NCERT Solution: Bank Reconciliation Statement | Accountancy Class 11 - Commerce PDF Download

Short Question Answer

Q1: State the need for the preparation of bank reconciliation statement? 
Ans: The bank reconciliation statement is a document that assists a firm in reconciling the information of transactions performed with its bank account with its financial records. The following are the requirements for preparing the bank reconciliation statement: 

• It aids in determining the accuracy of entries and balances by examining both the pass book and the cashbook at the same time. Bank reconciliation statement is used to verify the accuracy of the balances and entries in the passbook and cash book. 
• It assists in correcting errors and making necessary corrections by comparing the cashbook to the passbook. 
• Certain transactions may slip through the cracks and be unnoticed by the organisation, resulting in unrecorded transactions. As a result, throughout this procedure, companies may be made aware of such transactions. 
• The development of the bank reconciliation statement serves the objective of preventing fraud in bank transactions. 
• The preparation of the bank reconciliation statement is a means for the organisation to learn about unreasonable delays in cheque collections and clearing.

Q2: What is a bank overdraft? 
Ans: The term "bank overdraft" refers to the credit extended by a bank to a business when its balance falls below the bank's minimum balance. As a result, a bank overdraft can be defined as a credit extended over the minimum bank balance for a certain time. Interest is usually charged by banks for such a provision. The benefit of a bank overdraft is that it allows the bank to clear a company check even if there is insufficient money in the account, which would otherwise result in a bounced check.

Q3: Briefly explain the statement ‘wrongly debited by the bank’ with the help of an example. 
Ans: The term "wrongly debited by the bank" refers to the act of a bank debiting a transaction's money in an incorrect manner. An example of this is when a user deposits a cheque for Rs. 10,000 with the bank, but the bank records it as Rs. 1000. 

Q4: State the causes of difference occurred due to time lag. 
Ans: The following are some of the causes of time lag differences: Because of the temporal lag, there are two sources of discrepancy. 

• Drawn but unpresented check: In most circumstances, a cheque has a 30-month validity period, and there is a potential that the person to whom the cheque is issued would postpone cashing the check. However, the entry for the same is made in the cashbook, while the record for the same is still missing from the passbook. 
• Cheque placed but not collected: There may be a time discrepancy between when the bank collects the cheque and when the entry for the same is made in the cash book, which records such occurrences instantly. As a result, this could be the cause of the time lag.

Q5: Briefly explain the term ‘favourable balance as per cash book’ 
Ans: Every subsequent receipt is debited, and every payment is debited as well. The positive cash book balance is referred to as the favourable cash book balance. Without adjusting the cash book balance, the balance of the cash book balance is the first item to start with when preparing the bank reconciliation statement. When the bank makes more payments than it receives in receipts, the balance of the passbook is said to be favourable. As a result, the cashbook's favourable balance is the polar opposite of the pass book's favourable balance. 

Q6: Enumerate the steps to ascertain the correct cash book balance. 
Ans: The following are the steps to determine the right balance in the cashbook: 

1. Determine the cashbook and passbook balances. 
2. Compare the Passbook's debits to the Cashbook's credits, and vice versa. 
3. Any errors or discrepancies must be corrected as soon as possible. 
4. Add up the cashbook's totals and calculate the balancing number to aid in the preparation of the Bank Reconciliation Statement.

Long Question Answer

Q1: What is a bank reconciliation statement? Why is it prepared? 
Ans: The bank reconciliation statement is a document that assists a firm in reconciling the information of transactions performed with its bank account with its financial records. The bank reconciliation statement must be kept in order to tally the data in the cashbook and passbook against the figures in the bank account and reconcile the variances between the two.

Q2: Explain the reasons where the balance shown by the bank passbook does not agree with the balance as shown by the bank column of the cash book. 
Ans: The reasons for the balance discrepancy between the bank passbook and the cashbook are as follows: 

