Question

Bank collected dividend of Rs. $25,000$ on behalf of customer which was not recorded in cash book.
In respect the given transaction which of the following treatment is correct for preparation of bank reconciliation statement?
(I) If BRS is prepared without adjusting cash book and the balance as per cash book is starting point then Rs. $25,000$ will be subtracted.
(II) If BRS is prepared with adjusting cash book then Rs. $25,000$ will be debited to the adjusted cash book.
(III) If BRS is prepared without adjusting cash book and the balance as per cash book is starting point then Rs. $25,000$ will be added.
(IV) If BRS is prepared with adjusting cash book then Rs. $25,000$ will be credited to the adjusted cash book.
The correct answer is?

• A. (I) only is correct
• B. (II) only is correct
• C. (I) & (IV) are correct
• D. (II) & (III) is correct

Answer 1

Answer: (D)

(II) & (III) is correct

When the bank collected dividend of Rs. 25000 on behalf of the customer which was not recorded in the cash book, the passbook balance increase as the passbook was credited by the amount of dividend received. So now the balance as per pass book is more than the balance as per cash book. In this case, while preparing bank reconciliation statement, we have the following two options:

1. If the cash book balance is adjusted, it means that the dividend has to be recorded in the cash book by debiting the cash book by Rs. 25000 as cash book is debited when cash comes in and credited when cash goes out.

2. If the cash book is unadjusted, then in order to arrive at the balance as per pass book while reconciling, we will have to add Rs. 25000.

Thus (II) and (III) is correct.