Question

Prepare a bank reconciliation statement from the following particulars
and show the balance as per cash book.
(i) Balance as per passbook on March 31, 2017 overdrawn
Rs. 20,000.
(ii) Interest on bank overdraft not entered in the cash book Rs. 2,000.
(iii) Rs. 200 insurance premium paid by bank has not been entered in
the cash book.
(iv) Cheques drawn in the last week of March 2017, but not cleared till
date for Rs. 3,000 and Rs. 3,500.
(v) Cheques deposited into bank on February 2017, but yet to be credited
on dated March 31, 2017 Rs. 6,000.
(vii) Wrongly debited by bank Rs. 500.

Answer 1

Explanation is also given besides solution to the question.

Explanation:

Particulars                                                                                Amount

(i) Balance as per passbook                                                     (20000)

(ii) Add: Interest on overdraft                                                      2000

(iii) Add: Insurance paid                                                                 200

(iv) Less: Cheques drawn (3000+3500)                                     (6500)

(v) Add: cheque deposited                                                           6000

(vi) Add: Wrongly debited by bank                                                500

Balance as per cash book                                                          (17800)

.

Explanations :

• Interest on bank overdraft reduces the bank balance so we add the interest on overdraft.
• Insurance premium also reduces the bank balance so to match it with cash book we need to add it back.
• Cheque drawn reduces the cash book balance so we need to reduce it .
• Cheque deposited add to the amount of cash book so we need to add it.
• Wrongly debited reduces the amount of bank balance so we need to add it .