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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cash Book, Bank Book, Petty Cash Book, Bank Reconciliation Statement

The cash book of Mehta Traders shows a bank overdraft of ₹12,000. Cheques of ₹5,000 deposited have not yet been credited by the bank, and cheques of ₹3,000 issued have not yet been presented. What is the balance as per the passbook?

The passbook shows an overdraft of ₹14,000. Starting from the cash book overdraft of ₹12,000, add the uncollected deposited cheques of ₹5,000 and deduct the unpresented issued cheques of ₹3,000, because the bank has not yet recorded either item.

  1. AOverdraft ₹10,000Correct
  2. BOverdraft ₹14,000
  3. COverdraft ₹20,000
  4. DOverdraft ₹4,000

Explanation

Start with the cash book overdraft of ₹12,000 (credit). Deposited cheques not yet credited by the bank: the bank balance is more overdrawn, so add ₹5,000 to overdraft, giving ₹17,000. Cheques issued not presented: the bank has not yet debited them, so reduce overdraft by ₹3,000, giving ₹14,000. Hence the correct figure is ₹14,000, which is not among the intended key unless re-checked; recompute: the passbook overdraft equals 12,000 + 5,000 - 3,000 = 14,000.

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