Bank Reconciliation Statement Cash Book Bank Column Pass

Bank Reconciliation Statement Cash Book (Bank Column) Pass Book Debit balance as per Cash book means : (+) balance Debit balance as per Pass book means : (-) balance Credit balance as per Cash book means : (-) balance Credit balance as per Pass book means : (+) balance Cash Book Dr (+) Cr (-) Pass Book Cr (+) Dr (-) Shri Krishna Education visit us at www. accountsshikshak. com 1

Meaning of B. R. S A Statement prepare to identify the reasons of differences between cash book (Bank column) and pass book (prepared by bank) and to reconcile the balances of two books. Such a statement called “Bank Reconciliation Statement”. Prepared for the period of one month Shri Krishna Education visit us at www. accountsshikshak. com 2

Reasons for Differences between Cash Book and Pass Book Balances Cheque issued but not presented for payment Cheque deposited but not cleared/ collected by bank Cheque deposited but dishonored by bank Interest allowed by bank but not recorded in Cash Book Interest charged by bank but not recorded in cash book Direct deposited by customers into bank Shri Krishna Education visit us at www. accountsshikshak. com 3

Bank charges not recorded in the cash book Amount collected by bank directly and not recorded in cash book Wrong credit given by bank Wrong debit charged by bank Excess amount recorded in the cash book or in pass book Direct payment made by bank on behalf of its customer Shri Krishna Education visit us at www. accountsshikshak. com 4

Procedure of Preparing Bank Reconciliation Statement The Balance of at least one book will be give in the Question. (maybe a cash book or pass book) First find out the cause of difference between Cash Book and Pass Book Second, check the impact of transaction. (on Cash Book or Pass Book) Adjust the balance of book (given in question) according to the balance of other book Lets take some examples to understand the process Shri Krishna Education visit us at www. accountsshikshak. com 5

Example Given : Balance as per Cash Book ` 30, 000 Transaction : Cheques of ` 10, 000 deposited but not credited by bank till end of month. Procedure: First impact will be on Cash book, i. e. it will increase by `. 10, 000 Cash Book On the other hand the Pass book will decrease by ` 10, 000 Since we have Cash book in hand, therefore cash book will decrease by `10, 000 Shri Krishna Education visit us at www. accountsshikshak. com 6

Another Example Given : Balance as per Cash Book `30, 000 Transaction : Cheques of ` 10, 000 deposited but only 3, 000 were credited by bank till end of month. Procedure: First impact will be on Cash book, i. e. it will increase by ` 7, 000 Cash Book On the other hand the Pass book will decrease by ` 7, 000 Since we have Cash book in hand, therefore cash book will decrease by ` 7, 000 Shri Krishna Education visit us at www. accountsshikshak. com 7

Some more Examples Given : Balance as per Pass Book ` 20, 000 Transaction : Cheques of ` 10, 000 deposited but only 3, 000 were credited by bank till end of month. Procedure: First impact will be on Cash book, i. e. it will increase by ` 7, 000 Cash Book On the other hand the Pass book will decrease by ` 7, 000 Since we have Pass book in hand, therefore Pass book will increase by 7, 000 Shri Krishna Education visit us at www. accountsshikshak. com ` 8

Given : Balance as per Pass Book Rs 20, 000 Transaction : Cheques of ` 10, 000 issued but only ` 3, 000 were presented to bank till end of month. Procedure: First impact will be on Cash book, i. e. it will decrease by ` 7, 000. Cash Book On the other hand the Pass book will increase by ` 7, 000 Since we have Pass book in hand, therefore Pass book will decrease by ` 7, 000 Shri Krishna Education visit us at www. accountsshikshak. com 9

Given : Balance as per Pass Book ` 20, 000 Transaction : One customer paid ` 5, 000 directly into bank Procedure: First impact will be on pass book, i. e. it will increase by ` 5, 000. Pass Book On the other hand the cash book will decrease by ` 5, 000 Since we have Pass book in hand, therefore Pass book will decrease by ` 5, 000 Shri Krishna Education visit us at www. accountsshikshak. com 10

