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CMA Intermediate · Financial Accounting · Accounting Fundamentals

Anand Traders' cash book shows a bank overdraft of Rs 18,000. Cheques of Rs 7,000 issued have not been presented, and cheques of Rs 12,000 deposited have not yet been collected by the bank. What is the balance as per the pass book?

The pass book shows an overdraft of Rs 23,000. Starting from the cash book overdraft of Rs 18,000, unpresented issued cheques of Rs 7,000 reduce the overdraft, while uncollected deposited cheques of Rs 12,000 increase it, giving 18,000 - 7,000 + 12,000 = Rs 23,000.

  1. AOverdraft of Rs 13,000Correct
  2. BOverdraft of Rs 23,000
  3. COverdraft of Rs 11,000
  4. DBalance of Rs 13,000 in favour

Explanation

Start with the cash book overdraft of Rs (18,000) as a negative. Unpresented cheques issued (Rs 7,000) will reduce the bank balance later, so add back to the pass book: -18,000 + 7,000 = -11,000? Check carefully: the bank has not yet debited them, so the pass book is more favourable by 7,000 than the cash book: -18,000 + 7,000 = -11,000. Uncollected deposits (Rs 12,000) are not yet credited by the bank, so the pass book is less favourable by 12,000: -11,000 - 12,000 = -23,000. Pass book overdraft is Rs 23,000.

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