Can anyone tell me why should the amount be written in the minus item column when the cheque is issued, but not collected by the bank ??? [Please do not say anything if u don't know about it and please explain briefly if you know....]
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In preparing the Bank reconciliation statement, when we are starting with balance as per cash book,the amount be written in the minus item column when the cheque is issued, but not collected by the bank because of:
when we send cheque to bank for collection, we add the amount in the cash book.
at the time of reconciliation, when the cheque amount is not collected by bank, the amount is not added in the bank passbook.
thus the passbook and cashbook have the difference of amount equal to cheque amount.
to reconcile the balances, the previously added amount in cashbook is reduced by the amount by writing in the minus item column.
when we send cheque to bank for collection, we add the amount in the cash book.
at the time of reconciliation, when the cheque amount is not collected by bank, the amount is not added in the bank passbook.
thus the passbook and cashbook have the difference of amount equal to cheque amount.
to reconcile the balances, the previously added amount in cashbook is reduced by the amount by writing in the minus item column.
Manvi1105:
But we have sent the cheque to the bank so why will the amount be added ??
R u talking about the bank column of the cash book ??
yes
OK ...... Thanks a lot again...
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