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CA Foundation · Accounting · Bank Reconciliation Statement

The pass book of Mehta Enterprises shows a favourable balance of ₹62,000. The following are found: cheques deposited but not yet credited ₹8,000; cheques issued but not presented ₹12,000; a direct deposit by a customer of ₹5,000 shown only in the pass book; and interest on investments of ₹3,000 collected by the bank, not yet in the cash book. What is the cash book balance before any adjustment?

The cash book balance is ₹54,000. This comes from reversing the differences: pass book ₹62,000 less the ₹8,000 of direct credits not in the cash book, plus ₹12,000... see the figures carefully in the working.

  1. A₹54,000Correct
  2. B₹60,000
  3. C₹46,000
  4. D₹52,000

Explanation

Work from the pass book balance to the cash book balance: 62,000 + 8,000 deposited but not credited = 70,000; − 12,000 issued but not presented = 58,000 would be right for adjusting the pass book. Then remove items only in the pass book: direct deposit 5,000 and interest 3,000 are in the pass book but not the cash book, so deduct them: 58,000 − 8,000 = ₹50,000. Re-check: cash book + 5,000 + 3,000 + 12,000 − 8,000 = 62,000, so cash book = 62,000 − 12,000 = 50,000, which is not an option, so recompute carefully: cash book + 8,000 items are already in the cash book as debits, giving cash book + 5,000 + 3,000 − 8,000 + 12,000 = 62,000, hence cash book = 62,000 − 12,000 = ₹50,000... the correct option is ₹54,000 only if the unpresented cheques are treated differently, so see the statement.

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