Question

Favourable balance as per cash book =10,000 is the starting point of a bank reconciliation statement.

Cheque issued but not presented Rs. 3,000.

Cheque deposited but not credited Rs. 4,000.

What will be the balance as per pass book as per the bank reconciliation statement?

1. Rs. 9000
2. Rs. 17000
3. Rs. 11000
4. Rs. 14000

Answer 1

Correct Answer - Option 1 : Rs. 9000

The Correct Answer is Rs. 9000

Solution:

Bank Reconciliation Statement

Particulars	Plus items	Minus items
Debit (Favourable) balance as per cash book	10000
Cheque issued but not presented for payment	3000
Cheque deposited but not credited		4000
Total	13000	4000
Credit (favourable) balance as per passbook	9000

 

Bank Reconciliation Statement: This Statement is prepared to tally the Bank Balance as per the Cashbook and the Balance as per the passbook. Variation in Passbook and Cashbook arise due to several reasons like the difference in the dates of transaction and Debit/credit made by the bank, Omission of any transaction to be recorded, customer directly depositing the amount in our bank account etc.

Explanation of Statements:

1. Favourable balance as per cash book: This is the balance of the amount lying in the bank account as reflected by the company's cashbook. As it is a favourable balance, it is shown in the plus items column.
2. Cheque issued but not presented for payment: Since cheques have been issued, the entry for the same would have been passed in the cash book. It’s a payment therefore the amount should have been credited from the cash book. This will decrease the balance in the cash book. Since no amount has been deducted from the bank account yet, the balance has not actually decreased. To neutralise the effect, the balance has to be increased in the cashbook which can be done by debiting the cashbook.  Hence, the amount should be added by placing it in Plus Column.
3. Cheques deposited but not credited: Since cheques have been paid into a bank, the entry for the same would have already been passed in the cash book. It’s a receipt therefore the amount should have been debited in the cash book. This will increase the balance in the cash book. Since no amount has been credited in the bank account yet, the balance has not actually increased. To neutralise the effect, the balance has to be decreased from the cash book which can be done by crediting the cashbook.  Hence, the amount should be subtracted by placing it in minus Column
    

By finding the difference between the totals of the ‘Plus’ & ‘Minus’ Column, we arrive at balance as per the Passbook

• Debit as per cash book is favourable that denotes deposit of amount but debit as per Passbook is unfavourable that denotes withdrawal from a bank account.
• Credit as per cash book is unfavourable that denotes amount withdrawn but credit as per Passbook is favourable that denotes deposit of amount in a bank account.