The above technique will be clear with it help of the illustrations

given in the following pages.

9.3.1 Where causes of differences are given

Illustration: From the following particulars prepare a Bank

Reconciliation Statement as on 31st December, 2006.
i) Balance as per Cash Book Rs.5,800.
ii) Cheques issued but not presented for payment Rs. 2,000.
iii) Cheques sent for collection but not collected upto 31st
December, 2005 Rs. 1,500.
iv) The Bank had wrongly debited the account of the firm by Rs.
200 which was rectified by them after 31st December.

Balance as per Pass Book is Rs. 6,100.

Solution

There is a difference of Rs.300 between the balance as shown by

the Cash Book and the balance as shown by the Pass Book. A
reconciliation statement can be prepared to reconcile on the following
basis the balances shown by the two books.
i) The balance as shown by the Cash Book will be taken as the
starting point.
ii) The cheques issued but not presented for payment have not
been recorded in the Pass Book. The balance as per Pass
Book has to be found out. The Bank has not yet passed the
entry for the payment of these cheques since they have not
been presented for payment. The balance, therefore, in the
Pass Book should be more. The amount of Rs.2,000 should,
therefore, be added to the balance as shown by the Cash
Book.

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 iii) Cheques sent for collection but not yet collected must have
been entered in the Cash Book, but must not have been
credited by the Bank to the firm’s account since they have
not yet been collected. The balance in the Pass Book should,
therefore, be less as compared to the Cash Book. The
amount of Rs. 2,000 should, therefore, be deducted out of
the balance as shown by the Cash Book.
iv) The Bank has wrongly debited the firm’s account. This must
have resulted in reducing balance as per the Bank Pass
Book. The amount should, therefore, be deducted out of the
balance shown as per the Cash Book.

The Bank Reconciliation Statement will now appear as follows:

BANK RECONCILIATION STATEMENT

Particulars +(Rs.) - (Rs.)

i) Balance as per Cash Book 5,800

ii) Add Cheques issued but not presented for payment 2,000

iii) Less Cheques sent for collection but not yet collected 1,500

iv) Less Amount wrongly debited by the Bank. 200

7,800 1,700

Balance as per Bank Pass Book 6,100

OR

Bank Reconciliation Statement can be prepared as per the balance

shown by Pass Book as the starting point.

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 BANK RECONCILIATION STATEMENT
Particulars +(Rs.) - (Rs.)
i) Balance as per Pass Book 6,100
ii) Less Cheques issued but not presented for payment 2,000
iii) Add Cheques sent for collection but not yet collected 1,500
iv) Add Amount wrongly debited by the Bank. 200
7,800 2,000
Balance as per Bank Cash Book 5,800

9.3.2 Where cash book balance/pass book balance has to be

adjusted

Illustration II: On 31st December, 1997, the Cash Book of a firm

showed a bank balance of Rs.3,000. From the following information,
prepare a Bank Reconciliation Statement, showing the balance as per
Pass Book.
i) Cheques have been issued for Rs.2,500 out of which cheques
worth Rs.2,000 only were presented for payment.
ii) Cheques worth Rs.700 were paid on 28th December but had
not been credited by the Bank. One cheque for Rs.250 was
entered in the Cash Book on 30th December but was banked
on 3rd January, 1998.
iii) A cheque from Mohan for Rs.200 was paid in on 26th
December but was dishonoured and the advise was received
on 2nd January, 1998.
iv) Pass Book showed bank charges Rs.10 debited by the bank.
It also showed Rs. 400 collected by the bank as interest.
v) One of the debtors deposited a sum of Rs.250 in the account
of the firm on 20th December. Intimation in this respect was
received from the bank on 2nd January, 1998.

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 Solution

BANK RECONCILIATION STATEMENT

AS ON 31ST DECEMBER, 2006
Particulars +(Rs.) - (Rs.)
i) Dr. Balance as per Cash Book 3000
ii) Add Cheques issued but not yet presented for 500
payment (Rs.2,500-Rs.2,000).
iii) Add Interest collected by the bank not recorded in 400
the Cash Book
iv) Add Amount deposited by the Customer direct 250
into the bank not recorded in the Cash Book.
v) Less Cheques paid into bank but not yet credited 700
by the bank
vi) Less Cheque entered in the Cash Book but was 250
omitted to be banked upto 31st December.
vii) Less Cheque from Mohan paid into bank 200
dishonoured but not yet recorded in the Cash
Book.
viii) Less Bank charges as per Pass Book 10
4,150 1,160
Cr. Balance as per Pass Book 2,990

9.3.3 Where abstracts from the cash book and the pass book are
given

Illustration III: From the following entries in the Bank column of

Cash Book and the corresponding Pass Book, prepare Bank
Reconciliation Statement as on 30th June, 2006.

