Compute the correct cash book balance

Banking & FinanceFinance ManagementGrowth & Empowerment

Problem

XYZ Enterprise Company has a pass book balance of Rs. 58700/- and cash book balance of Rs.68500/- as on 31st march 2014. Compute the correct cash book balance for the transactions and prepare a reconciliation statement.

The transactions are as follows −

  • Cheque issued (personal account) of enterprise debited to firm's account of Rs.3500/-
  • Cheque deposited and yet to collect by bank of Rs.1900/-
  • Cheque deposited and collected from bank and not recorded in cash books of Rs.3800/-
  • Customer cheque dishonored Rs.1800/-
  • Bank direct payments of Rs.4200/-
  • Cheque issued and yet to present for payments of Rs.12000/-
  • Customer deposited Rs.2000/- into bank
  • Discounted bill is dishonored when presented on maturity Rs.7800/-
  • Bank charges Rs.500/-
  • Dividends and interest (collection) by bank Rs.1900/-
  • Corrected bank balance (cash book) Rs. 61900/-

Solution

Computation of corrected bank balance as per cash book is as follows −


Items (to be added)Items (to be subtracted)
Direct deposits
Direct collections
Cheques collected but yet to record in cash book
Balance (cash book)
2000
1900
3800
68500
Cheque dishonored
Discounted bill dishonored
Bank charges
Direct payments
Corrected bank balance (cash book)

1800
7800
500
4200
61900

7620076200

The bank reconciliation statement is prepared as follows −

Bank reconciliation statement
As on 31st march, 2014

Items (to be added)Items (to be subtracted)
Deposited cheque yet to collect
Wrongly debited cheque
Balance (cash book)
Direct deposits
1900
3500
68500

Issued cheque yet to present
Corrected bank balance (cash book)

12000
61900

7390073900
raja
Published on 13-Jul-2021 12:19:27
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