ILLUSTRATION :

On 31st March, 2013 the pass book of Mitra showed a credit balance of Rs. 2,16,000. A comparison of pass book and cash book revealed the following:
`
(i) Cheques deposited but not cleared by 31st March 1,08,150
(ii) Cheques issued by Mitra but not presented for payment before 1st April, 2013 26,000
(iii) Insurance premium paid by bank on behalf of Mitra but not yet recorded in cash book 52,075
(iv) Commission charged by bank not yet recorded in cash book 750
(v) Interest on bonds collected by bank on behalf of Mitra not yet recorded in cash book 25,000

Bank balance as per cash book as on 31st March, 2013 is Rs. 3,25,975. Prepare a Bank Reconciliation Statement as on 31st March, 2013.

Solution:

Bank Reconciliation Statement of Mitra
as on 31st March, 2013

Particulars	Rs.	Rs.
Balance as per Pass Book		2,16,000
Add :
Cheques deposited with bank but not yet collected	1,08,150
Commission charged	52,075
Insurance premium paid by the bank	750	1,60,975
		3,76,975
Less:
Cheques issued but not yet presented for payment	26,000
Interest on bonds received by the bank _	25,000	51,000
Balance as per Cash Book		3,25,975

 

Alternatively:

Bank Reconciliation Statement of Mitra
as on 31st March, 2013

Particulars	Rs.	Rs.
Balance as per Cash Book		3,25,975
Add :
Cheques issued but not yet presented for payment	26,000
Interest on bonds received by the bank	25,000	51,000
		3,76,975
Less:
Cheques deposited into bank but not yet collected	1,08,150
Commission charged	52,075
Insurance premium paid by the bank ____	750	1,60,975
Balance as per Pass Book		2,16,000

 

Illustration:

The cash book of Shri Gupta showed an overdraft of Rs.30,000 on 31.3.2013. The scrutiny of the entries in the cash book and the pass book revealed that:

(a) On 22nd March, cheques totaling Rs. 6,000 were sent to bankers for collection, out of these, a cheque for Rs.1,000 was wrongly recorded on the credit side of the cash book and cheques amounting to Rs.300 could not be collected by bank within the accounting year.

(b) A cheque for Rs.4,000 was issued to a supplier on 28th March, 2013. The cheque was presented to bank on 4th April, 2013.

(c) There were debits in the pass book for interest Rs. 2,000 on overdraft and bank charges Rs. 600 not recorded in the cash book.

(d) The credit side of the bank column of the cash book was under cast by Rs.100.

(e) A cheque for ` 1,000 was issued to a creditor on 27th March, but the same was not recorded in the cash book. The cheque was, however, duly en-cashed before 31st March.

(f) As per standing instructions, the banker collected dividend of Rs.500 on behalf of Gupta and credited the same to his account within 31st March, 2013. The fact was, however, intimated to Gupta on 3rd April, 2013.

You are required to prepare a bank reconciliation statement as on 31st March, 2013.

Solution:

Shri Gupta
Bank Reconciliation Statement as on 31.3.2013

Particulars	Rs.	Rs.
Bank Overdraft as per Cash Book		30,000
Add :
Cheques deposited into bank but not yet collected	300
Bank charges not yet recorded in cash book	600
Interest on overdraft charged by the bank	2,000
Credit side of the bank column of the cash book undercast	100
Cheques issued to creditor not recorded in the cash book but duly
encashed by 31st March	1,000	4,000
		34,000
Less:
Cheque wrongly recorded on the credit side of the cash book (Rs.1,000 x 2)	2,000
Cheques issued but not yet presented for payment	4,000
Dividend collected by the bank but not recorded in the cash book	500	6,500
Overdraft as per Pass Book		27,500

 

Illustration:

From the following information, prepare Bank Reconciliation Statement as on 31st March, 2013:

Cash Book of Mr. S. Ray

Dr.                                                                                     (Bank Columns only)                                                                             Cr.

