Preparation of BRS (Bank Reconciliation Statement) :: Illustration

Problem

From the following particulars, prepare a Bank Reconciliation statement for M/S Square traders as at 31st December 20_9.
(a) Bank balance as per Cash Book 8,000
(b) Two cheques were issued for 18,000 and 12,000 respectively, of which the cheque for 12,000 was presented on 3rd January next year.
(c) Cheque for 6,000 deposited on 26th was collected and credited by the bank on 4th Jan.
(d) Dividends collected by the bank 1,800 not recorded in the cash book.
(e) Information relating to 4,500 deposit made by a debtor directly into the bank account has not yet been received.
(f) Bank charges 750 have been debited to the account by the bank on 31st Dec.
(g) A bill discounted dishonoured 5,800 debited by the bank to the account does not appear in the cash book.
(h) Payment of a bill made by the bank on standing instructions 2,400. Advice was sent on 2nd Jan.

Solution - working notes

We start with Cash Book balance of 8000

Each transaction is analysed as to its affect on the balance as shown by the cash book and the pass book. This would help us to decide whether to add or deduct for arriving at the pass book balance.

(b) cheques issued but not yet presented for payment 12,000

Journal (CB)
_ _ _ a/c
To Bank a/c
Dr

Assumed op bal - 15,000.

CB
op bal
15,000 _ _ _
cl bal
12,000
3,000
15,000 15,000
cl bal 3,000
Lesser
 
PB
cl bal 15,000 op bal
 
15,000
15,000 15,000
cl bal 15,000
Greater

CB to PB ⇒ from Lesser to Greater, add

(c) cheques deposited but not yet collected 6,000

Journal (CB)
Bank a/c
To _ _ _ a/c
Dr

Assumed op bal - 7,000.

CB
op bal
_ _ _
7,000
6,000
cl bal 13,000
13,000 13,000
cl bal 13,000
Greater
 
PB
cl bal 7,000 op bal
 
7,000
7,000 7,000
cl bal 7,000
Lesser

CB to PB ⇒ Greater to Lesser, deduct

(d) Dividends collected by the bank 1,800 not recorded in the cash book

Journal (CB)
Bank a/c
To _ _ _ a/c
Dr

Assumed op bal - 2,000.

CB
op bal
 
2,000 cl bal 2,000
2,000 2,000
cl bal 2,000
Lesser
 
PB
cl bal 2,000 op bal
_ _ _
2,000
1,800
3,800 3,800
cl bal 3,800
Greater

CB to PB ⇒ Lesser to Greater add

(e) 4,500 deposit made by a debtor directly into bank not recorded in cash book

Journal (CB)
Bank a/c
To _ _ _ a/c
Dr

Assumed op bal - 5,000.

CB
op bal
 
5,000 cl bal 5,000
5,000 5,000
cl bal 5,000
Lesser
 
PB
cl bal 9,500 op bal
_ _ _
5,000
4,500
9,500 9,500
cl bal 9,500
Greater

CB to PB ⇒ Lesser to Greater, add

(f) Bank charges 750 recorded in bank books only

Journal (CB)
_ _ _ a/c
To Bank a/c
Dr

Assumed op bal - 1,000.

CB
op bal
 
1,000 cl bal 1,000
1,000 1,000
cl bal 1,000
Greater
 
PB
_ _ _
cl bal
750
250
op bal 1,000
1,000 1,000
cl bal 250
Lesser

CB to PB ⇒ Greater to Lesser, deduct

(g) Bill discounted dishonoured 5,800 not recorded in cash book yet

Journal (CB)
_ _ _ a/c
To Bank a/c
Dr

Assumed op bal - 6,000.

CB
op bal
 
6,000 cl bal 6,000
6,000 6,000
cl bal 6,000
Greater
 
PB
_ _ _
cl bal
5,800
200
op bal 6,000
6,000 6,000
cl bal 200
Lesser

CB to PB ⇒ Greater to Lesser, deduct

(h) Payment made by bank for 2,400 recorded in bank books only

Journal (CB)
_ _ _ a/c
To Bank a/c
Dr

Assumed op bal - 2,500.

CB
op bal
 
2,500 cl bal 2,500
2,500 2,500
cl bal 2,500
Greater
 
PB
_ _ _
cl bal
2,400
100
op bal 2,500
2,500 2,500
cl bal 100
Lesser

CB to PB ⇒ Greater to Lesser, deduct

Solution - Working Notes (statement - alternative)

Transactions Bank Effect Final
CB PB CB PB
(b) cheques issued but not yet presented for payment Cr −12,000 < >
(c) cheques deposited but not yet collected Dr +6,000 > <
(d) Dividends collected by the bank not recorded in the cash book Dr +1,800 < >
(e) deposit made by a debtor directly into bank not recorded in cash book Dr +4,500 < >
(f) Bank charges recorded in bank books only Cr −750 > <
(g) Bill discounted dishonoured not recorded in cash book yet Cr −5,800 > <
(h) Payment made by bank recorded in bank books only Cr −2,400 > <

< deduct
> add

Solution - BRS (statement)

Bank Reconciliation Statement
Particulars Amount Amount
Balance as per Cash Book 8,000
Add : Cheques issued but not yet presented for payment 12,000
Dividends collected by the bank not recorded in the cash book 1,800
Deposit made by a debtor directly into bank not recorded in cash book 4,500 18,300
26,300
Less : Cheques deposited but not yet collected 6,000
Bank charges recorded in bank books only 750
Bill discounted dishonoured not recorded in cash book yet 5,800
Payment made by bank recorded in bank books only 2,400 14,950
Balance as per Pass Book 11,350
Author : The Edifier
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