prepare bank reconciliation statement.

 


Solution:
 

Bank Reconciliation Statement of Anil & Coas on August 31, 2005

 

Particulars

(+)Amount
Rs.

(-)Amount
Rs.

1. Overdraft as per Cash book   1,18,100
2. Cheques received and recorded in the cash book but not sent to the bank for collection   12,400
3. Interest on bank overdraft debited by the bank but not entered in the cash book   8,800
4. Payment received from the customer directly 27,300  
5. Credited in the bank a/c but not entered in the cash book 1,75,200  
6. Cheques issued but not presented for payment    
7. Balance as per the passbook (favourable balance)



2,02,500

63,200

2,02,500

 

Question-3

From the following particulars of Asha & Co. prepare a bank reconciliation statement on December 31, 2005.
 
Overdraft as per passbook 20,000
Interest on overdraft 2,000
Insurance Premium paid by the bank 200
Cheque issued but not presented for payment 6,500
Cheque deposited but not yet cleared 6,000
Wrongly debited by the bank 500

Solution:

Bank Reconciliation Statement of Asha & Co as on December 31, 2005

 

Particulars

(+) Amount Rs.

(-)Amount
Rs.

1. Overdraft as per passbook   20,000
2. Interest on overdraft

      2,000

 
3. Insurance premium paid by the bank 200  
4. Cheque issued but not presented for payment   6,500
5. Cheques deposited but not yet cleared 6,000  
6. Wrongly debited by the bank 500  
7. Balance as per the cash book (overdraft) 17,800

26,500


26,500

 

Question-4


From the following particulars, prepare a bank reconciliation statement as on March 31, 2001.

 

(a) Debit balance as per cash book is Rs. 10,000.

(b) A cheque for Rs. 1,000 deposited but not recorded in the cash book.

(c) A cash deposit of Rs. 200 was recorded in the cash book if there is not bank, column therein.

(d) A cheque issued for Rs. 250 was recorded as Rs. 205 in the cash column.

(e) The debit balance of Rs. 1,500 as on the previous day was brought forward as a credit balance.

(f) The payment side of the cash book was under cast by Rs. 100.

(g) A cash discount allowed of Rs. 112 was recorded as Rs. 121 in the bank column.

(h) A cheque of Rs. 500 received from a debtor was recorded in the cash book but not deposited in the bank for collection.

(i) One outgoing cheque of Rs. 300 was recorded twice in the cash book.


Solution:
     Bank Reconciliation Statement as on September 30, 2004
 

Particulars

(+) Amount Rs.

(-)Amount Rs.

1.

2.

3.

4.

5.

6.

7.

8.

Debit balance as per cash book

Error in carrying forward

Cheque recorded twice in cash book

Cheque deposit not record in bank column

Cheque deposit but not recorded

Under casting of payment side

Cheque issued but not entered

A cash discount wrongly recorded in bank column

10,000

3,000

300

200

1,000

 

 

 

 

 



100

250


121

9. Cheque recorded but not deposited   500
10. Credit balance as per passbook

14,500
13,529

14,500

 

Question-5


From the following particulars, prepare the bank reconciliation statement of Shri Krishnan as on March 31, 2005.

 

(a) Balance as per passbook is Rs. 10,000.

(b) Bank collected a cheque of Rs. 500 on behalf of Shri Krishnan but wrongly credited it to Shri Krishnan’s account.

(c) Bank recorded a cash book deposit of Rs. 1,589 as Rs. 1,598.

(d) Withdrawal column of the passbook under cast by Rs. 100.

(e) The credit balance of Rs. 1,500 as on the pass-book was recorded in the debit balance.

(f) The payment of a cheque of Rs. 350 was recorded twice in the passbook.

(g) The pass-book showed a credit balance. For a cheque, deposited by Shri Krishnan for Rs.100.

 


Solution:
          Bank Reconciliation Statement as on March 31, 2005
 

Particulars

(+)Amount
Rs.

(-)Amount
Rs.

1. Credit balance as per passbook 10,000  
2. Cheque wrongly credited to another customer account 500  
3. Error in carrying forward 3,000  
4. Cheque recorded twice 350  
5. Excess credit for cash deposit   9
6. Under casting of withdrawal column   100
7. Wrong credit   1,000
8. Debit balance as per cash book


13,850

12,741
13,850

 

Question-6


The following is the summary of a cash book for December, 2004. 
 

Cash Book (Bank Column)

Particulars

Rs.

Particulars

Rs.

Receipts

Balance c/d

13,221

4,986

_______

18,207

_______

Balance b/d

Payments

 

6,849

11,358

_______

18,207

_______

All receipts are banked and payments are made by cheques. On investigation the following are observed:

1. Bank charges of Rs. 1,224 entered in the bank statement have not been entered in cash book.

2. Cheques drawn amounting to Rs. 2,403 have not been presented to the bank for payment.

3. Cheques received totaling Rs. 6,858 have been entered in the cash book and deposited in the bank, but have not been credited by the bank until January, 2005.

