4 Marks Question

Question 14 Marks

On checking Ram's Cash Book with the Bank Statement of his overdraft current account for the month of November, 2013, you find the following :
i. Cash Book showed an overdraft of ₹ 45,000 .
ii. The payment side of the Cash Book had been undercast by ₹ 1,500 .
iii. A cheque for ₹ 7,500 drawn on his saving account has been shown as drawn on current account.
iv. Cheques amounting to ₹ 70,000 drawn and entered in the Cash Book had not yet been presented.
v. Cheques amounting to $₹ 60,000$ sent to the bank for collection, though entered in the Cash Book, had not been credited by the bank.
vi. Bank charges of $₹ 750$ as per Bank Statement had not been taken into the Cash Book.
vii. Dividends of the amount of $₹ 25,000$ had been paid directly into the bank and not entered in the Cash Book.
You are required to prepare a Bank Reconciliation Statement on 30th November, 2013.

Answer

Bank Reconciliation Statement as on $30^{\text {th }}$ November 2013
Particulars	Plus Items (₹)	Minus Items (₹)
Bank Overdraft Balance as per Cash Book		45,000
Payment side of Cash Book is undercast		1,500
Cheque is drawn on saving account wrongly shown on the current account	7,500
Cheques issued but not yet presented for payment	70,000
Cheques paid into bank but not yet credited		60,000
Bank Charges debited by the bank		750
Direct payment of dividend into a bank account	25,000
	1,02,500	1,07,250
Bank Overdraft Balance as per Pass Book (₹ 1,07,250 - ₹ 1,02,500)		4,750

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Question 24 Marks

On 30th June, 2023, the bank Column of Anuj's Cash Book showed a balance of $₹ 8,250$. On examination of the Cash Book and bank statement you find that:
i. Out of total cheques amounting to $₹ 8,000$ issued, cheques amounting to $₹ 5,800$ have been presented for payment upto 30th June, 2023.
ii. Out of total cheques amounting to $₹ 6,000$ sent to bank for collection, cheques of $₹ 4,100$ were credited in Pass Book upto 30th June, 2023.
iii. On 28th June a customer deposited $₹ 3,500$ direct in the bank account but it was entered only in the Pass Book.
iv. Debit side of Anuj's Cash Book (Bank Column) has been overcast by ₹ 100 .
v. No entry has been made in the Cash Book for the Rent of ₹ 800 paid by bankers according to Anuj's standing instructions.
vi. The Pass Book showed a credit of ₹ 320 for interest and a debit of ₹ 40 for bank charges, but these have not been entered in the Cash Book.
Prepare a Bank Reconciliation Statement as on 30th June, 2023.

Answer

BANK RECONCILIATION STATEMENT as on 30th June 2023
Particulars	Plus Items	Minus Items
	₹	₹
Balance as per Cash Book (Dr.)	8,250
Add : (i) Cheques issued but not presented for payment upto 30th June, 2023 (₹8,000 - ₹5,800)	2,200
(ii) Direct deposit by a customer in the bank	3,500
(iii) Interest credited by bank	320
Less : (i) Cheques sent for collection but not credited by the bank upto 30th June 2023 (₹6,000 - ₹4,100)		1,900
(ii) Debit side of the Cash Book overcast		100
(iii) Rent paid by bank according to standing instructions		800
(iv) Bank Charges		40
	14,270	2840
Balance as per Pass Book. (Cr.)	11,430

In the above illustration, it has not been clearly stated whether the Cash Book balance given at the start is a debit or credit balance.
Hence, it will be treated as debit balance. When opening balance of cash book is given all the rectification is done only in cash book not pass book.

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Question 34 Marks

Mr. Goel maintains two bank accounts. Prepare his columnar cash book from the following particulars:

2023		₹
May 1	Cash in hand	34,000
	Balance with PNB Bank	75,200
	Balance with SBI Bank	1,20,000
May 3	Cash drawn from SBI for office use	25,000
May 8	Sold goods to Pradhan for ₹ 80,000 and received from him ₹ 20,000 in cash and a cheque for the balance. The cheque is deposited in PNB on the $9^{\text {th }}$ and the bank credited the amount on the $15^{\text {th }}$ and debited ₹ 25 as its collection charges.
May 12	Purchased goods for ₹ 40,000 at 20% trade discount. 25% of the amount is paid in cash and issued a cheque on SBI for the balance amount.
May 20	Paid Wages ₹ 36,000 and Salary ₹ 4,000 .
May 22	A cheque for ₹ 50,000 is drawn on SBI and it is deposited in PNB.
May 23	Purchased land for ₹ 3,20,000 and a cheque is issued on PNB.
May 24	A cheque for ₹ 10,000 which was received from Mukesh and was deposited in SBI on $25^{\text {th }}$ April is dishonoured and the bank debited ₹ 100 as bank charges on this cheque. The amount of dishonoured cheque and bank charges is received from Mukesh in cash on the $25^{\text {th }}$.
May 26	Deposited cash ₹ 30,000 in PNB.
May 28	Sold old typewriter for ₹ 2,000 and old newspapers for ₹ 200 in cash.
May 30	Interest charged by PNB Bank ₹ 400 .
May 31	Bank charges by SBI Bank ₹ 180 and PNB Bank ₹ 340 .

Answer

Working Note:

JOURNAL ENTRY
Date	Particulars		L.F.	Debit (₹)	Credit (₹)
2023
May-08	Cheques-in-hand A/c	Dr.		60,000
	To Pradhan's A/c (cheque received from Pradhan)				60,000

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Question 44 Marks

What is the difference between trade discounts and cash discounts?

Answer

Objectives of preparing a trial balance are as follows:
i. Ascertain the arithmetical accuracy of ledger accounts: The trial balance helps to ascertain whether all the debits and credits are properly recorded in the ledger. If the debit and the credit balances are equal, it is said that the posting and the balancing of the accounts are arithmetically correct. However, the tallying of the trial balance cannot be considered as conclusive proof of the accuracy of the books since some errors remain sometimes.
ii. Helps in identifying errors: Trial balance helps in identifying the errors in bookkeeping work. The error may occur at any one of the stages of an accounting process such as totalling of the subsidiary books, posting of journal entries in the ledger, calculating account balances, carrying account balances to the trial balance and totalling the trial balance columns.
iii. Assists in the preparation of the financial statements: A trial balance is a statement with the record of debit and credit balances of all ledger accounts which helps in the preparation of the financial statements. Hence, it is considered as a connecting link between the accounting records and the preparation of financial statements. Trial balance is useful for further processing.

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