Following is the information provided by Muqeem Co. at April 30, 2015 for prepar
ID: 2488863 • Letter: F
Question
Following is the information provided by Muqeem Co. at April 30, 2015 for preparation of bank reconciliation statement: (i) On April 30, bank statement showed overdraft of Rs.8,500 and cash book had a balance of Rs. 13,650. (ii) Deposit in transit Rs.80,000. (iii) A debit memo for Rs.1,500 accompanied the bank statement for locker rent. The bank had erroneously charged this to Muqeem Co. instead of Muqeem Bros. (iv) The bank charged Rs.100 for services. (v) Outstanding cheques Rs.48,000. (vi) A direct remittance in bank account Rs.8,000 by a customer. (vii) Divident collected by the bank on behalf of the company Rs.3000 but not recorded in cash book. (viii) A cheque for Rs.720 of Azeem deposited in the bank was erroneously recorded in cash book Rs.270. REQUIRED: Prepare Bank Reconciliation StatementExplanation / Answer
Bank reconciliation is a statement used to check the balance of checking account as per bank statement and figure appearing in companys book. Both records are related with same deposit accounts;but maintained by two diferent organisation. For company, it is an asset. For Bank it is a liability. But balance should be the same. However, in most of the situations they will not agree. It is due to some transactions ommitted from one record or due to some errors. Hence it is necessary to tally them through necessary addition and deduction. It is done by preparing Bank reconciliation statement.
1. On 30 th April 2015, Bank statement is showing an overddraft balance of Rs 8,500. So as per bank record, company has drawn excess amout of $8,500 over its deposit. So this amount receivable from the company. It is an asset to bank and a liability to company. But companys record is showing a favorable balance of Rs 13,650. In bank reconciliation statement you can start with companys balance and arrive at Bank record balance.
2. Amount deposited Rs. 80,000 but is in transit. So bank has not yet recorded it in the credit side of their record. So for arriving at this figure, deduct it from company balance.
3. Bank record has debited ( deducted) Rs 1,500 as locker rent. It is not related with Muqueem Co. So company record has not credited it. Thus to arrive at Bank statement figure, deduct it from Companys stated checking account balance.
4. Bank has rightly deducted charges of Rs 100 for rendering service. It is not credited by company. So this amount should be deducted.
5. Check issued but is outstanding. It has been deducted in company's record, but not debited by bank. So it should be added. Amount is Rs 48,000.
6. A customer has directly deposited Rs 8,000 in Bank. It has been credited in bank's record. So the amount is added with companys stated balance.
7. Bank has collected dividend and credited. But it has not been entered in companys record. So it is added in Bank recociliation statement. Amount is Rs 3,000
8. Cheque of Rs 720 has been received from Azeem and deposited in bank. But the check has been wrongly recorded as Rs 270. It has been understated as deposit in companys record to the extent of Rs720-Rs270=Rs450. It should be added.
Thus Bank reconciliation statement is:
Bank Reconciliation statement of Muqueem Co. as on April 30, 2015.
ADD:
Details Amount Amount Favorable Balance as per companys record 13,650ADD:
1. Direct reimbursement in bank not recorded by company 8,000 2. Check issued but not cleared till date 48,000 3. Dividend collected but not appearing in companys record 3,000 4. Cjeques collected from Azeem of Rs 720, wrongly recorded by company as deposit of Rs 270. 450 59,450 Total 73,100 LESS: 1. Amout deposited but is in transit 80,000 2. Locker rent wrongly charged by bank 1,500 3. Bank charge not entered in cvompany,s record 100 81,600 Overdraft balance as per bank statement 8,500