Bank Reconciliation Statement--Cash Book (Overdraft) Balance

When credit side of cash book, that is expenditure, is more than debit side we say it overdraft balance of cash book. In the case of reconciliation of statement when there is overdraft balance of cash book, we have to do just the opposite what we did in the case of favorable balance of cash book.

Take an example—“cheque issued but not presented for payment” in the case of favorable balance of cash book, we added it back as our expenditure side is more than pass book and to balance it we have to add it back. Now if i talk about overdraft balance, we need to deduct it (just the opposite) because in overdraft case our expenditure is already more and in that expenditure list there is an item regarding cheque issued, so we have to deduct it. It would implies our overdraft balance is reduced after this reconciliation.

“Bank charges charged by bank but not informed” here if we had favorable balance, we would deduct it but now in case of overdraft balance we have to add it (just the opposite) because we already have our expenditure side more and still there is an item of expenditure which we missed to record so result would be to increase the cash overdraft balance.

If anyone has to fail to understand so far, let us solve a question to understand clearly.

Problems:

1. From the following particulars, ascertain bank balance as would appear in the pass book as on 30.4.15.

i) The bank overdraft (credit balance) as per cash book on 30.04.2015 was rs 8000.

ii) Interest on overdraft for six months amounting to rs 200 was debited in the pass book.

iii)Bank charges also debited in the pass book which amounting to rs 150.

iv) Cheque issued but not presented for payment before 30.04.2015 amounting to rs 1500.

v) Cheque paid into the bank but not cleared and credited before 30.04.2015 were rs 2500.

vi) Interest on govt. Securities collected by the bank and credited in the pass book amounted to rs 1800.

Solution:

	Bank Reconciliation Statement as on 30.04.2015
	Particular	Amount	Amount
i)	Bank overdraft as per cash book		8000
ii) Add:	interest on overdraft not recorded in cash book	200
iii)Add:	Bank charges not recorded in cash book	150
v)Add:	cheques deposited but not cleared within date	2500	2850
			10850
iv)less:	cheques issued but not presented for payment	1500
vi) less:	interest on govt. Securities collected by bank
	but not recorded in cash book	1800	(3300)
	Bank balance as per pass book (overdraft)		7550