Chapter bank-reconciliation-statement: Bank Reconciliation Statement Case Study Questions | accountancy Class 11 CBSE

Chapter bank-reconciliation-statement: Bank Reconciliation Statement Case Study Questions | accountancy Class 11 CBSE | ByteNotes.in

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Case Set

Case Set 1

Case Analysis

Passage

Sunita runs a small textile shop in Delhi. On March 31, 2017, her cash book showed a bank balance of ₹50,000. However, when she received her bank passbook, the balance shown was different. On checking, she found that she had issued a cheque of ₹6,000 to her supplier Ramesh on March 28, but Ramesh had not yet presented it to the bank for payment. Additionally, the bank had collected dividends of ₹8,000 on her behalf and credited her account, but Sunita had not recorded this in her cash book. She had also deposited a cheque of ₹6,000 from a customer, but the bank had not yet cleared it. Bank charges of ₹400 were debited by the bank but not recorded in the cash book.

Question 1: What is the meaning of a Bank Reconciliation Statement?

A Bank Reconciliation Statement is a statement prepared to reconcile (tally) the difference between the bank balance shown by the cash book and the balance shown by the bank passbook.
It identifies and explains the causes of difference between the two balances on a particular date.

Question 2: Identify the items from Sunita's case that would cause her cash book balance to be higher than the passbook balance, and explain why.

Cheque deposited but not yet cleared (₹6,000): Sunita recorded it in her cash book as a receipt, but the bank has not yet credited it, so passbook balance is lower.
Bank charges (₹400): The bank has debited these charges in the passbook but Sunita has not yet recorded them in the cash book, reducing passbook balance relative to cash book.

Question 3: Prepare a Bank Reconciliation Statement for Sunita as on March 31, 2017, showing the balance as per passbook.

Balance as per cash book: ₹50,000 (Dr.)
Add: Cheques issued but not presented for payment: ₹6,000; Dividends collected by bank: ₹8,000; Total: ₹64,000
Less: Cheques deposited but not yet collected: ₹6,000; Bank charges debited by bank: ₹400; Total deductions: ₹6,400
Balance as per passbook: ₹57,600

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Case Set

Case Set 2

Case Analysis

Passage

Anil & Co. is a trading firm. On August 31, 2017, their cash book showed a bank balance of ₹54,000. The accountant noticed a discrepancy with the passbook. On investigation, the following facts emerged: the bank had debited ₹100 as incidental charges which was not recorded in the cash book; Anil & Co. had deposited cheques worth ₹5,400 in the bank but they had not yet been collected; and a cheque of ₹20,000 was issued by Anil & Co. to a creditor but it had not been presented to the bank for payment yet. The accountant was asked to prepare a Bank Reconciliation Statement to explain the difference and find the balance as per the passbook.

Question 1: Why are cheques issued by a firm recorded in the cash book immediately, but may not appear in the passbook at the same time?

When a firm issues a cheque, it immediately credits the bank column of the cash book, reducing the cash book balance.
However, the bank debits the firm's account only when the payee actually presents the cheque for payment, causing a time lag between the two records.

Question 2: How do incidental/bank charges affect the difference between cash book and passbook balances?

Bank charges are debited by the bank in the passbook as soon as they are levied, reducing the passbook balance.
The firm learns about these charges only when it receives the bank statement; till then these are not recorded in the cash book, making the cash book balance higher than the passbook balance.

Question 3: Prepare the Bank Reconciliation Statement of Anil & Co. as on August 31, 2017, and find the balance as per passbook.

Balance as per cash book: ₹54,000
Add: Cheques issued but not presented for payment: ₹20,000; Total: ₹74,000
Less: Cheques deposited but not yet collected: ₹5,400; Bank incidental charges: ₹100; Total deductions: ₹5,500
Balance as per passbook: ₹68,500

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Case Set

Case Set 3

Case Analysis

Passage

M/s Boss & Co. received their bank passbook on June 1, 2017, which showed a balance of ₹45,000 as on May 31, 2017. On comparing with the cash book, the accountant found that cheques issued before May 31 amounting to ₹25,940 had not been presented for encashment. Two cheques of ₹3,900 and ₹2,350 were deposited on May 31 but credit was given by the bank in June 2017 only. Additionally, a cheque deposited earlier was dishonoured on May 31, 2017, and ₹2,500 was debited in the passbook for the same, but no entry had been made in the cash book. The firm wanted to prepare a reconciliation statement starting from the passbook balance.

Question 1: What is a dishonoured cheque, and how does it affect the passbook balance?

A dishonoured cheque is a cheque that the bank refuses to pay due to insufficient funds, stopped payment, or other reasons.
When a cheque is dishonoured, the bank debits (reverses) the credit previously given in the passbook, reducing the passbook balance without any entry in the cash book initially.

Question 2: When the passbook balance is the starting point in BRS, how are cheques issued but not presented treated, and why?

When starting from the passbook balance, cheques issued but not presented for payment are added back.
This is because the cash book has already reduced the balance for these cheques, but the passbook has not yet done so; adding them aligns the passbook balance to the cash book balance.

Question 3: Prepare the Bank Reconciliation Statement of M/s Boss & Co. as on May 31, 2017 starting from the passbook balance, to find the cash book balance.

