Chapter 6 Solutions: Bank Reconciliation Statement
Answers to the Chapter 6 exercises. Each answer is as long as its marks call for: a sentence or two for 1 mark, and full working for the numerical problem.
Group A: Very Short Answer Questions (1 Mark Each)
1. What is a Bank Reconciliation Statement?
A Bank Reconciliation Statement (BRS) is a statement prepared by an account holder on a specific date to find and reconcile the causes of difference between the bank balance shown by the Cash Book and the balance shown by the Pass Book (Bank Statement).
2. State any two causes of disagreement between the Cash Book and Pass Book balances.
(1) Cheques issued but not yet presented for payment, and (2) cheques deposited into the bank but not yet collected or credited by the bank.
Group B: Short Answer Numerical Questions (5 Marks Each)
1. Practice Problem 1: On 30th Chaitra, the Cash Book of Everest Enterprises showed a bank balance of Rs. 50,000. On comparing with the Pass Book, the following differences were noted:
- (a) Cheques issued for Rs. 12,000 were not presented for payment.
- (b) Cheques sent for collection amounting to Rs. 15,000 were not credited by the bank up to 30th Chaitra.
- (c) Bank charges of Rs. 400 and electricity bill of Rs. 2,600 paid by the bank were not recorded in the Cash Book.
- (d) A debtor directly deposited Rs. 8,000 into the bank account.
- (e) Bank credited Rs. 1,000 as interest in the Pass Book.
We start from the Cash Book balance, so the Pass Book is the target book. For each item, ask whether it makes the Pass Book balance higher (add) or lower (deduct) than the Cash Book balance.
Everest Enterprises
Bank Reconciliation Statement
As on 30th Chaitra
| S.N. | Particulars | Details (Rs.) | Amount (Rs.) |
|---|---|---|---|
| Balance as per Cash Book (Dr.) | 50,000 | ||
| Add: | 1. Cheques issued but not presented for payment | 12,000 | |
| 2. Direct deposit by a debtor into the bank | 8,000 | ||
| 3. Interest credited by the bank in the Pass Book only | 1,000 | 21,000 | |
| Sub-total | 71,000 | ||
| Less: | 1. Cheques sent for collection but not yet credited | 15,000 | |
| 2. Bank charges debited in the Pass Book only | 400 | ||
| 3. Electricity bill paid by the bank, not in the Cash Book | 2,600 | (18,000) | |
| Balance as per Pass Book (Cr.) | 53,000 |
Answer: Balance as per Pass Book = Rs. 53,000.
Working notes:
- Added items (Pass Book higher): the unpresented cheques have already been deducted in the Cash Book but not yet in the Pass Book; the debtor’s direct deposit and the interest are in the Pass Book but not yet in the Cash Book.
12,000 + 8,000 + 1,000 = 21,000. - Deducted items (Pass Book lower): the uncollected cheques are already added in the Cash Book but not yet in the Pass Book; the bank charges and the electricity bill have been taken out of the Pass Book only.
15,000 + 400 + 2,600 = 18,000. - Check:
50,000 + 21,000 - 18,000 = 53,000.