PREPARATION OF BANK RECONCILIATION STATEMENT WHEN OVERDRAFT BALANCES ARE GIVEN :
In case the books show an adverse balance i.e. an overdraft, the procedure is just the reverse of that which has been discussed in the case of a favorable balance. Overdraft means overdrawing of a bank account. The customer is allowed to draw from his account over and above his balance subject to a limit agreed upon. The bank pass book will show a debit balance in the account of the customer and similarly there will be a credit balance in the bank column of the cash book.
SPECIMEN OF BANK RECONCILIATION STATEMENT
(From overdraft balances)
Bank Reconciliation Statement as on….
Particulars | Rs. | Rs. |
Overdraft as per Cash Book | XXX | |
Add : | ||
Cheques deposited into bank but not yet collected | XXX | |
Bank charges | XXX | |
Insurance premium paid by the bank | XXX | |
Interest on overdraft charged by the bank | XXX | |
Dishonoured cheques / bills | XXX | |
Drawings made but not entered in cash book | XXX | |
Cheques received and entered in the cash book but not deposited | XXX | |
Any wrong debit in the pass book | XXX | XXX |
Less : | ||
Cheques issued but not yet presented for payment | XXX | |
Interest allowed by the bank | XXX | |
Direct payment by customers into bank | XXX | |
Interest on investment received by the bank | XXX | |
Dividend on shares collected by the bank | XXX | |
Rebate on bills retired under rebate through the bank but full amount entered in the cash book | XXX | |
Any wrong credit in the pass book | XXX | XXX |
Overdraft as per Pass Book | (XXX) | |
Note: If the reconciliation statement has been started with overdraft as per the pass book to arrive at overdraft
as per the cash book the entries made above should be reversed i.e. all added items should be deducted and
all deducted items should be added.
SUMMARY PREPARATION OF BANK RECONCILIATION STATEMENT |
||
Transactions | Starting with the Overdraft
as per Cash Book |
Starting with the Overdraft as
per Pass Book |
Cheques issued but not presented | Deduct: The amount of unpresented cheques. | Add: The amount of unpresented cheques. |
Cheques deposited but not yet collected | Add: The amount of cheques deposited | Deduct: The amount of cheques deposited |
Cheques received entered in the bank column of the cash book but not deposited | Add: The amount of cheques | Deduct: The amount of cheques. |
Dishonour of cheques deposited earlier | Add: The amount of dishonoured cheques | Deduct: The amount of dishonoured cheques |
Collection of interest and dividends and interest by banks | Deduct: The amount of these items | Add: The amount of these items. |
Bank charges | Add: The amount of bank charges | Deduct: The amount of bank charges. |
Balance/ Overdraft | Bank Overdraft as per Cash Book | Bank Overdraft as per Pass Book |
Alternative Method is to keep two columns ‘Plus’ and ‘Minus’. All additions are to be shown in ‘plus’ column while all deductions in the ‘minus’ column. Balance is to be shown in ‘plus’ column while overdraft is shown in ‘minus’ column.