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CSEET · Fundamentals of Accounting · Bank Reconciliation Statement

Mehta & Co.'s cash book shows an overdraft of ₹12,000. Before preparing the BRS, the following are found: bank charges of ₹300 and interest on overdraft of ₹700 were debited by the bank but not entered in the cash book; a customer's direct deposit of ₹4,000 into the bank was not entered in the cash book. What is the adjusted cash book balance?

The adjusted cash book shows an overdraft of ₹9,000. The direct deposit of ₹4,000 reduces the overdraft, while bank charges and interest totalling ₹1,000 increase it, so 12,000 minus 4,000 plus 1,000 gives 9,000.

  1. AOverdraft ₹9,000Correct
  2. BOverdraft ₹8,000
  3. COverdraft ₹16,000
  4. DOverdraft ₹17,000

Explanation

Start with an overdraft of 12,000 (credit balance). The direct deposit of 4,000 reduces it, while the charges of 300 + 700 = 1,000 increase it. Overdraft = 12,000 - 4,000 + 1,000 = ₹9,000. Ignoring the bank charges would give 8,000.

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