4. A cheque for Rs. 198 has been entered as a receipt in the cash book instead of as payment.

5. A cheque for Rs. 225 has been debited by the bank in error.

6. A cheque received for Rs. 720 has been returned by the bank and marked “No funds available”; no adjustment had been made in the cash book.

7. All dividends receivable are credited directly to the bank account. During December, an amount of Rs. 558 was credited by the bank and no entry is made in the cash book.

8. A cheque drawn for Rs. 54 has been incorrectly entered in the cash book as Rs.594.

9. The balance brought forward should have been Rs. 639.

10. The bank statement as on December, 31, 2004 showed an overdraft of Rs. 10,458.

(a) You are required to prepare an amended cash book and

(b) Prepare a bank reconciliation statement as on Dec. 31, 2004.

 


Solution:
Amended Cash Book
(Bank Column)

Dr.

Cr.

Date

Particulars

L.F.

Amount

Rs.

Date

Particulars

L.F.

Amount

Rs.

  Dividends       Balance b/d   4,986
  Received   558  

Bank Charges

Adj.regarding

  1,224
  Adj. for cheque drwn for Rs. 54 entered as Rs. 594   540   cheque entered as receipt   396
  Adj. of balance brought forward   450   Adj.regarding    
  Balance c/d   5,778


_____
7,326
_____
  cheque returned






Balance b/d
  720


_____
7,326
_____

5,778

 

Question-7


The bank overdraft of Smith Ltd., on December 31, 2004 as per cash book is Rs.18, 000 From the following information, ascertain the adjusted cash balance and prepare bank reconciliation statement.

(i) Unpresented cheques 6,000

(ii) Uncleared cheques 3,400

(iii) Bank interest debited in the passbook only 1,000

(iv) Bills collected and credited in the passbook only 1,600

(v) Cheque of Arun traders dishonored 1,000

(vi) Cheque issued to Kapoor & Co. not yet entered in the 600 of cash book.

 


Solution:

Amended Cash Book
(Bank Column)

Dr.

Cr.

Date

Particulars

L.F

Amount

Rs.

Date

Particulars

L.F.

Amount

Rs.

 

Bills collected as per pass book

Balance c/d

  1,600


19,000
  Balance b/d
Interest
cheque Dishonoured
(Arun Traders) Kapoor & Co.
(cheque)
  18,000

1,000

1,000

600
     

20,600

 

Balance b/d
 

20,600

19,000

Bank Reconciliation Statement as on December 31, 2004

 

 



Add

Less

 

Bank overdraft as per cash book

Uncleared cheques

Unpresented cheques

Bank overdraft as per passbook

19,000

3,400

22,400

6,000

16,400

Question-8

State the need for the preparation of bank reconciliation statement?

Solution:
When a comparison is made between the bank pass book and bank balance as shown in the firm’s cash book, the two balances do not tally. It may not tally because of the time factor or some error in entering the details. In this case, we have to first find out the reason for the difference thereof and then reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balances.Thus, the Bank Reconciliation statement is prepared to reconcile the bank and cash book balances.

Question-9

What is a bank overdraft?

Solution:
Overdraft is the case where bank account becomes negative and the businesses in effect borrowed from the bank. This is shown in the cash book as a credit balance. In the bank statement, where the balance is followed by Dr. (or sometimes OD) means that there is an overdraft and called debit balance as per passbook. An overdraft is treated as negative figure on a bank reconciliation statement.

Question-10

State the causes of difference occurred due to time lag.

Solution:
When a business compares the balance of its cash book with the balance shown by the bank passbook, there is often a difference, which is caused by the time gap in recording the transactions relating either to payments or receipts. The factors of difference due to time gap are:
Cheques issued by the bank but not yet presented for payment
Cheques paid into the bank but not yet collected
Direct debits made by the bank on behalf of the customer
Amounts directly deposited in the bank account
Direct payments made by the bank on behalf of the customers
Interest and dividends collected by the bank
Cheques deposited/bills discounted dishonored

Question-11

Briefly explain the term ‘favorable balance as per cash book’

Solution:
While preparing a bank reconciliation statement without adjusting cash book balance, the balance as per cash book or as per passbook is the starting item. The debit balance as per the cash book means the balance of deposits held at the bank. Such a balance will be a credit balance as per the passbook. Such a balance exists when the deposits made by the firm are more than its withdrawals. It indicates the favorable balance as per cash book or favorable balance as per the passbook. Thus, if the deposits in the bank are more than the withdrawals that balance is called Favorable balances.




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