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 CASH BOOK (BANK COLUMN ONLY)
Dr. Cr.
Date Particulars Rs. Date Particualrs Rs.
2006 2006
June 1 To Balance b/d 4,600 June 3 By Cash (Self 800
June 4 To Maninder 3,200 Cheque)
June 8 To Devinder 500 June 5 By Drawings 1,000
June 18 To Narinder 3,700 June 10 By Kailsash 2,200
June 21 To Dayal 1,400 June 15 By Shyam Lal 1,300
June 28 To Amrinder 100 June 28 By Salaries 1,800
June 30 To Kashmiri Lal 450 June 29 By Mohanto 1,900
June 30 By Des Raj 1,700
June 30 By Commission 20
June 30 By Balance b/d 3,230
13,950 13,950

BANK PASS BOOK

Date Particulars Dr. Cr. Balance
withdrawals Deposits Dr./Cr. Amount
2006
June 1 By Bal. b\d - - Cr. 4,600
June 3 To Cash (Self) 800 - Cr. 3,800
June 5 To Self (Drawings) 1,000 - Cr. 2,800
June 6 By Maninder - 3,200 Cr. 6,000
June 10 By Devinder - 500 Cr. 6,500
June 14 To Kailash 2,200 - Cr. 4,300
June 16 By Narinder - 3,700 Cr. 8,000
June 20 To Shyam Lal 1,300 - Cr. 6,700
June 25 By Dividend on - 700 Cr. 7,400
shares
June 28 To Salaries 1,800 - Cr. 5,600
June 30 To Collection charges 4 - Cr. 5,596
June 30 To Commission 20 - Cr. 5,576
June 30 To Electricity Board 80 - Cr. 5,496

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 Solution

BANK RECONCILIATION STATEMENT

AS ON 30TH JUNE, 2006
Particulars +(Rs.) - (Rs.)
i) Dr. Balance as per Cash Book 3,230
ii) Add Cheques issued but not yet presented(Mohanto 4,300
Rs.1,900 +Des Raj Rs.1,700 +Dividend Rs.700).
iii) Less Cheques paid but not yet credited by Bank 1,950
(Dayal Rs.1,400 + Amrinder Rs.100 + Kashmiri Lal
Rs.450)
iv) Less Collection charges charged by Bank 4
v) Less Payment to Electricity Board 80
7,530 2,034
Cr. Balance as per Pass Book. 5,496

9.3.4 When overdraft balance is given

Illustration IV: From the following particulars, prepare the Bank

Reconciliation Statement:
Rs.
(i) Bank overdraft as per the Cash Book. 16,200
(ii) A cheque deposited as per Bank Statement but not 700
recorded in the Cash Book.
(iii) Debit side of the Bank Column cast short. 100
(iv) A cheque for Rs.5,000 deposited but collection as per the 4,996
Bank Statement only.
(v) A party’s cheque returned dishonoured as per the Bank 530
Statement only.
(vi) Bills collected directly by the bank. 3,500
(vii) Bank charges recorded twice in the Cash Book. 25
(viii) A bill for Rs.8,000 discounted for Rs.7,960 returned 15
dishonoured by the bank, noting charges being
(ix) Cheques deposited but not yet collected by the bank. 2,320
(x) Cheques issued but not yet presented for encashment. 1,250

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 Solution

BANK RECONCILIATION STATEMENT

Particulars + Rs. -Rs.
(i) Bank Overdraft per the Cash Book 16,200
(ii) Add Cheque for Rs.5,000 deposited but collection 4
as per Bank statement Rs.4,996.
(iii) Add Cheque returned dishonoured as per the 530
Bank statement only.
(iv) Bill for Rs.8,000 discounted for Rs.7,960 8,015
returned dishonoured by the bank noting charges
being Rs.15.
(v) Add Cheque deposited but not collected. 2,320
(vi) Less Cheque deposited but not recorded in the 700
Cash Book.
(vii) Less Debit side of the bank column cast short. 100
(viii) Less Bills collected directly by the bank. 3,500
(ix) Less Bank charges recorded twice in the Cash 25
Book.
(x) Less Cheques issued but not yet presented for 1,250
encashment.
27,069 5,575
Bank overdraft as per the Pass Book (Dr.) 21,494

9.4 SUMMARY

Bank reconciliation statement is a statement which is prepared for

reconciling the balances of cash book and pass book. It is a statement
which contains a complete and satisfactory explanation of the differences
in the balances as per the cash book and the pass-book. The balances
shown by the cash book and pass book may not agree due to (i) cheques
issued but not presented for payment; (ii) cheques paid into bank but not

266
yet collected by the bank; (iii) bank charges; (iv) interest credited by bank
but not entered in cash book; (v) interest or dividend on investments etc.
collected by the bank; (vi) amount directly deposited into the bank by
customers; (vii) payment made by the bank on behalf of client; (viii) bills
collected by the bank on behalf of customers; (ix) dishonour of cheques;
(x) rebate on retiring of bills; (xi) cheques paid into bank but omitted to
the entered in cash book; (xii) wrong debit or credit given by the banks.
Bank reconciliation statement can be prepared with the (i) debit balance
of cash book; (ii) credit balance of cash book; (iii) debit balance of pass
book; (iv) credit balance of pass book.