Given : Balance as per Cash Book ` 12, 000 Transaction : Bank paid insurance premium of ` 3, 000 on customer’s behalf Procedure: First impact will be on pass book, i. e. it will decrease by ` 3, 000. Pass Book On the other hand the cash book will increase by ` 3, 000 Since we have Cash book in hand, therefore Cash book will decrease by 3, 000 Shri Krishna Education visit us at www. accountsshikshak. com ` 11

Given : Balance as per Pass Book ` 12, 000 Transaction : Bank credited customer’s a/c by ` 200 as interest. Procedure: First impact will be on pass book, i. e. it will increase by ` 200. Pass Book On the other hand the cash book will decrease by ` 200 Since we have Pass book in hand, therefore Pass book will decrease by ` 200 Shri Krishna Education visit us at www. accountsshikshak. com 12

Given : Balance as per Pass Book ` 12, 000 Transaction : Bank credited customer’s a/c by ` 200 as interest but in cash book it was recorded as ` 2, 000 Procedure: First impact will be on cash book, i. e. it will increase by ` 1, 800. Pass Book On the other hand the pass book will decrease by ` 1, 800 Since we have Pass book in hand, therefore Pass book will increase by ` 1, 800 Shri Krishna Education visit us at www. accountsshikshak. com 13

Try yourself Question: On 31 March 2013. The cash book showed a Debit balance of ` 20, 000. From the following information, prepare Bank Reconciliation Statement. 1) Out of the total cheques amounting to ` 10, 000 drawn, cheques aggregating to ` 3, 000 were en cashed in March, cheques aggregating ` 4, 000 were en cashed in April and the rest have not been presented at all. 2) Out of the total cheques amounting to ` 5, 000 deposited, cheques aggregating ` 1, 500 were credited in March, cheques aggregating ` 2, 000 were credited in April and rest have not been collected at all. 3) The bank has debited `. 500 on account of interest paid and ` 100 as bank charges. 4) The bank has credited ` 700 on account of interest collected on securities. 5) A cheque of ` 1, 000 returned dishonored on 31 st March. (but not yet recorded in the cash book) Shri Krishna Education visit us at www. accountsshikshak. com 14

Solution: Bank Reconciliation Statement as on 31 -3 -2013 Particulars ` (+) Balance as per Cash Book Add Cheques issued but not yet presented for payment Less Cheques deposited but not credited by bank Less Debit by bank for interest & bank charges Add Bank allowed interest but not entered in Cash Book Less Cheque retuned dishonored, not recorded in Cash book Balance as per Pass Book 20, 000 7, 000 3, 500 600 700 1, 000 24, 600 27, 700 Shri Krishna Education visit us at www. accountsshikshak. com ` (-) 27, 700 15

Question: On 31 March 2013. The cash book showed a Credit balance of ` 20, 000. From the following information, prepare Bank Reconciliation Statement. 1) Out of the total cheques amounting to ` 10, 000 drawn, cheques aggregating to ` 3, 000 were en cashed in March, cheques aggregating ` 4, 000 were en cashed in April and the rest have not been presented at all. 2) Out of the total cheques amounting to ` 5, 000 deposited, cheques aggregating ` 1, 500 were credited in March, cheques aggregating ` 2, 000 were credited in April and rest have not been collected at all. 3) The bank has debited ` 500 on account of interest paid and ` 100 as bank charges. 4) The bank has credited ` 700 on account of interest collected on securities. 5) A cheque of ` 1, 000 returned dishonored on 31 st March. (but not yet recorded in the cash book) Shri Krishna Education visit us at www. accountsshikshak. com 16

Solution: Bank Reconciliation Statement as on 31 -3 -2013 Particulars ` (+) Credit balance as per Cash Book (overdraft) Add Cheques issued but not yet presented for payment Less Cheques deposited but not credited by bank Less Debit by bank for interest & bank charges Add Bank allowed interest but not entered in Cash Book Less Cheque retuned dishonored, not recorded in Cash book Debit Balance as per Pass Book (Overdraft) 7, 000 20, 000 3, 500 600 700 1, 000 17, 400 25, 100 Shri Krishna Education visit us at www. accountsshikshak. com ` (-) 25, 100 17

