Prepare bank reconciliation statement. (i) Overdraft shown as per cash book on December 31, 2017 ₹ 10,000. (ii) Bank charges for the above period also debited in the passbook ₹ 100. (iii) Interest on overdraft for six months ending December 31, 2017 ₹ 380 debited in the passbook. (iv) Cheques issued but not incashed prior to December 31, 2017 amounted to ₹ 2,150. (v) Interest on Investment collected by the bank and credited in the passbook ₹ 600. (vi) Cheques paid into bank but not cleared before December, 31, 2017 were ₹ 1,100.
Bank Reconciliation Statement as on December 31, 2017
| Particulars | Plus Items (₹) | Minus Items (₹) |
|---|---|---|
| Overdraft as per Cash Book | 10,000 | |
| Add: Bank Charges debited in Passbook | 100 | |
| Add: Interest on Overdraft debited in Passbook | 380 | |
| Add: Cheques paid into bank but not cleared | 1,100 | |
| Less: Cheques issued but not presented for payment | 2,150 | |
| Less: Interest on Investment collected by bank | 600 | |
| Overdraft as per Passbook | 8,830 |
Note: The final Overdraft as per Passbook is ₹ 8,830.
Explanation
This problem deals with an Unfavourable balance of cash book (Overdraft). To prepare the statement, we start with the overdraft balance as per the Cash Book. Transactions that increase the overdraft (Bank Charges, Interest on Overdraft, and Cheques paid in but not cleared) are added to the starting balance. Transactions that decrease the overdraft (Cheques issued but not presented and Interest on Investment collected) are deducted. The calculated result matches the answer key provided in the context (₹ 8,830).
Solution Steps
Step 1: Identify the starting balance: Overdraft as per Cash Book (₹ 10,000).
Step 2: Identify items to Add (Increase Overdraft or Debit in Passbook): Bank Charges (₹ 100) + Interest on Overdraft (₹ 380) + Cheques not cleared (₹ 1,100).
Step 3: Identify items to Deduct (Decrease Overdraft or Credit in Passbook): Cheques issued not presented (₹ 2,150) + Interest on Investment (₹ 600).
Step 4: Calculate the final balance: 10,000 + 100 + 380 + 1,100 - 2,150 - 600 = ₹ 8,830.