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CA Foundation · Accounting · Bank Reconciliation Statement

The pass book of Rao & Sons shows an overdraft of ₹15,000. Cheques issued of ₹8,000 have not been presented for payment, and cheques deposited of ₹5,000 have not been collected by the bank. What is the balance as per the cash book?

The cash book shows an overdraft of ₹18,000. Starting from the pass book overdraft of ₹15,000, the unpresented cheques of ₹8,000 increase the overdraft, while the uncollected deposits of ₹5,000 reduce it. So 15,000 + 8,000 − 5,000 gives ₹18,000.

  1. AOverdraft of ₹18,000Correct
  2. BOverdraft of ₹12,000
  3. COverdraft of ₹28,000
  4. DFavourable balance of ₹18,000

Explanation

Treat the overdraft as a negative balance: −15,000. Cheques issued but not presented will increase the overdraft once paid, but the cash book already shows them, so the cash book overdraft is larger: −15,000 − 8,000 = −23,000. The uncollected deposits have already been added in the cash book, so add 5,000: −23,000 + 5,000 = −18,000. The cash book shows an overdraft of ₹18,000.

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