On 1st January 2017, Rakesh had an overdraft of ₹ 8,000 as showed by his cash book. Cheques amounting to ₹ 2,000 had been paid in by him but were not collected by the bank by January 01, 2017. He issued cheques of ₹ 800 which were not presented to the bank for payment up to that day. There was a debit in his passbook of ₹ 60 for interest and ₹ 100 for bank charges. Prepare bank reconciliation statement for comparing both the balance.
Bank Reconciliation Statement of Rakesh as on January 01, 2017
| Particulars | (+) Amount ₹ | (-) Amount ₹ |
|---|---|---|
| Overdraft as per Cash Book | 8,000 | |
| Add: Cheques deposited but not yet collected | 2,000 | |
| Add: Interest on Overdraft (Debited in Passbook) | 60 | |
| Add: Bank Charges (Debited in Passbook) | 100 | |
| Less: Cheques issued but not presented for payment | 800 | |
| Overdraft as per Passbook | 9,360 | |
| Total | 10,160 | 10,160 |
Explanation
To solve this, we start with the Overdraft as per Cash Book (₹ 8,000). Since an overdraft is a negative balance, items that reduce the bank balance further (like uncollected cheques or bank charges) are added to the overdraft amount, while items that increase the bank balance (like unpresented cheques) are deducted. The adjustments for interest (₹ 60) and bank charges (₹ 100) are added because they have reduced the balance in the Passbook but are not yet recorded in the Cash Book.
Solution Steps
Start with the balance given: Overdraft as per Cash Book (₹ 8,000).
Add the cheques deposited but not collected (₹ 2,000) as they increase the overdraft.
Add the Interest (₹ 60) and Bank Charges (₹ 100) debited in the passbook, as they decrease the bank balance.
Deduct the cheques issued but not presented (₹ 800) as they decrease the overdraft.
Calculate the total: 8,000 + 2,000 + 60 + 100 - 800 = Overdraft as per Passbook ₹ 9,360.