Bank Reconciliation Statement - 3 - Commerce Accountancy Class 11 Free

Sometimes the difference between the two balances may be accounted for by an error of the bank or an error in the cash book of the business. This cause difference between the bank balance shown by the cash book and the balance shown by the bank statement. Omission or wrong recording of transactions relating to cheques issued, cheques deposited and wrong totaling, etc. committed by the firm while recording entries in the cash book cause difference between cash book and passbook balance. Cash deposited but not credited by the bank, casting mistakes in bank column of cash book and interest or commission charged by the bank but not accounted for in cash book are the types of errors which are detected, whereas cash embezzlement by the cashier is not detected during bank reconciliation.

Answer: Option A - Add Rs. 250.

If the payment side is undercast by Rs. 250, it means payments recorded in the Cash Book are short by Rs. 250. Because payments are understated, the Cash Book shows a higher (i.e., less overdrawn) bank balance than the Pass Book.

When the BRS starts from the overdraft as per Pass Book, we must adjust that overdraft for errors in the Cash Book. Since the Cash Book is Rs. 250 higher than it should be, we add Rs. 250 to the Pass Book overdraft to arrive at the Cash Book overdraft.

Example: if Pass Book shows an overdraft of Rs. 1,000, adding Rs. 250 gives the Cash Book overdraft of Rs. 750. Therefore the correct treatment is to add Rs. 250.

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Option D is correct. Final balance as per pass book = Rs. 2,150.

Start with the cash book balance: Rs. 2,000.

Less: cheques deposited but not yet cleared by the bank: Rs. 100. Subtotal = Rs. 1,900.

Add: cheques issued but not yet presented to the bank: Rs. 150. Subtotal = Rs. 2,050.

Add: interest allowed by bank (not yet recorded in cash book): Rs. 50. Subtotal = Rs. 2,100.

Add: dividend collected by bank (not yet recorded in cash book): Rs. 50. Final balance as per pass book = Rs. 2,150.

The correct option is B.

Since the starting point is balance as per cash book, we are making changes in cash book. Since the cheques are not collected they are not included in pass book but are added in cash book. As a result balance of cash book is more than pass book by that amount. So it should be subtracted to match the pass book.