At the end of the year,prem chawla cash book showed a balance of 1850. On comparing the same with bank pass book he found that cheque amount to 1360.79had been issued towards the close of the year. He had deposited cash and cheque worth 1389.15on 29th December of which cheque for 470.76 were cleared in January. The bank credited his account with 140.70 in the pass book in respect of interest on current account and has debited him with 25 as charge for collecting outstation cheques.
Answers
1. Cheque is issued to the close of the year: this could mean that the cheque might not have been presented for payment, hence not reduced from passbook. So, this is added back to the cash book balance.
2. Cash deposited is not considered because this is an instant transaction. When you deposit cash this is instantly added to the bank account balance, hence it is not considered for making reconciliation statement.
3. Cheque deposited might have not been cleared. Hence, this is reduced from cash book balance as the same has not been added to the bank account balance.
4. Both charges and interest have been considered in passbook but not in cash book. Hence, this is also added and reduced in cash book balance.
Solution:
Balance as per cashbook - 1,850.00
Add:
Pt. 1. Cheque not presented for payment - 1,360.79
Pt. 4. Interest credited in the passbook - 140.70
Less:
Pt. 3. Cheque not cleared up to end of the year - 470.76
Pt. 4. Bank charges - 25
Balance as per passbook - 2,855.73
Hope this helps