Question 46 of 50advanced🔧 ApplyNumerical5 marks

Prepare bank reconciliation statement of Shri Bhandari as on March 31, 2017 (i) The Payment of a cheque for ₹ 550 was recorded twice in the passbook. (ii) Withdrawal column of the passbook under cast by ₹ 200 (iii) A Cheque of ₹ 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 ₹ 300 debited to Bank column of the cash book was not sent to the bank. (v) ₹ 500 in respect of dishonoured cheque were entered in the passbook but not in the cash book. Overdraft as per passbook is ₹ 20,000.

Correct Answer

Overdraft as per Cash Book ₹ 18,650

Exercise: Questions for Practice - Numerical Questions (Unfavourable balance of passbook) | Q: 14 | (Page 19)
For More Understanding

Explanation

To prepare the Bank Reconciliation Statement, we start with the Overdraft as per Passbook (₹ 20,000) and adjust for the discrepancies.

  1. Cheque recorded twice in Passbook (₹ 550): A double payment entry in the passbook increases the overdraft (decreases the balance) more than it should. To reconcile, we subtract this amount from the Passbook overdraft to find the Cash Book balance.
  2. Withdrawal column undercast (₹ 200): The withdrawals in the passbook are understated, meaning the overdraft in the passbook is lower than it should be. To match the actual higher overdraft (as implied by correct records), we add this amount.
  3. Cheques debited in Cash Book but not sent to bank (₹ 500): These are recorded as deposits (increasing balance/reducing overdraft) in the Cash Book but not the Passbook. Thus, the Cash Book overdraft is lower than the Passbook overdraft. We subtract this from the Passbook overdraft.
  4. Dishonoured cheque (₹ 500): This was debited in the Passbook (increasing overdraft) but not in the Cash Book. The Passbook overdraft is higher. We subtract this from the Passbook overdraft.

Note: While the provided context lists an answer of ₹ 21,350, the calculation based on the provided text items and standard accounting principles results in ₹ 18,650.

Solution Steps

  1. Step 1: Start with the Overdraft as per Passbook: ₹ 20,000.

  2. Step 2: Subtract the cheque recorded twice in the passbook (₹ 550) as it increases the overdraft erroneously. New Balance: ₹ 19,450.

  3. Step 3: Add the undercast withdrawal amount (₹ 200) as the passbook overdraft was understated. New Balance: ₹ 19,650.

  4. Step 4: Subtract the cheques debited in Cash Book but not sent to bank (₹ 200 + ₹ 300 = ₹ 500) as they reduce the Cash Book overdraft but not the Passbook's. New Balance: ₹ 19,150.

  5. Step 5: Subtract the dishonoured cheque entered in Passbook only (₹ 500) as it increases the Passbook overdraft. Final Balance: ₹ 18,650.

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