Date	Particulars	Rs.	Date	Particulars	Rs.
Mar.    1	ToBalance b/fd	7,000	Mar. 5	By Drawings	5,000
”         5	” Manohar Lal	4,000	”   8	”   Interest	150
”        10	”Deepak Kumar	10,000	” 10	”   Cheque Book	100
”        17	”Sher Singh	13,000	” 15	”    Salaries	3,500
”        25	”Mohan Lal	4,000	” 17	”  Ajit Singh	4,000
”        31	”Harish Kumar	1,900	” 21	”    Abdul & Co.	5,000
			” 25	”  Karim & Sons	7,000
			” 30	”    Harish & Co.	1,000
		______	” 31	”    Balance c/fd	14,150
		39,900			39,900

 

Bank Pass Book
(Bank in Account with Mr. S. Ray)

Dr.                                                                                                                                                                                                    Cr.

Dr.							Cr.
Date		Particulars		Amount	Date		Particulars		Amount
				Rs.					Rs.
2013					2013
Mar.	1	To	Balance b/fd	7,000	Mar.	5	By	Drawings	5,000
ff	8	ff	Manohar Lal	4,000	“	8	ff	Interest	150
ff	15	ff	Deepak Kumar	10,000	“	10	ff	Cheque Book	100
ff	24	ff	Sher Singh	13,000	“	15	ff	Salaries	3,500
ff	28	ff	Interest on		ff	22	ff	Ajit Singh	4,000
			Investment	1,200	“	29	ff	Abdul & Co.	5,000
ff	30	ff	Rent	300	“	31	ff	Bank charges	32
ff	31	ff	Bhura Mal	800	“	31	ff	Electricity charges	78
					ff	31	ff	Balance c/fd	18,440
				36.300					36.300

 

Solution:

Bank Reconciliation Statement
as at 31st March, 2013

Particulars	Rs.	Rs.
Balance as per Cash Book Add :		14,150
Cheques issued but not presented for payment	8,000
Interest on investment collected by bank	1,200
Rent collected by bank	300
Direct deposit by the customer	800	10,300
Less: Cheques deposited but not yet collected		24,450
	5,900
Bank charges	32
Electricity charges	78	6,010
Balance as per pass book		18,440

 

Illustration :

On 30th April, 2013 the cash book of Sircar showed a bank overdraft of r 1,970. A comparison of entries in the pass book with those in the cash book revealed the following:

• Cheques deposited with the bank but not yet credited in the pass book r 8,505.
• Cheques issued by Sircar but not yet presented by payees to bank for payment r 12,500.
• Interest on fixed deposit credited by bank under standing instructions but not yet recorded in cash book r 650.

 

Prepare bank reconciliation statement as on 30th April, 2013 to ascertain the balance as per pass book. Solution:

Mr. Sircar
Bank Reconciliation Statement as at 30th April, 2013

Particulars	Rs.	Rs.
Overdraft as per cash book		1,970
Add :
Cheques deposited with the bank but not yet credited in pass book		8,505
		10,475
Less :
Cheques issued but not yet presented to bank for payment	12,500
Interest on fixed deposit credited by bank under standing instructions	650	13.150
Balance as per pass book		2,675

 

Illustration :

On 30th April, 2013 pass book of Ghosh showed a debit balance of r 32,675. You are required to prepare bank reconciliation statement taking into consideration the following information:

Particulars	Rs.
Cheques issued but not yet presented for payment	18,513
Total cheques deposited with bank for collection	1,38,000
But so far credited in the pass book	1,12,000
Interest collected by the bank but not recorded in cash book by Ghosh	1,200
Bank charges not yet entered in cash book	150

 

Solution:

Mr. Ghosh
Bank Reconciliation Statement as at April 30, 2013

Particulars	Rs.	Rs.
Overdraft as per pass book Add :		32,675
Cheques issued but not yet presented for payment	18,513
Interest collected by bank but not yet recorded in cash book by Ghosh	1.200	19,713
		52,388
Less :
Cheques deposited with bank not yet credited in pass book	26,000
(21,38,000 — 21,12,000)
Bank charges not yet entered in cash book	150	26,150
Overdraft as per cash book		26.238

 

The bank reconciliation statement can also be prepared by having two amount columns, one for the amounts that increase the positive balance (or reduce the overdraft) and one for those amounts that reduce positive balance (or increase the overdraft). The first may be headed “+” and the second “-”, the opening balance is first entered in the appropriate column and finally the two columns are balanced. The illustration given above is solved below in the manner just stated:

Mr. Ghosh
Bank Reconciliation Statement as at April 30, 2013

particulars	Rs.	Rs.
Overdraft as per pass book		32,675
Cheques issued but not yet presented for payment		18,513
Interest collected by bank but not yet recorded in cash book		1,200
Cheques deposited with bank not yet credited in pass book	26,000
Bank charges not yet entered in cash book	150
Overdraft as per cash book	26,238	__________
	52,338	52,338

