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CSEET · Fundamentals of Accounting · Bank Reconciliation Statement

Verma Ltd.'s cash book shows a bank balance of ₹25,000 debit. The following are discovered: (i) a cheque of ₹6,000 paid to a supplier was entered on the receipt side in the cash book; (ii) a standing instruction for an insurance premium of ₹2,500 was not entered; (iii) dividend of ₹1,500 collected directly by the bank was not entered. What is the adjusted cash book balance?

The adjusted cash book balance is ₹12,000 debit. The supplier cheque was wrongly entered as a receipt, so the balance is overstated by twice ₹6,000. After deducting ₹12,000 and ₹2,500 insurance and adding ₹1,500 dividend, the balance is ₹12,000.

  1. A₹12,000 debitCorrect
  2. B₹24,000 debit
  3. C₹13,000 debit
  4. D₹18,000 debit

Explanation

Item (i) was posted as a receipt instead of a payment, so the balance is overstated by twice 6,000 = 12,000. Starting at 25,000: minus 12,000 gives 13,000, minus 2,500 gives 10,500, plus 1,500 gives 12,000. Subtracting only 6,000 would give 24,000 after the other items, a single-effect error.

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