9.5 KEYWORDS

Pass Book: Copy of firm’s account with bank.

Overdraft: Withdrawls in excess of bank deposits.

Favourable Balance: Debit balance of cash book.

Reconciliation: Agreement of cash bank and pass book.

9.6 SELF ASSESSMENT QUESTIONS

1. What is a Bank Reconciliation Statement? How is it

prepared? Submit a proforma of a Bank Reconciliation
Statement with Imaginary figures.
2. “Balance as shown by the pass book should tally with the
balance as shown by the cash book of the business”, Do you
agree? If not, explain the reasons with suitable examples of
differences betwen the two.
3. Prepare a Bank Reconciliation Statement as on 30th
September, 1988 from the following extracts from the Bank
pass Book and the Cash Book (Bank column only).

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 BANK PASS BOOK
Date Particulars Withdrawls Deposits Dr./Cr. Balance
Rs. Rs. Rs.
2006 By Balance b/d Cr. 9,810
Sept. 1 To Mahesh Chander 740 Cr. 9,070
Sept. 3 To Balwant Garg 580 Cr. 8,490
Sept. 7 By Salaria & Co. 200 Cr. 8,690
Sept. 8 By Cash 1,000 Cr. 9,690
Sept. 12 By Santosh Arora 500 Cr. 10,190
Sept. 18 To Rameshwar Vohra 440 Cr. 9,750
Sept. 21 To Insurance Premium 400 Cr. 9,350
Sept. 26 To Bank Charges 20 Cr. 9,330
Sept. 30 To Cash 3,000 Cr. 6,330
Sept. 30 By Interest 70 Cr. 6,400
Sept. 30 By Interest on 600 Cr. 7,000
Investments

CASH BOOK
(BANK COLUMN ONLY)
Date Particulars Amount Date Particulars Amount
Rs. Rs. Rs.
2006
Sept. 1 To Balance b/d 9,810 Sept.2 By Mahesh Chander 740
Sept. 6 To S.P. Roy 300 Sept. 6 By Balwant Garg 580
Sept.10 To Salaria & Co. 200 Sept.11 By Jagan Nath 470
Sept.12 To Cash 1,000 Sept.15 By Ashok Sood 350
Sept.14 To Santosh 500 Sept.18 By Rameshwar 440
Arora Vohra
Sept.19 To Baljeet 460 Sept.24 By Ashok Kumar 630
Grewal
Sept.26 To Bharat Singh 780 Sept.30 By Cash 3,000
Sept.30 By Balance c/d 6,840
13,050 13,050
Oct. 1 To Balance b/d 6,840

4. From the following particulars prepare a Bank Reconciliation

Statement as at 31st December, 2006 of M/s. A.B. & Co. who

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 had cash at bank as per cash book Rs.10,500.40 and as per
pass book Rs.12,350.60:
(a) The following cheques were deposited on 30th and 31st
December but were not collected by 31st December,
2006.
(i) Rs.300.25 (ii) Rs. 500 (iii) Rs.200.15
(b) The following cheques were issued but not cashed by
31st December, 2006.
(i) Rs.600.25, (ii) Rs.200 (iii) Rs.489.25, (iv) Rs.50
(c) The bank collected a bill of Rs.1,500 on the 31st
December, 2006 but the intimation was received by the
firm on 1st January, 2007.
(d) The bank allowed interest Rs.20.30 and a commission
was charged Rs.9.20 on 31st December, 2006.
5. The Cash Book of a trader showed an overdraft balance of
Rs.32,750 on 31st December, 2005. On scrutiny of the Cash
Book and Pass Book it was discovered that:
a) On 22nd December, sundry cheques totalling Rs.6,500
were sent to Bank for collection out of which a cheque
for Rs.1,500 was wrongly recorded on the credit side of
the Cash Book and cheques amounting to Rs.3,300
could not be collected by the Bank till 6th January
next.
b) A cheque for Rs.4,00 was issued to a supplier on 28th
December. This cheuqe was not presented to Bank till
10th January.
c) Bank had debited Rs. 2,000 towards interest on
overdraft and Rs. 600 for Bank charges, but the bank
advice was sent on 15th January.
d) Credit side of the bank Column of the Cash Book was
undercast by Rs.100.

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