 

Illustration :

From the following information supplied by Shri Mehta, prepare his bank reconciliation statement as on 31st March, 2013 after amending the cash book on that date:

	Rs.
1. Bank overdraft as per bank statement	1,65,000
2. Cheques issued but not yet presented for payment	87,500
3. Cheques deposited with the bank but not yet collected	1,05,000
4. Cheque recorded in the bank column of the cash book but not sent to the bank for collection	20,000
5. Payments received from customers direct by the bank	35,000
6. Bank charges debited in the statement	200
7. A bill for Rs.30,000 (discounted with the bank in February at Rs.29,780) dishonored on 31st March and noting charges paid by the bank	100
8. Premium on life policy of Mehta paid by the bank on standing advice	1,800
9. Overdraft (credit) on 25.3.2013, ` 80,000 carried over as debit balance on the next day.

 

Solution:

Cash Book
Dr.                                                                               (Bank Column only)                                                                                      Cr.

Date	Particular	Rs.	Date	Particular	Rs.
31.3.2013			31.3.2013
	To Balance b/fd (balancing figure)	29,600		By Bank charges	200
	” Customer                                                                                                                 (amount directly collected by Bank)	35,000		” Customer                                                  (discounted bill dishonoured and noting charges paid by bank)	30,100
	” Balance c/d	1,27,500		” Drawings (life insurance premium paid by bank)	1,800
		__________		” Error (overdraft balance carried over as debit balance)	1,60,000
		1,92,100			1,92,100
			1.4.2013
				By Balance b/d	1,27,500

 

Notes:
(a) Discounted value of the bill is immaterial here, because on dishonor, the bank has debited the pass book with Rs.30,100.
(b) Overdraft credit balance means overdraft as per Cash Book.

Bank Reconciliation Statement of Shri Mehta
as on 31st March, 2013

Particulars	Rs.	Rs.
Overdraft as per bank statement		1,65,000
Add:
Cheques issued but not presented for payment		87,500
		2,52,500
Less:
Cheques deposited with the bank but not collected	1,05,000
Cheques recorded in cash book but not sent to bank for collection	20,000	1,25,000
Overdraft as per cash book		1,27,500

 

Illustration:
On 31st March, 2013, the cash book of Ajay Ghosh showed a bank overdraft of Rs.3,458. On examination of the
cash book and bank statement, the following discrepancies were noted:

(i) Cheques issued for Rs.1,200 were entered in the cash book but were not presented at the bank till first week of April, 2013.

(ii) Cheques amounting to Rs.1,000 were entered in the cash book on 30th March, 2013 but were banked on 2nd April, 2013.

(iii) Cheques amounting to Rs. 500 were deposited in the bank but were not collected till March 31st, 2011.

(iv) A cheque for ` 300 received from Mr. Dass Gupta and deposited in the bank was dishonored but advice of non-payment was not received from the bank upto 31st March.

(v) Rs.3,000 being the proceeds of a bill collected on 20th March did not appear in the cash book.

(vi)Rs.300 being the proceeds of a bill collected on 20th March were omitted to be credited in the pass book.

(vii) The pass book showed an amount of Rs. 340, being rent which his tenant Madan Gopal had directly deposited on the bank on 30th March, 2013. The item did not appear in cash book.

(viii) A bill payable of Rs.600 was duly paid off on 30th March according to the instructions of Ajay Ghosh but this was not entered in cash book before 1st April, 2013.

(ix) Bank charges of Rs.30 and interest an overdraft Rs.170 appeared in the pass book but not in the cash book.

Prepare a bank reconciliation statement and find out the balance as per pass book.

Solution:

Ajay Ghosh
Bank Reconciliation Statement as on 31st March, 2013

Particulars	Rs.	Rs.
Overdraft as per cash book		3,458
Add : Items increasing overdraft in pass book:
Cheques entered in cash book but not banked	1,000
Cheques deposited but not collected	500
Cheques deposited but dishonoured	300
Bill collected but omitted to be entered in pass book	300
Pay off of bills payable not entered in cash book	600
Bank charges	30
Interest on overdraft	170	2,900
		6,358
Less : Items reducing overdraft in pass book:
Cheques issued, not presented for payment	1,200
Bill collected, not entered in cash book	3,000
Direct deposit of rent into bank	340	4,540
Overdraft as per pass book		1,818

 

Illustration;
On 31st March 2013, the cash book of a trader showed a bank overdraft of Rs.15,280. On a comparison of the
cash book with the bank pass book, the trader ascertained the following differences.