1. Time lag: There may be a time lag between the duration of time in which the cashbook and the passbook record the entry connected to the encashment of the check - there are two reasons for variations that occur due to time lag.
   • A cheque's validity is limited to 30 months in most situations, and there's a danger that the individual to whom the cheque is issued will be late in cashing it. However, the entry for the same is made in the cashbook, while the record for the same is still missing from the passbook. 
   • Cheque placed but not collected: There may be a time discrepancy between when the bank collects the cheque and when the entry for the same is made in the cash book, which records such occurrences instantly. As a result, this could be the cause of the time lag. 
2. Customer direct deposit: In some situations, clients may make a direct deposit of funds without notifying the organisation in advance, and the organisation may be unaware of the transaction until they check their passbook. 
3. Bank Charges and Interest Credits: A bank may deduct charges and credit interest, with notice given only through the bank's statement. 
4. The business's income and expenses are dealt with directly by the bank: The bank offers the option of making direct payments and receiving funds for expenses such as phone and power bills, as well as incomes such as dividends and rents. 
5. Dishonoured cheques and bills: In some cases, the organisation may have made an entry for a deposit of a cheque that is later dishonoured, and the organisation does not make an entry for it. Furthermore, banks have the option of discounting invoices, which can result in the bills being dishonoured on the due date. The organisation may not be aware of such transactions until they compare the ledger to the passbook. 
6. Errors and omissions: In some situations, the ban may make omissions, commissions, or errors in transactions conducted via it in order to suit the organization's various needs. There's also the possibility.

Q3: Explain the process of preparing bank reconciliation statement with amended cash balance. 
Ans: Due to a variety of factors, there may be variations between the Cashbook and the Passbook. The steps for determining the accurate cash book balance are as follows: 

1. Determine the cashbook and passbook balances. 
2. Compare the Passbook's debits to the Cashbook's credits, and vice versa. 
3. Any errors or discrepancies must be corrected as soon as possible. 
4. Add up the cashbook's totals and calculate the balancing number to aid in the preparation of the Bank Reconciliation Statement.

The following is the format for a bank reconciliation with an adjusted cash balance:

Numerical Questions

Q1: From the following particulars, prepare a, bank reconciliation statement as at March 31, 2017. 
(i) Balance as per cash book Rs 3,200 
(ii) Cheque issued but not presented for payment Rs. 1,800 
(iii) Cheque deposited but not collected upto March 31, 2017 Rs. 2,000 
(iv) Bank charges debited by bank Rs. 150
Ans:
Bank Reconciliation Statement, as on March 31,2017

Q2: On March 31, 2017 the cash book showed a balance of Rs. 3,700 as cash at bank, but the bank passbook made up to same date showed that cheques for Rs. 700, Rs. 300 and Rs. 180 respectively had not presented for payment, Also, a cheque amounting to Rs. 1,200 deposited into the account had not been credited. Prepare a bank reconciliation statement.
Ans:
Bank Reconciliation Statement, as on March 31,2017

Q3: The cash book shows a bank balance of Rs. 7,800. On comparing the cash book with passbook the following discrepancies were noted:
(a) Cheque deposited in bank but not credited Rs. 3,000
(b) Cheque issued but not yet present for payment Rs. 1,500
(c) Insurance premium paid by the bank Rs. 2,000
(d) Bank interest credit by the bank Rs. 400
(e) Bank charges Rs. 100
(d) Directly deposited by a customer Rs. 4,000
Ans: Bank Reconciliation Statement

Q4: Bank balance of Rs. 40,000 showed by the cash book of Atul on December 31, 2016. It was found that three cheques of Rs. 2,000, Rs. 5,000 and Rs. 8,000 deposited during the month of December were not credited in the passbook till January 02, 2017. Two cheques of Rs. 7,000 and Rs. 8,000 issued on December 28, were not presented for payment till January 03, 2017. In addition to it bank had credited Atul for Rs. 325 as interest and had debited him with Rs. 50 as bank charges for which there were no corresponding entries in the cash book. Prepare a bank reconciliation statement as on December 31, 2016. (Ans: Balance as per passbook Rs. 40,275)
Ans: Bank Reconciliation Statement of Atul as on December 31, 2016

Q5: On comparing the cash book with passbook of Naman it is found that on March 31, 2014, bank balance of Rs. 40,960 showed by the cash book differs from the bank balance with regard to the following: 
(a) Bank charges Rs. 100 on March 31, 2017, are not entered in the cash book. 
(b) On March 21, 2017, a debtor paid Rs. 2,000 into the company’s bank in settlement of his account, but no entry was made in the cash book of the company in respect of this. 
(c) Cheques totaling Rs. 12,980 were issued by the company and duly recorded in the cash book before March 31, 2017, but had not been presented at the bank for payment until after that date. 
(d) A bill for Rs. 6,900 discounted with the bank is entered in the cash book without recording the discount charge of Rs. 800. 
(e) Rs. 3,520 is entered in the cash book as paid into bank on March 31st , 2017, but not credited by the bank until the following day. 
(f) No entry has been made in the cash book to record the dishon or on March 15, 2017 of a cheque for Rs. 650 received from Bhanu. Prepare a reconciliation statement as on March 31, 201.
Ans: Bank Reconciliation Statement of Naman as on March 31, 2017

