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CSEET · Fundamentals of Accounting · Bank Reconciliation Statement

The cash book of Iyer & Co. shows a bank overdraft (credit balance) of ₹20,000. Cheques of ₹7,000 deposited have not yet been collected by the bank, and cheques of ₹4,000 issued have not yet been presented. The bank has also charged ₹500 as service charges not yet entered in the cash book. What is the overdraft as per the pass book?

The overdraft as per the pass book is ₹23,500. Start with ₹20,000, add ₹500 bank charges, add ₹7,000 for deposits not yet collected, and deduct ₹4,000 for cheques issued but not yet presented.

  1. A₹17,500
  2. B₹23,500Correct
  3. C₹16,500
  4. D₹24,500

Explanation

Work in terms of overdraft. Cash book overdraft 20,000. Service charges increase the overdraft: +500 = 20,500. Cheques deposited but not collected: the bank has not yet reduced the overdraft, so overdraft per pass book is higher: +7,000 = 27,500. Cheques issued but not presented: bank has not yet increased the overdraft, so overdraft per pass book is lower: -4,000 = 23,500. Check as debit balances: -20,000 -500 = -20,500 in adjusted cash book; pass book = -20,500 -7,000 +4,000 = -23,500.

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