Bank Reconciliation Statement as on 31st December 2016 for PQRS Ltd.

 From the following particulars, prepare a Bank Reconciliation Statement as on 31st December 2016 for PQRS Ltd.

S. No.	Particulars	Amount (₹)
i	Bank balance overdraft as per Cash Book	80,000
ii	Cheque recorded for collection but not sent to the bank	10,000
iii	Credit side of the Cash Book cast short	1,000
iv	Premium on proprietor's Life Insurance Policy (LIP) paid on standing order	5,000
v	Bank charges recorded twice in the Cash Book	100
vi	Customer's cheque returned by the bank as dishonoured	4,000
vii	Bill Receivable collected by the bank directly on behalf of the company	20,000
viii	Cheque received entered twice in the Cash Book	6,000
ix	Cheque issued but dishonoured on technical grounds	3,000
x	A cheque deposited into the bank of worth ₹45,000, but ₹8,000 cheques were not collected by the bank   Solution Bank Reconciliation Statement PQRS Ltd. Bank Reconciliation Statement as on 31st December 2016 Given: Overdraft as per Cash Book = ₹80,000 We have to find the Overdraft as per Pass Book/Bank Statement. Step 1: Understand the rule Since the starting figure is an overdraft as per Cash Book, we will ask: Does this item make the overdraft as per Pass Book higher or lower than the Cash Book overdraft? Treatment of each item S. No. Particulars Effect on Pass Book Overdraft Amount (₹) i Overdraft as per Cash Book Starting point 80,000 ii Cheque recorded for collection but not sent to bank Pass Book overdraft increases +10,000 iii Credit side of Cash Book cast short Cash Book overdraft is understated → Pass Book overdraft lower −1,000 iv Premium on proprietor's LIP paid by standing order Not recorded in Cash Book; bank has paid it → Pass Book overdraft increases +5,000 v Bank charges recorded twice in Cash Book Cash Book overdraft overstated → Pass Book overdraft lower −100 vi Customer's cheque dishonoured by bank Bank has reversed the credit → Pass Book overdraft increases +4,000 vii Bill Receivable collected directly by bank Bank has received money → Pass Book overdraft decreases −20,000 viii Cheque received entered twice in Cash Book Cash Book overdraft understated → Pass Book overdraft increases +6,000 ix Cheque issued but dishonoured Cash Book shows payment, but bank has not made payment → Pass Book overdraft decreases −3,000 x Cheque deposited ₹45,000; ₹8,000 not collected Only ₹37,000 credited by bank; Pass Book overdraft increases by ₹8,000 +8,000 Detailed Explanation of Each Adjustment (ii) Cheque recorded for collection but not sent to bank — ₹10,000 The cheque has already been recorded in the Cash Book, so the Cash Book shows a receipt. But it has not been sent to the bank, so the bank has not credited it. Therefore, the Pass Book overdraft is ₹10,000 more. Add ₹10,000. (iii) Credit side of Cash Book cast short — ₹1,000 The credit side of Cash Book represents payments. If it has been cast short, payments have been understated. Therefore, the Cash Book overdraft is understated by ₹1,000. Hence the actual Cash Book overdraft would be higher, making the Pass Book overdraft ₹1,000 lower in comparison. Less ₹1,000. (iv) Premium on proprietor's LIP paid by standing order — ₹5,000 The bank has made the payment directly, but it has not yet been entered in the Cash Book. Therefore, the bank balance is lower and the Pass Book overdraft is higher. Add ₹5,000. (v) Bank charges recorded twice in Cash Book — ₹100 Bank charges have been entered twice in the Cash Book instead of once. Therefore, the Cash Book shows an overdraft ₹100 higher than it should be. Consequently, the Pass Book overdraft is ₹100 lower. Less ₹100. (vi) Customer's cheque dishonoured — ₹4,000 The cheque was originally recorded as received in the Cash Book. The bank subsequently dishonoured it and reversed the amount, but the Cash Book has not yet been adjusted. Therefore, the Pass Book overdraft becomes ₹4,000 higher. Add ₹4,000. (vii) Bill Receivable collected directly by bank — ₹20,000 The bank collected ₹20,000 directly. The bank balance therefore increases, reducing the overdraft. Less ₹20,000. (viii) Cheque received entered twice in Cash Book — ₹6,000 The Cash Book has recorded the receipt twice, although the bank has credited it only once. Therefore, the Cash Book overdraft is understated by ₹6,000. The Pass Book overdraft is consequently ₹6,000 higher. Add ₹6,000. (ix) Cheque issued but dishonoured — ₹3,000 The Cash Book shows the cheque as a payment, so the Cash Book overdraft has increased. However, because the cheque was dishonoured, the bank did not actually make the payment. Therefore, the Pass Book overdraft is ₹3,000 lower. Less ₹3,000. (x) Cheque deposited ₹45,000; ₹8,000 not collected The Cash Book has recorded the entire ₹45,000. But the bank has not collected ₹8,000. Therefore, only: ₹45,000 − ₹8,000 = ₹37,000 has effectively been credited by the bank. The difference of ₹8,000 makes the Pass Book overdraft higher. Add ₹8,000. Final Bank Reconciliation Statement PQRS Ltd. Bank Reconciliation Statement as on 31st December 2016 Particulars Amount (₹) Overdraft as per Cash Book 80,000 Add: Cheque recorded for collection but not sent to bank 10,000 Less: Credit side of Cash Book cast short (1,000) Add: Premium on proprietor's LIP paid by standing order 5,000 Less: Bank charges recorded twice in Cash Book (100) Add: Customer's cheque dishonoured 4,000 Less: Bill Receivable collected directly by bank (20,000) Add: Cheque received entered twice in Cash Book 6,000 Less: Cheque issued but dishonoured (3,000) Add: Cheque deposited but not collected by bank 8,000 Overdraft as per Pass Book ₹88,900 ✅ Final Answer Overdraft as per Pass Book = ₹88,900	45,000