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Direct Payments Made by Bank

Mr. Ajay has ...

Question

Mr. Ajay has taken an insurance policy from Bajaj Life Insurance Corporation & has given instruction to bank to pay the insurance premium monthly i.e. Rs 10,000 by deducting the amount automatically from the account. The bank reconciliation statement was not prepared for 4 months by him & after 4 months the cash book & bank pass book showed a difference. What according to you could be the probability?

A

Amount in cash book is less by Rs 40,000

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B

Amount in cash book is more by Rs 40,000

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C

Amount in bank statement is more by Rs 40,000

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D

None of the above

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Solution

The correct option is B
Amount in cash book is more by Rs 40,000

Standing orders for insurance premium of Rs 10,000 would not have been entered in cash book for those four months. Therefore it must be showing a balance more by Rs 40,000 (10,000*4).

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Q. Bank column of the cash book showed a debit balance of Rs. 49,000 on 30th June, 2017. Bank Statement or Pass Book showed a credited balance of Rs. 37,400. Entries in the Cash Book and Pass book were compared and gthe following difference were noticed:
(i) Cheques of Shyam Rs. 9,000 and of Mohan Rs. 15,000 were deposited but were not collected up to 30th June, 2017.
(ii) Ramesh, a debtor, deposited a cheque of Rs. 8,000 directly into the bank.
(iii) Bank allowed an interest of Rs. 500.
(iv) Cheque for Rs. 10,000 issued to Ramesh was not presented for payment.
(v) Bank debited the account by Rs. 6,000, being insurance premium paid as per standing instructions.
(vi) Bank debited the account by Rs. 100, being bank charges.
You are required to prepare a Bank Reconciliation Statement as on 30th June, 2017.

Q. The Bank Column of Mukesh's Cash Book as on 31st March, 2018 showed an overdraft of Rs. 1,80,000. His Bank Statement Showed an overdraft of Rs. 1,13,900. Prepare Bank Reconciliation Statement taking the following into account:
(i) Cheque deposited into bank but entry is not passed in the Cash Book. Rs. 3000.
(ii) Cheque received and entered into the Cash Book but was not sent to bank. Rs. 10,000.
(iii) Credit side of the Bank column casted short by Rs. 1,000
(iv) Insurance premium paid directly by the bank under standing instructions was not recorded in the Cash Book. Rs. 5,000
(v) Bank charges entered in the Cash book twice. Rs. 100
(vi) Cheque 'received' returned on technical grounds but entry was not passed. Rs. 4,000
(vii) Cheque 'issued' returned on technical grounds but entry was not passed. Rs. 3,000
(viii) Bill discounted dishonoured. Rs. 40,000
(ix) Bills Recievable directly collected by the bank. Rs. 20,000
An amount of Rs. 1,00,000 being collection of Mahesh's cheque was wrongly credited to the account of Mukesh by the bank in his bank statement.

Q. From the following information supplied by Mr. D.H., prepare his Bank Reconciliation Statement as on 31st March, 2019:

		₹
(i)	Bank overdraft as per Pass Book.	33,000
(ii)	Cheques issued but not presented for payment.	17,500
(iii)	Cheques deposited but not collected.	21,000
(iv)	Cheques recorded in the Cash Book but not sent to the bank for collection.	4,000
(v)	Payment received from customers directly by the bank.	7,000
(vi)	Bank charges debited in the Pass Book.	40
(vii)	Premium of Life Insurance Policy of Mr. D.H. paid by the bank on standing instructions.	360
(viii)	A bill for ₹ 6,000 dishonoured on 30th March, 2019 and bank paid Noting charges ₹ 20. This bill was discounted on 30th January, 2019.

Q. On 30th June 2014, the bank balance as per Sanjay Yadav's Cash Book was ₹ 1,500. On comparing with the Pass Book the following information was received:-
1. Cheques amounting to ₹ 7,290 were issued on 28th June, of which one cheque of ₹ 1,300 was presented in the bank for payment on 4th July.
2. Cheques deposited into bank for ₹ 10,000, but of these cheques for ₹ 4,000 were cleared and credited in July.

3. Interest and Dividend on investments ₹ 580 collected by bank and credited to his account but he did not have any information for this.
4. Life Insurance Premium ₹ 750 paid by bank according to his standing orders.
5. Bank Charges ₹ 25 not recorded in the Cash Book.
Prepare a Bank Reconciliation Statement.

Q. On 30th June 2014, the Cash Book of a trader shows a bank overdraft of ₹ 2,500. Following informations are available:-
1. Cheques amounting to ₹ 14,600 had been paid to the bank, but of these only ₹ 12,200 were credited in the Pass Book, up to 30th June, 2014.
2. He had also issued cheques amounting to ₹ 10,000, out of which only ₹ 3,600 had been presented for payment.
3. A cheque of ₹ 500 which he had debited to the bank account was not sent to bank for collection by mistake.
4. There is a debit in the Pass Book of ₹ 10 for Bank Charges and ₹ 50 for interest.
5. A customer directly paid into his bank ₹ 1,000, but it was not shown in the Cash Book.
6. Bank has paid insurance premium of ₹ 400 according to his instructions, but this is not recorded in the Cash Book.
Prepare a Bank Reconciliation Statement.

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