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CSEET · Fundamentals of Accounting · Bank Reconciliation Statement

The pass book of Rao Stores shows an overdraft of ₹20,000 on 31 March. Cheques issued of ₹8,000 are yet to be presented, and cheques deposited of ₹5,000 are yet to be credited. What is the cash book balance?

The cash book shows an overdraft of ₹17,000. Treating the pass book overdraft as minus ₹20,000, add the unpresented cheques of ₹8,000 and deduct the uncredited cheques of ₹5,000, giving minus ₹17,000.

  1. AOverdraft of ₹23,000Correct
  2. BOverdraft of ₹17,000
  3. COverdraft of ₹33,000
  4. DFavourable balance of ₹3,000

Explanation

Treat an overdraft as a negative balance: -20,000. Unpresented cheques are added: -20,000 + 8,000 = -12,000. Uncredited cheques are deducted: -12,000 - 5,000 = -17,000. So the cash book shows an overdraft of ₹17,000. Check from the cash book: -17,000 - 8,000 + 5,000 = -20,000, which matches the pass book. Hence the correct answer is overdraft of ₹17,000, not ₹23,000, which mistakenly treats the adjustments with the opposite signs.

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