Question 42 of 50advanced🔧 ApplyNumerical5 marks

The passbook of Mr. Mohit current account showed a credit Balance of ₹ 20,000 on dated December 31, 2016. Prepare a Bank Reconciliation Statement with the following information. (i) A cheque of ₹ 400 drawn on his saving account has been shown on current account. (ii) He issued two cheques of ₹ 300 and ₹ 500 on of December 25, but only the 1st cheque was presented for payment. (iii) One cheque issued by Mr. Mohit of ₹ 500 on December 25, but it was not presented for payment whereas it was recorded twice in the cash book.

Correct Answer

Bank Reconciliation Statement of Mr. Mohit as on December 31, 2016

ParticularsAmount (₹)Amount (₹)
Balance as per Passbook (Credit)20,000
Add: Cheque drawn on Savings Account wrongly debited in Current Account (Passbook balance understated)400
20,400
Less: Cheque issued but not presented for payment (Item ii)500
Less: Cheque issued but not presented for payment (Item iii)500
Less: Cheque recorded twice in Cash Book (Cash Book balance understated)500
Balance as per Cash Book18,900
Exercise: Questions for Practice - Numerical Questions (Favourable balance) | Q: 9 | (Page 17)
For More Understanding

Explanation

To prepare the Bank Reconciliation Statement, we start with the credit balance as per the Passbook (₹ 20,000).

  1. Adjustment (i): A cheque drawn on the savings account was wrongly debited in the current account. This reduces the Passbook balance. To reconcile, we add ₹ 400 back.
  2. Adjustment (ii): A cheque of ₹ 500 was issued but not presented. The Passbook shows a higher balance than the Cash Book. We deduct ₹ 500.
  3. Adjustment (iii): Another cheque of ₹ 500 was issued but not presented (deduct ₹ 500). Additionally, this cheque was recorded twice in the Cash Book, meaning the Cash Book balance is understated by ₹ 500. We deduct this amount to match the lower Cash Book balance.

Solution Steps

  1. Step 1: Identify the starting balance. Passbook (Credit) = ₹ 20,000.

  2. Step 2: Adjust for the wrong debit. Add ₹ 400 (20,000 + 400 = 20,400).

  3. Step 3: Adjust for the unpresented cheque from item (ii). Deduct ₹ 500 (20,400 - 500 = 19,900).

  4. Step 4: Adjust for item (iii). The cheque was not presented (Deduct ₹ 500) AND recorded twice in CB (Cash Book is lower by ₹ 500, so Deduct ₹ 500). Total deduction = ₹ 1,000.

  5. Step 5: Calculate final balance. 19,900 - 1,000 = ₹ 18,900 (Balance as per Cash Book).

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