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QUESTION: How To Prepare Adjusted Cash Book And Bank Reconciliation Statement

Nigeria Student Forum / Questions / Marketing Department / How To Prepare Adjusted Cash Book And Bank Reconciliation Statement (48) Views

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Fadeyi Oluwaseun
Ladoke Akintola University Ogbomosho
B.tech Marketing Management
200Level, Nigeria.

Where bank favourable/overdraft balance as per the cash book is given: In this situation, the following steps should be taken for the preparation of the Bank Reconciliation Statement.

Step 1 : Draw up a Cash Book. Write down the favourable balance in the debit side of the cashbook and the overdraft balance in the credit side of the cash book.



Step 2 : Make the necessary entries in the Cash Book in respect of the following:



(a) Amount recorded in the Pass Book but not yet recorded in the Cash Book such as:

Bank Charges debited by the bank.
Dividend collected directly by the bank.
Payment made by the bank as per standing order.
Dishonour of cheques and bills receivable not yet recorded in the cash book.
(b) All errors that have crept in the Cash Book such as

Over casting in the debit/credit column of the Cash Book;
Under casting in debit/credit column of the Cash Book;
Amount entered twice in the Cash-Book.
Wrong Amount entered in the Cash-Book etc.
Step 3 : Balance off the Cash Book and bring down the adjusted Cash Book balance.


Step 4 : Prepare the Bank Reconciliation Statement in the usual manner taking the adjusted Cash Book balance and leaving those items which have already been considered in the adjusted cash-book.




Notes
(1) No errors of the Pass Book are to be considered for adjusting the Cash Book.

(2) Items correctly entered in the Cash Book are not to be considered for adjusting the Cash Book.

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Fadeyi Oluwaseun
Ladoke Akintola University Ogbomosho
B.tech Marketing Management
200Level, Nigeria.

Illustration:
From the following particulars, ascertain the Bank balance as per Pass Book as on 31st December.

1. The Bank balance as per Cash Book on the date was Rs 11,500.

2. Cheques issued but not cashed before that date amounted to Rs 1,750.

3. Cheques paid into Bank, but not cleared before December amounted to Rs 2,150.

4. Interest on Investments collected by the Bank but not entered in the Cash Book amounted to Rs 275.

5. Local cheque paid in but not entered in the Cash Book Rs 300.

6. Bank Charges debited in the Pass Book Rs 25.

Solution:

(a) Without adjustment in Cash Book:


b) With adjustment in Cash Book:
If the balance at Bank, as per the Cash Book adjusted, it will be Rs 12,050, thus:

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