Balance as per passbook: ₹45,000
Less: Cheques deposited but not collected (₹3,900 + ₹2,350 = ₹6,250); Cheque dishonoured recorded only in passbook: ₹2,500; Total deductions: ₹8,750; Subtotal: ₹36,250
Add: Cheques issued but not presented for payment: ₹25,940
Balance as per cash book: ₹62,190 (favourable)

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Case Set

Case Set 4

Case Analysis

Passage

Rakesh is a businessman whose cash book showed an overdraft of ₹8,000 as on March 31, 2017. He had deposited cheques amounting to ₹2,000, which had not been collected by the bank. He had issued cheques of ₹800 which were not presented to the bank for payment. The passbook showed a debit of ₹60 for interest and ₹100 for bank charges, both of which had not been recorded in Rakesh's cash book. Rakesh was confused about how an overdraft is treated in a Bank Reconciliation Statement and asked his accountant to prepare the reconciliation statement and explain the treatment.

Question 1: What is a bank overdraft, and how is it shown in the cash book and passbook?

A bank overdraft occurs when the amount withdrawn from the bank exceeds the amount deposited, i.e., the firm has borrowed from the bank.
It is shown as a credit balance in the cash book (bank column) and as a debit balance in the passbook.

Question 2: In the case of an overdraft, how are cheques issued but not presented and cheques deposited but not collected treated in the BRS?

Cheques issued but not presented are deducted from the overdraft starting balance (cash book overdraft), as the passbook overdraft will be less since the bank has not yet debited them.
Cheques deposited but not collected are added to the overdraft balance, as the cash book has already reduced the overdraft by recording these receipts, but the bank has not yet credited them.

Question 3: Prepare the Bank Reconciliation Statement for Rakesh as on March 31, 2017 and determine the balance as per passbook.

Overdraft as per cash book: ₹8,000
Add: Cheques deposited but not yet collected: ₹2,000; Interest charged by bank: ₹60; Bank charges: ₹100; Total additions: ₹2,160; Subtotal: ₹10,160
Less: Cheques issued but not presented for payment: ₹800
Overdraft as per passbook: ₹9,360

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Case Set

Case Set 5

Case Analysis

Passage

Priya is the accountant of Agrawal Traders. On March 31, 2017, the bank column of the cash book showed a credit balance (overdraft) of ₹1,18,100. On comparing with the bank statement, the following differences were found: cheques of ₹12,400 were received and recorded in the cash book but not sent to the bank for collection; a customer had deposited ₹27,300 directly into the firm's bank account but no entry was made in the cash book; cheques of ₹1,75,200 had been issued but not yet presented for payment; and the bank had charged interest of ₹8,800 on the overdraft, which was not entered in the cash book. Priya was required to prepare the BRS and determine whether the passbook showed an overdraft or a favourable balance.

Question 1: Why does a direct deposit by a customer into the firm's bank account cause a difference between the cash book and passbook?

When a customer directly deposits money into the firm's bank account, the bank immediately credits the firm's account and the passbook reflects this receipt.
However, the firm does not come to know about this until it receives the bank statement, so no entry is made in the cash book, causing the passbook balance to be higher than the cash book balance.

Question 2: How does interest on overdraft charged by the bank affect the reconciliation when starting from cash book overdraft balance?

Interest on overdraft is debited by the bank in the passbook, increasing the overdraft in the passbook, but it is not yet recorded in the cash book.
When starting from the cash book overdraft, interest on overdraft is added to arrive at the passbook overdraft, as the passbook shows a larger overdraft than the cash book.

Question 3: Prepare the Bank Reconciliation Statement of Agrawal Traders as on March 31, 2017 and determine the balance as per passbook.

Overdraft as per cash book: ₹1,18,100
Add: Cheques received but not sent to bank: ₹12,400; Interest on overdraft: ₹8,800; Total: ₹1,39,300
Less: Direct payment received from customer: ₹27,300; Cheques issued but not presented: ₹1,75,200; Total: ₹2,02,500
Balance as per passbook: ₹63,200 (Favourable balance — overdraft converted to credit)

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Chapter sections

Chapter bank-reconciliation-statement: Bank Reconciliation Statement | Case Study Questions

Passage

Question 1: What is the meaning of a Bank Reconciliation Statement?

Question 2: Identify the items from Sunita's case that would cause her cash book balance to be higher than the passbook balance, and explain why.

Question 3: Prepare a Bank Reconciliation Statement for Sunita as on March 31, 2017, showing the balance as per passbook.

Passage

Question 1: Why are cheques issued by a firm recorded in the cash book immediately, but may not appear in the passbook at the same time?

Question 2: How do incidental/bank charges affect the difference between cash book and passbook balances?

Question 3: Prepare the Bank Reconciliation Statement of Anil & Co. as on August 31, 2017, and find the balance as per passbook.

Passage

Question 1: What is a dishonoured cheque, and how does it affect the passbook balance?

Question 2: When the passbook balance is the starting point in BRS, how are cheques issued but not presented treated, and why?

Question 3: Prepare the Bank Reconciliation Statement of M/s Boss & Co. as on May 31, 2017 starting from the passbook balance, to find the cash book balance.

Passage

Question 1: What is a bank overdraft, and how is it shown in the cash book and passbook?

Question 2: In the case of an overdraft, how are cheques issued but not presented and cheques deposited but not collected treated in the BRS?

Question 3: Prepare the Bank Reconciliation Statement for Rakesh as on March 31, 2017 and determine the balance as per passbook.

Passage

Question 1: Why does a direct deposit by a customer into the firm's bank account cause a difference between the cash book and passbook?

Question 2: How does interest on overdraft charged by the bank affect the reconciliation when starting from cash book overdraft balance?

Question 3: Prepare the Bank Reconciliation Statement of Agrawal Traders as on March 31, 2017 and determine the balance as per passbook.

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