BANK RECONCILIATION STATEMENT

Bank is an institution which deals in money. The main function of bank is accepting deposit and
lending advance (i.e loans).

There are Four types of account can be opened with bank

1. Current Account
2. Savings Account
3. Fixed Deposit Account
4. Recurring Deposit Account

 For depositing cash into bank the slip used is known as pay in slip
 For withdrawing cash from bank the slip used is known as withdrawal slip.

Bank Reconciliation Statement

 Bank reconciliation statement prepared by the account holder of the bank (i.e.
the business ) for reconciling the bank balance as per bank column of cash
book and bank balance as per pass book.
 Pass book : Bank pass book is a copy of customers account in the books of
Bank. It is also known as bank statement.
 It is a memorandum (rough) statement not a part of cash book, pass book,
journal, ledger etc.
 It can be prepared at any time usually it is prepared periodically i.e. once in a
week or once in a month etc.
 BRS is prepared with the balance of either cash book or pass book

Favourable Balance : favourable balance to account holder (i.e. the business ) –

Deposit Balance

o Debit balance as per cash book or

o Credit balance as per pass book

Unfavourable Balance : favourable balance to account holder (i.e. the business ) –

Overdraft Balance

o Credit balance as per cash book

o Debit balance as per pass book
Causes of difference between bank balance as per bank column of cash book and pass
book

 Errors in the side of the accountant of the business while preparing bank
column of the cash book
 Errors in the side of the bank while preparing pass book
 Timing difference

Debit balance in cash book (i.e. Deposit ) = Credit balance in pass book
Credit balance in cash book (i.e. Overdraft ) = Debit balance in pass book

Favourable Balance

Cash Book (bank column) Pass Book

Debit Balance Credit Balance

Debit side Credit side Credit side Debit side

amount more amount less amount more amount less

Question 1

On 31st March 2016 the cash book of A Ltd. Showed a debit balance (deposit) of ` 1,60,000

where as the pass book showed a different balance while checking the books following causes of
difference are find out.

1) Cheque issued to a creditor for `10000 showed only in the cash book

2) Cheque deposited for collection for ` 5000 showed only in the cash book

3) Bank charges showed only in the pass book `1000

4) Direct deposit by a customer showed only in the pass book `2000

5) Rent paid by the bank showed only in the pass book `5000

6) Dividend collected by the bank `2000 showed only in the pass book
 7) Wrong debit in the cash book `2000

8) Wrong credit in the cash book ` 1000

Prepare the bank reconciliation statement

Question 2

On 31st December 2015 the pass book of B ltd. showed a credit balance (deposit) of `2,50,000.

Where as cash book showed a different balance. The following are the causes of difference.

1) Wrong credit in the cash book `5000

2) Wrong credit in the pass book ` 10000

3) Wrong debit in the pass book ` 8000

4) Wrong debit in the cash book `6000

5) Cheque deposited for collection ` 10,000

6) Bank charges ` 3,000

7) Interest on deposit allowed by the bank `5,000

8) Direct deposit by the customer ` 8,000

9) Salaries paid by the bank `12000

10) Rent collected by the bank `3000

Prepare the bank reconciliation statement

Question 3

On 31st March 2016 the pass book of partnership firm showed a credit balance of ` 5,00,000.

Where as cash book showed a different balance. The following are the causes of difference.

1) Salaries paid wrongly showed on the bank column of cash book ` 40,000

2) Cash sales for `30,000 wrongly showed on the bank column of the cash book

3) Wrong credit in the pass book ` 5000

4) Credit side of the cash book under caste by `10,000

 5) Bank charges ` 8,000

6) Direct deposit by the customer ` 25,000

7) Rent paid by the bank ` 25,000

8) Commission collected by the bank `6,500

9) Cheque send for the collection dishonoured `20,000

10) Commission received wrongly showed on the bank column of the cash book ` 4000

11) Salaries paid by cheque wrongly showed on the debit side of the bank column `4000 but

not recorded in the pass book

Prepare the bank reconciliation statement

Unfavourable Balance

Cash Book (bank column) Pass Book

Credit Balance Debit Balance

Credit side Debit side Debit side Credit side

amount more amount less amount more amount less

Question 4

On 31st March 2016 the cash book of ABC ltd. showed a credit balance of ` 1,60,000. Where as

pass book showed a different balance. The following are the causes of difference.

1) Cheque issued but not cashed `10,000

2) Cheque deposited for collection for ` 2,000

3) Bank charges `1,000

4) Interest on overdraft `3,000

 5) Direct deposit by a customer `25,000

6) Rent paid by the bank ` 4,000

7) Dividend collected by the bank ` 3,000

8) Wrong credit in the cash book `10,000

Prepare the bank reconciliation statement

Question 5

On 31st December 2015 the pass book of A ltd showed a debit balance of ` 1,00,000. Where as

cash book showed a different balance. The following are the causes of difference.

1) Cheque deposited but not collected by the bank ` 20,000

2) Wrong credit in the pass book ` 8,000

3) Cheque issued but not cashed ` 5,000

4) Bank charges ` 4,000

5) Wrong debit in the cash book ` 6000

6) Bank charges ` 1000 recorded twice in the cash book

7) Under casting of credit side of cash book ` 4000

8) Rent paid by the bank ` 3000

9) Commission collected by the bank ` 6000

Question 6

On 31st March 2016 the cash book of Mr. A showed a credit balance of ` 95000. Where as pass

book showed a different balance. The following are the causes of difference

1) Cheque issued but not presented ` 15000

2) Cheque deposited but not cleared ` 8500

3) Wrong credit in the cash book ` 2400

4) Wrong debit in the pass book ` 5500

5) Bank charges ` 2000 recorded twice in the cash book

 6) Under casting of credit side of cash book ` 1000

7) Direct deposit by the customer ` 25000

8) Rent paid by the bank ` 12000

9) Cash sales ` 8000 wrongly showed on the bank column of cash book

Adjusted Cash Book/ Amended Cash Book

Generally in balance sheet bank balance as per adjusted cash book is appear and not as per the
pass book

Items to be adjusted in adjusted cash book

1) Correct item which appear only in the pass book (Example Bank charges, interest
charged or allowed by the bank, direct payment or collection by the bank)
2) Rectifying the wrong entries (error) recorded in the cash book

Items not to be adjusted in adjusted cash book

1) Unpresented Cheque
2) Uncollected cheque
3) Wrong entry in the pass book

Item which appear in the BRS taking the balance as per the adjusted cash book

1) Unpresented Cheque
2) Uncollected cheque
3) Wrong entry in the pass book

Question 7

On 31st March 2016 the cash book of Mr X Showed a deposit balance of ` 2,00,000 where as the

pass book showed a different balance while checking the books following causes of difference
are find out.

1) Cheque issued but not cashed `10000

 2) Cheque deposited but not credited ` 20000

3) Bank charges ` 5000

4) Wrong credit in the pass book `4000

5) Direct deposit by the customer ` 15000

6) Rent paid by the bank ` 12000

7) Cash sales ` 10000 wrongly showed on the bank column of cash book

8) Dividend collected by the bank ` 2000

9) Cheque deposited for collection dishonoured ` 10000

Prepare the adjusted cash book and calculate the amount of bank balance to be shown in trial
balance and balance sheet and also prepare the BRS on the basis of adjusted cash book balance.