The passbook of Mr. Randhir showed an overdraft of ₹ 40,950 on March 31, 2017. Prepare bank reconciliation statement on March 31, 2017. (i) Out of cheques amounting to ₹ 8,000 drawn by Mr. Randhir on March 27 a cheque for ₹ 3,000 was encashed on April 2017. (ii) Credited by bank with ₹ 3,800 for interest collected by them, but the amount is not entered in the cash book. (iii) ₹ 10,900 paid in by Mr. Randhir in cash and by cheques on March, 31 cheques amounting to ₹ 3,800 were collected on April, 07. (iv) A Cheque of ₹ 780 credited in the passbook on March 28 being dishonoured is debited again in the passbook on April 01, 2017. There was no entry in the cash book about the dishonour of the cheque until April 15.
Bank Reconciliation Statement of Mr. Randhir as on March 31, 2017
| Particulars | Amount (₹) | Amount (₹) |
|---|---|---|
| Overdraft as per Passbook | 40,950 | |
| Add: Cheques issued but not presented for payment (₹ 8,000 - ₹ 5,000) | 3,000 | |
| Add: Interest collected by bank but not entered in Cash Book | 3,800 | 6,800 |
| 47,750 | ||
| Less: Cheques deposited but not collected by bank | (3,800) | |
| Less: Cheque dishonoured but not recorded in Cash Book | (780) | |
| Overdraft as per Cash Book | 43,170 |
Note: The Overdraft as per Passbook is a starting point (Credit balance). Items that increase the Passbook balance (or decrease the Cash Book balance relative to Passbook) are added to find the Cash Book overdraft. Items that decrease the Passbook balance are deducted.
Explanation
The problem requires preparing a Bank Reconciliation Statement starting from the Overdraft as per Passbook (₹ 40,950).
- Cheques issued but not presented (₹ 3,000): These reduce the Cash Book balance immediately but not the Passbook yet. Thus, the Passbook shows a higher balance (less overdraft) than the Cash Book. To match the Cash Book overdraft (which is higher), we Add this amount.
- Interest collected by bank (₹ 3,800): This increases the Passbook balance but is not yet in the Cash Book. The Passbook is higher relative to the Cash Book. We Add this to the starting overdraft.
- Cheques deposited but not collected (₹ 3,800): These increase the Cash Book balance but not the Passbook. The Cash Book is higher relative to the Passbook. Since we are finding the Cash Book overdraft (which should be smaller), we Deduct this amount.
- Cheque dishonoured (₹ 780): The bank reduces the balance (increases overdraft) immediately. The Cash Book still shows the money. The Passbook is lower relative to the Cash Book. To match the Cash Book overdraft (which is smaller), we Deduct this amount.
The final calculated Overdraft as per Cash Book is ₹ 43,170.
Solution Steps
Step 1: Start with the Overdraft as per Passbook given in the question (₹ 40,950).
Step 2: Identify adjustments that cause the Passbook balance to be higher (or Cash Book lower): (i) Cheques issued but not presented (₹ 3,000) and (ii) Interest collected (₹ 3,800). Add these to the starting balance. (40,950 + 3,000 + 3,800 = 47,750).
Step 3: Identify adjustments that cause the Passbook balance to be lower (or Cash Book higher): (iii) Cheques deposited but not collected (₹ 3,800) and (iv) Cheque dishonoured (₹ 780). Deduct these from the running total.
Step 4: Calculate the final balance: 47,750 - 3,800 - 780 = 43,170.
Step 5: Conclude that the Overdraft as per Cash Book is ₹ 43,170.