On comparing the cash book with passbook of Naman it is found that on March 31, 2014, bank balance of ₹ 40,960 showed by the cash book differs from the bank balance with regard to the following: (a) Bank charges ₹ 100 on March 31, 2017, are not entered in the cash book. (b) On March 21, 2017, a debtor paid ₹ 2,000 into the company's bank in settlement of his account, but no entry was made in the cash book of the company in respect of this. (c) Cheques totaling ₹ 12,980 were issued by the company and duly recorded in the cash book before March 31, 2017, but had not been presented at the bank for payment until after that date. (d) A bill for ₹ 6,900 discounted with the bank is entered in the cash book without recording the discount charge of ₹ 800. (e) ₹ 3,520 is entered in the cash book as paid into bank on March 31st, 2017, but not credited by the bank until the following day. (f) No entry has been made in the cash book to record the dishonor or on March 15, 2017 of a cheque for ₹ 650 received from Bhanu. Prepare a reconciliation statement as on March 31, 2017.
Bank Reconciliation Statement of Naman as on March 31, 2017
| Particulars | Amount (₹) | Amount (₹) |
|---|---|---|
| Balance as per Cash Book | 40,960 | |
| Add: (b) Amount directly paid by debtor into bank | 2,000 | |
| Add: (c) Cheques issued but not presented for payment | 12,980 | |
| 55,940 | ||
| Less: (a) Bank charges not entered in cash book | 100 | |
| Less: (d) Discount charge on bill discounted not recorded | 800 | |
| Less: (e) Cheques deposited but not credited by bank | 3,520 | |
| Less: (f) Cheque received from Bhanu dishonoured | 650 | 5,070 |
| Balance as per Passbook | 50,870 |
Explanation
To prepare the Bank Reconciliation Statement, we start with the balance as per the Cash Book (₹ 40,960). We adjust this balance for items that are recorded in the Passbook but not in the Cash Book, or timing differences.
- Items added (Debtors payment, Unpresented cheques) increase the bank balance relative to the cash book or are favorable adjustments.
- Items subtracted (Bank charges, Discount charges, Uncredited deposits, Dishonoured cheques) decrease the bank balance relative to the cash book or are unfavorable adjustments. The final calculated balance matches the textbook answer of ₹ 50,870.
Solution Steps
Step 1: Start with the favorable balance as per Cash Book: ₹ 40,960.
Step 2: Add amounts that increase the Passbook balance or were not recorded in the Cash Book (Debtor direct deposit ₹ 2,000 + Unpresented cheques ₹ 12,980). Subtotal = ₹ 55,940.
Step 3: Deduct amounts that decrease the Passbook balance or were omitted from the Cash Book (Bank charges ₹ 100 + Discount charge ₹ 800 + Uncredited deposit ₹ 3,520 + Dishonoured cheque ₹ 650). Total Deductions = ₹ 5,070.
Step 4: Calculate the final balance: ₹ 55,940 - ₹ 5,070 = ₹ 50,870 (Balance as per Passbook).