# 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

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

 _ _ _ a/c To Bank a/c Dr

Assumed op bal - 15,000.

 op bal 15,000 _ _ _ cl bal 12,000 3,000 15,000 15,000 cl bal 3,000 Lesser

 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

 Bank a/c To _ _ _ a/c Dr

Assumed op bal - 7,000.

 op bal _ _ _ 7,000 6,000 cl bal 13,000 13,000 13,000 cl bal 13,000 Greater

 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

 Bank a/c To _ _ _ a/c Dr

Assumed op bal - 2,000.

 op bal 2,000 cl bal 2,000 2,000 2,000 cl bal 2,000 Lesser

 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

 Bank a/c To _ _ _ a/c Dr

Assumed op bal - 5,000.

 op bal 5,000 cl bal 5,000 5,000 5,000 cl bal 5,000 Lesser

 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

 _ _ _ a/c To Bank a/c Dr

Assumed op bal - 1,000.

 op bal 1,000 cl bal 1,000 1,000 1,000 cl bal 1,000 Greater

 _ _ _ 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

 _ _ _ a/c To Bank a/c Dr

Assumed op bal - 6,000.

 op bal 6,000 cl bal 6,000 6,000 6,000 cl bal 6,000 Greater

 _ _ _ 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

 _ _ _ a/c To Bank a/c Dr

Assumed op bal - 2,500.

 op bal 2,500 cl bal 2,500 2,500 2,500 cl bal 2,500 Greater

 _ _ _ 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

# 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