Q6: Prepare bank reconciliation statement as on December 31, 2017. This day the passbook of Mr. Himanshu showed a balance of Rs. 7,000.
(a) Cheques of Rs. 1,000 directly deposited by a customer.
(b) The bank has credited Mr. Himanshu for Rs. 700 as interest.
(c) Cheques for Rs. 3000 were issued during the month of December but of these cheques for Rs. 1,000 were not presented during the month of December.
Ans: Bank Reconciliation Statement of Mr. Himanshu as on December 31, 2017

Q7: From the following particulars prepare a bank reconciliation statement showing the balance as per cash book on December 31, 2016.
(a) Two cheques of Rs. 2,000 and Rs. 5,000 were paid into bank in October, 2016 but were not credited by the bank in the month of December.
(b) A cheque of Rs. 800 which was received from a customer was entered in the bank column of the cash book in December 2016 but was omitted to be banked in December, 2016.
(c) Cheques for Rs. 10,000 were issued into bank in November 2016 but not credited by the bank on December 31, 2016.
(d) Interest on investment Rs. 1,000 collected by bank appeared in the passbook.
Balance as per Passbook was Rs. 50,000
Ans: 

Q8: Balance as per passbook of Mr. Kumar is 3,000.
(a) Cheque paid into bank but not yet cleared
Ram Kumar Rs. 1,000
Kishore Kumar Rs. 500
(b) Bank Charges Rs. 300
(c) Cheque issued but not presented
Hameed Rs. 2,000
Kapoor Rs. 500
(d) Interest entered in the passbook but not entered in the cash book Rs. 100. Prepare a bank reconciliation statement.
Ans: Bank Reconciliation Statement of Mr. Kumar

Q9: The passbook of Mr. Mohit current account showed a credit Balance of Rs. 20,000 on dated December 31, 2016. Prepare a Bank Reconciliation Statement with the following information.
(i) A cheque of Rs. 400 drawn on his saving account has been shown on current account.
(ii) He issued two cheques of Rs. 300 and Rs. 500 on of December 25, but only the Ist cheque was presented for payment.
(iii) One cheque issued by Mr. Mohit of Rs. 500 on December 25, but it was not presented for payment whereas it was recorded twice in the cash book.
Ans: Bank Reconciliation Statement of Mr. Mohit's Current Account, as on December 31,2016

Q10: On Ist January 2017, Rakesh had an overdraft of Rs. 8,000 as showed by his cash book. Cheques amounting to Rs. 2,000 had been paid in by him but were not collected by the bank by January 01, 2017. He issued cheques of Rs. 800 which were not presented to the bank for payment up to that day. There was a debit in his passbook of Rs. 60 for interest and Rs. 100 for bank charges. Prepare bank reconciliation statement for comparing both the balance.
Ans: Bank Reconciliation Statement of Rakesh as on January 01,2017

Q11: Prepare bank reconciliation statement.
(i) Overdraft shown as per cash book on December 31, 2017 Rs. 10,000.
(ii) Bank charges for the above period also debited in the passbook Rs. 100.
(iii) Interest on overdraft for six months ending December 31, 2017 Rs. 380 debited in the passbook.
(iv) Cheques issued but not incashed prior to December 31, 2017 amounted to Rs. 2,150.
(v) Interest on Investment collected by the bank and credited in the passbook Rs. 600.
(vi) Cheques paid into bank but not cleared before December, 31, 2017 were Rs. 1,100.
Ans: Bank Reconciliation Statement as on December 31,2017

Q12: Kumar find that the bank balance shown by his cash book on December 31, 2017 is Rs. 90,600 (Credit) but the passbook shows a difference due to the following reason:
A cheque (post dated) for Rs. 1,000 has been debited in the bank column of the cash book but not presented for payment. Also, a cheque for Rs. 8,000 drawn in favour of Manohar has not yet been presented for payment. Cheques totaling Rs. 1,500 deposited in the bank have not yet been collected and cheque for Rs. 5,000 has been dishonoured.
Ans: Bank Reconciliation Statement of Kumar as on December 31,2017

