Question 48 of 50advanced🔧 ApplyNumerical5 marks

Raghav & Co. have two bank accounts. Account No. I and Account No. II. From the following particulars relating to Account No. I, find out the balance on that account of March 31, 2017 according to the cash book of the firm. (i) Cheques paid into bank prior to March 31, 2017, but not credited for ₹ 10,000. (ii) Transfer of funds from account No. II to account no. I recorded by the bank on March 31, 2017 but entered in the cash book after that date for ₹ 8,000. (iii) Cheques issued prior to March 31, 2017 but not presented until after that date for ₹ 7,429. (iv) Bank charges debited by bank not entered in the cash book for ₹ 200. (v) Interest Debited by the bank not entered in the cash book ₹ 580. (vi) Overdraft as per Passbook ₹ 18,990.

Correct Answer

Overdraft as per Cash Book ₹ 23,639

Exercise: Questions for Practice - Numerical Questions (Unfavourable balance of passbook) | Q: 16 | (Page 19)
For More Understanding

Explanation

To solve this, we start with the Overdraft as per Pass Book (₹ 18,990) and adjust for timing differences to arrive at the Cash Book balance. Items recorded in the Pass Book but not in the Cash Book (Transfer received, Bank Charges, Interest) must be adjusted. Items recorded in the Cash Book but not in the Pass Book (Cheques deposited but not credited, Cheques issued but not presented) must also be reversed. Specifically, since the Pass Book shows an overdraft (credit balance), items that increase the bank balance in the Pass Book (like transfers received and unpresented cheques) are added to find the higher Cash Book overdraft, while items that decrease it (uncredited deposits, charges) are deducted.

Solution Steps

  1. Step 1: Identify the starting balance. Overdraft as per Pass Book = ₹ 18,990.

  2. Step 2: Add items that make the Cash Book balance lower (more negative) than the Pass Book balance:

    • Transfer from Account No. II recorded in Pass Book only: ₹ 8,000
    • Cheques issued but not presented: ₹ 7,429 Total Additions = ₹ 15,429.

  3. Step 3: Deduct items that make the Cash Book balance higher (less negative) than the Pass Book balance:

    • Cheques deposited but not credited: ₹ 10,000
    • Bank charges debited by bank: ₹ 200
    • Interest debited by bank: ₹ 580 Total Deductions = ₹ 10,780.

  4. Step 4: Calculate the final balance. Overdraft as per Pass Book + Additions - Deductions 18,990 + 8,000 + 7,429 - 10,000 - 200 - 580 = ₹ 23,639.

  5. Step 5: Conclude the answer. The Overdraft as per Cash Book is ₹ 23,639.

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