Following information is given to you:
i. Overdrafts as per cash book Rs. 75,000
ii. Cheque drawn but not cashed till now Rs. 15,000
iii. Interest debited by the bank Rs. 5,000
iv. Cheque received from customer Rs. 50,000 however the cheque was dishonoured by the bank due to the incorrect signature in the cheque.
v. Interest on investment collected by the bank Rs. 7,000 but not recorded in cash book.
vi. Cheques deposited into bank Rs. 35,000 but bank collected and credited Rs. 30,000 only.
Required: Bank reconciliation statement.
Answer (1)
To prepare a Bank Reconciliation Statement, you reconcile the balance as per the Cash Book with the balance as per the Bank Statement by considering the items causing differences between them. Let's start with the overdraft as per the Cash Book, which is Rs. 75,000.
Start with Overdraft as per Cash Book : Rs. 75,000
Add: Cheque drawn but not cashed till now : Rs. 15,000
This amount has been deducted in the cash book but not yet from the bank statement since the cheque is not yet cashed. Therefore, add it back.
Less: Interest debited by the bank not recorded in the Cash Book : Rs. 5,000
This interest has reduced the bank balance but hasn't been recorded in the Cash Book, so subtract it.
Less: Dishonoured cheque received from customer : Rs. 50,000
This cheque was initially recorded in the cash book but must be subtracted as it was dishonoured.
Add: Interest on investment collected by the bank : Rs. 7,000
This interest has been credited by the bank but not yet recorded in the Cash Book, so add it.
Less: Cheques deposited into bank but not collected in full amount : Rs. 5,000
Rs. 35,000 was deposited, but only Rs. 30,000 was collected. Thus, subtract the difference of Rs. 5,000.
By calculating these steps, the Bank Reconciliation Statement is:
[ \text{Overdraft as per Cash Book: } Rs. 75,000 \
\text{ Cheque drawn but not cashed till now: } Rs. 15,000 \
\text{ Interest charged by bank: } Rs. 5,000 \
\text{ Dishonoured cheque: } Rs. 50,000 \
\text{ Interest on investment not recorded: } Rs. 7,000 \
\text{ Difference in cheque deposited: } Rs. 5,000 \ \text{Adjusted Balance as per Bank: } Rs. 37,000 ]
The adjusted bank balance, after considering all these reconciliations, comes out to be Rs. 37,000.
