Compute the correct cash book balance

Banking & Finance Finance Management Growth & 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
	76200	76200

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
	73900	73900

Nagasravan Tamma

Updated on: 13-Jul-2021

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