Financial accounting I – Reconciliation statement
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2015 Fall Q. No. 15
In December 31st, Amod Co.’s bank statement showed a balance of Rs. 7,000. On this date the cash account in the company’s ledger disclosed a balance of Rs. 7,090. The review related as:
a. Cheques under collection on Dec.31, Rs. 500.
b. Outstanding cheques for Rs. 200.
c. A cheque for Rs. 2,100 issued to supplier was recorded by bank as Rs. 2,010.
d. A bill receivable of Rs. 500 and interest of Rs. 30 collected by the bank have not been recorded in company’s account.
e. A cheque for Rs. 100 received from customer was returned by bank due to NSF reason.
f. Service charge charged by bank Rs. 10.
g. In accordance with the company’s standing instruction on Dec.31, the bank paid insurance premium of Rs. 300 for company’s car. This does not appear in the company’s book.
Required:
i. A bank reconciliation statement.
ii. The necessary journal entries. [10]
Solution:
i.
Amod Company
Bank Reconciliation Statement
As on December 31
| Particulars | Amount Rs. |
| Balance as per bank statement Add: Deposit in transit Less: Outstanding checks Less: Errors in recording | 7,000 500 200 90 |
| Adjusted balance as per bank statement | Rs. 7,210 |
| Balance as per company’s book Add: Bill receivable Add: Interest on bill receivable Less: NSF check Less: Bank service charge Less: Insurance premium paid by bank | 7,090 500 30 100 10 300 |
| Adjusted balance as per company’s book | Rs. 7,210 |
ii.
Journal Entries
In the book of Amod Company
December 31
Cash a/c Dr. Rs.
Bill receivable a/c Rs. 500
Interest on bill receivable a/c Rs. 30
(To record the bill receivable and interest on bill receivable collected by the bank)
December 31
NSF check a/c, Dr. Rs. 100
Bank service charges a/c Dr. Rs. 10
Insurance premium a/c Dr. Rs. 300
Cash a/c Rs. 410
(To record the NSF check, bank service charge, and insurance premium made by the bank)
PU 2014 Spring Q. No. 16, BRS (outstanding checks)
Also, know about
Outstanding checks
The checks which are written by the company but not make payment by the bank are called outstanding checks. As outstanding checks are not debited or not paid by the bank, these checks should be deducted from the balance of bank statement.