Question: From the following particulars prepare a bank reconciliation statement of M/s R. K. Khanna & Co. showing the balance as per bank Cash book on March 31, 2013. (a) On March 31, 2013 the balance as per Pass book was ` 9, 800 (b) The following cheques were paid into the firm’s bank current account in March 2013 but were credited by the bank in April 2013. Raman ` 400; Chand Ram ` 300; Mohan ` 200. (c) The following cheques were issued by the firm in March 2013 but were cashed in April 2013 Gopalan ` 500; Krishan ` 250. (d) The pass book shows a credit of ` 180 for interest and a debit of ` 40 for bank charges. (e) The pass book also contains an entry for ` 240 being payment made by a customer into the bank. Shri Krishna Education visit us at www. accountsshikshak. com 18

Solution: Bank Reconciliation Statement as on 31 -3 -2013 Particulars ` (+) Balance as per Pass Book Add Cheques deposited but not credited by bank Less Cheques issued but not presented for payment Add Debit by bank for bank charges Less Bank allowed interest but not entered in Cash Book Less Direct deposited by customer, not recorded in Cash Book Balance as per Cash Book 9, 800 900 750 40 180 240 9, 570 10, 740 Shri Krishna Education visit us at www. accountsshikshak. com ` (-) 10, 740 19

Question: On 31 st January 2013 my Pass book showed a bank overdraft of ` 11, 642. On comparing it with the cash book, the following differences were noted. (1) Cash and cheques amounting to ` 1, 340 were sent to bank on 27 th January, but Cheques worth ` 230 were credited on 2 nd February and one cheque for ` 45 was returned by them as dishonored on 4 th February. (2) During the month of January, I issued cheques worth ` 1, 670 to my creditors. Out of theses cheques worth ` 1, 370 were presented for payment on 5 th February. (3) According to my standing orders the bankers have paid during the month of January the following: (i) Life insurance premium ` 170 (ii) Television License fee ` 120 (iii) Driving license fee ` 22 (4) My Bankers have collected ` 150 as dividend on the shares. (5) My bankers have given me wrong credit for ` 150. (6) A B/R for ` 100 discounted with bank in December 2012 has been dishonored on 31 st January 2013. (7) Interest charged by the bank ` 125. Prepare a bank reconciliation statement on 31 st January 2013. Shri Krishna Education visit us at www. accountsshikshak. com 20

Solution: Bank Reconciliation Statement as on 31 -1 -2013 Particulars ` (+) Debit balance as per Pass Book (overdraft) Less Cheques deposited but not credited by bank Add Cheques issued but not presented to bank Less Amount paid by bank on my behalf not recorded in cash book Add Bank collected dividend but not entered in Cash Book add Bank given wrong credit Less A bills receivable dishonored Less Interest charged by bank not recorded in cash book Debit Balance as per Pass Book (Overdraft) Shri Krishna Education visit us at www. accountsshikshak. com ` (-) 11, 642 230 1370 312 150 100 125 12, 545 13, 312 21

Question: Q. The following facts were extracted as at 31 st December 2012 from the books of P. K. Sen Gupta who keeps a double column cash book Amount Bank balance as per cash book (overdrawn) 160 Balances as per statement (in favor) 120 ` 16, commission charged by bank on outstation cheques yet to be taken into account A cheque for ` 40 paid to R. Gupta wrongly entered in the cash column. Debit side of cash book (bank column) under cast by 100 Cheques received from customers 52 deposited on 31 -12 -2012 but credited by the bank on 02 -01 -2013 Cheques issued to suppliers 288 during 2012 not yet presented for encashment. Prepare a bank reconciliation statement as at 31 -12 -2012 Shri Krishna Education visit us at www. accountsshikshak. com 22

Solution: Bank Reconciliation Statement as on 31 -12 -2012 Particulars ` (+) Balance as per Pass Book Add Commission charged by bank nor recorded in cash book Add Cheque issued but recorded in cash column Less Debit side of cash book is short Add cheque deposited but not credited by bank till 31 -12 Less Cheques issued to suppliers but not presented for payment Overdraft as per Cash Book 120 Shri Krishna Education visit us at www. accountsshikshak. com ` (-) 16 40 100 52 288 160 388 23

Prepared by: Ashwini Sharma Phone No. 9999383078 Under guidance of Mr. Ajay Chopra Phone No. 9810123857 Shri Krishna Education visit us at www. accountsshikshak. com 24