	Rs.
Cheques deposited with bank, but not credited by the bank	20,000
Interest on securities collected by the bank, but not yet recorded in the cash book	2,560
Dividend collected by the bank, but not yet recorded in the cash book	2,000
Cheques issued, but not yet presented to the bank for payment	74,800
Bank charges not yet recorded in the cash book	680

 

Solution:

Bank Reconciliation Statement as on 31st March 2013

Particulars	Plus items (Rs.)	Minus items  (Rs.)
Cheques deposited with bank, but not credited by the bank	20,000
Interest on securities collected by the bank, but not yet recorded in the cash book	2,560
Dividend collected by the bank, but not yet recorded in the cash book	2,000
Cheques issued, but not yet presented to the bank for payment	74,800
Bank charges not yet recorded in the cash book	680
Overdraft as per cash book		15,280
Cheques deposited with the bank but not yet credited by bank		20,000
Interest on securities collected by the bank,
but not yet recorded in the cash bank	2,560
Dividend collected by the bank, but not yet
recorded in the cash book	2,000
Cheques issued, but not yet presented to the
bank for payment	74,800
Bank charges not yet recorded in the cash book	___________	680
	79,360	35,960

 

Balance as per pass book = Rs.79,360 – Rs.35,960 =Rs.43,400.

 

Dr.                                                                       Cash Book (Bank Columns only)                                                                                                     Cr.

Particulars	Rs.	Particulars	Rs.
To Interest on securities	2,560	By Balance b/fd	15,280
To Dividends received	2,000	By Bank charges	680
To Balance c/d_____	11,400		________
	15,960		15,960
By Balance b/d	11,400		11,400

 

Illustration: The following is a summary of the Cash Book of Shri Mohan Das, for the month of June 2012.

	Rs.		Rs.
Receipts	14,690	Balance b/d	7,610
Balance c/d	5,540	Payments	12,620
	20,230		20,230

 

 

All receipts are banked and payments are made by cheque. On investigation it is found that:

– Bank charges of RS.1,360 entered in the bank statement had not been entered in the cash book.

– Cheques drawn amounting to Rs. 2,670 had not been presented to the bank for payment.

– Cheques received totaling Rs.17,620 had been entered in the cash book and paid into the bank, but had not been credited by the bank until July, 2012.

– A cheques for Rs. 1,220 had been entered as a receipt in the cash book instead of as a payment.

– A cheque for RS. 1,250 had been debited by the bank in error.

– A cheque received for RS. 800 had been dishonored. No adjustments had been made in the cash book.

– All dividends receivable are credited directly to the bank account. During June, amount totaling Rs.2,620 were credited by the bank and no entries were made in the cash book.

– A cheque drawn for Rs. 600 in favour of a creditor had been incorrectly entered in the cash book as Rs.` 6,000.

– The balance brought forward should have been Rs. 7,110

– The bank statement as on 30th June, 2011, showed an overdraft Rs 17,820. You are required to:

– Show the adjustments required in the cash book; and

– Prepare a bank reconciliation statement as on 30th June, 2012

Solution:

Shri Mohan Das

Cash Book

Dr.                                                                                                (Bank column only)                                                                                                  Cr.

Particulars	Rs.	Particulars	Rs.
30.6.2012		30.6.2012
To Dividend	2,620	By Balance b/d	5,540
To Creditor – cheque drawn              for Rs.600 wrongly   entered a Rs.6,000	5,400	By Bank charges	1,360
To Error – wrong carry forward of balance on 1st June, 2011	500	By Error – cheque issued wrongly entered as received Rs.1,220	2,440
To Balance c/d	1,620	By Customer – cheque returned	800
	10,140		10,140

Bank Reconciliation Statement

as on 30th June, 2012

Particulars	Rs.	Rs.
Bank balance as per cash book (overdraft)		1,620
Add: Cheques deposited but not credited by the bank until after 30th June, 2011	17,620
Cheque debited by the bank in error	1,250	18,870
		20,490
Less: Cheque issued but not presented for payment		2,670
Bank overdraft as per bank statement		17,820