Q13: On December 31, 2017, the cash book of Mittal Bros. Showed an overdraft of Rs. 6,920. From the following particulars prepare a Bank Reconciliation Statement and ascertain the balance as per passbook.
(1) Debited by bank for Rs. 200 on account of Interest on overdraft and Rs. 50 on account of charges for collecting bills.
(2) Cheques drawn but not encashed before December, 31, 2017 for Rs. 4,000.
(3) The bank has collected interest and has credited Rs. 600 in passbook.
(4) A bill receivable for Rs. 700 previously discounted with the bank had been dishonoured and debited in the passbook.
(5) Cheques paid into bank but not collected and credited before December 31, 2017 amounted Rs. 6,000.
Ans: Bank Reconciliation Statement of Mittal Bros, as on December 31, 2017

Q14: Prepare bank reconciliation statement of Shri Bhandari as on March 31, 2017 
(i) The Payment of a cheque for Rs. 550 was recorded twice in the passbook. 
(ii) Withdrawal column of the passbook under cast by Rs. 200 
(iii) A Cheque of Rs. 200 has been debited in the bank column of the Cash Book but it was not sent to bank at all. 
(iv) A Cheque of Rs. 300 debited to Bank column of the cash book was not sent to the bank. 
(v) Rs. 500 in respect of dishonoured cheque were entered in the passbook but not in the cash book. Overdraft as per passbook is Rs. 20,000. 
Ans: Bank Reconciliation Statement of Shri Bhandari as on December 31, 2017

Q15: Overdraft shown by the passbook of Mr. Murli is Rs. 20,000. Prepare bank reconciliation statement on dated March 31, 2017. 
(i) Bank charges debited as per passbook Rs. 500. 
(ii) Cheques recorded in the cash book but not sent to the bank for collection Rs. 2,500. 
(iii) Received a payment directly from customer Rs. 4,600. 
(iv) Cheque issued but not presented for payment Rs. 6,980. 
(v) Interest credited by the bank Rs. 100. (vi) LIC paid by bank Rs. 2,500. 
(vii) Cheques deposited with the bank but not collected Rs. 3,500
Ans: Bank reconciliation statement as on 31.03.2017

Q16: Raghav & Co. have two bank accounts. Account No. I and Account No. II. From the following particulars relating to Account No. I, find out the balance on that account of March 31, 2017 according to the cash book of the firm.
(i) Cheques paid into bank prior to March 31, 2017, but not credited for Rs. 10,000.
(ii) Transfer of funds from account No. II to account no. I recorded by the bank on March 31, 2017 but entered in the cash book after that date for Rs. 8,000.
(iii) Cheques issued prior to March 31, 2017 but not presented until after that date for Rs. 7,429.
(iv) Bank charges debited by bank not entered in the cash book for Rs. 200.
(v) Interest Debited by the bank not entered in the cash book Rs. 580.
(vi) Overdraft as per Passbook Rs. 18,990.
Ans: Bank Reconciliation Statement of Account No. I as on 31.03.2017 
Bank  Reconciliation Statement of Mr. Raghav  and Co. Account No. I as on December 31, 2017

Q17: Prepare a bank reconciliation statement from the following particulars and show the balance as per cash book.
(i) Balance as per passbook on March 31, 2017 overdrawn Rs. 20,000.
(ii) Interest on bank overdraft not entered in the cash book Rs. 2,000.
(iii) Rs. 200 insurance premium paid by bank has not been entered in the cash book.
(iv) Cheques drawn in the last week of March 2017, but not cleared till date for Rs. 3,000 and Rs. 3,500.
(v) Cheques deposited into bank on February 2017, but yet to be credited on dated March 31, 2017 Rs. 6,000.
(vii) Wrongly debited by bank Rs. 500.
Ans: Bank Reconciliation Statement as on December 31, 2017

Q18: The passbook of Mr. Randhir showed an overdraft of Rs. 40,950 on March 31, 2017. Prepare bank reconciliation statement on March 31, 2017.
(i) Out of cheques amounting to Rs. 8,000 drawn by Mr. Randhir on March 27 a cheque for Rs. 3,000 was encashed on April 2017.
(ii) Credited by bank with Rs. 3,800 for interest collected by them, but the amount is not entered in the cash book.
(iii) Rs. 10,900 paid in by Mr. Randhir in cash and by cheques on March, 31 cheques amounting to Rs. 3,800 were collected on April, 07.
(iv) A Cheque of Rs. 780 credited in the passbook on March 28 being dishonoured is debited again in the passbook on April 01, 2017. There was no entry in the cash book about the dishonour of the cheque until April 15.
Ans: Bank Reconciliation Statement of Mr. Randhir as on March 31, 2017