We had to pay a sum of Rs 40,000 to Mr. Akhil. By mistake, Rs 4,00,000 was entered on the cheque instead of Rs 40,000 but our bank account did not have such a large amount of balance. What will happen to that cheque?

It shall become an endorsed cheque

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It shall become a cancelled cheque

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It shall become a stale cheque

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It shall become a dishonored cheque

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Solution

The correct option is D It shall become a dishonored cheque
In the given situation when bank did not have sufficient balance, then the cheque shall become a dishonored cheque.

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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.

(i) On 31st March, 2016 the bank passbook of Radha showed a balance of Rs. 15,000 to her credit.

(ii) Before that date, she had issued cheques amounting to Rs. 8,000 out of which cheques amounting to Rs. 3,200 have so far been presented for payment.

(iii) A cheque of Rs. 2,200 deposited by her into the bank on 26th March, 2016 is not yet credited in the passbook.

(iv) She had also received a cheque of Rs. 500 which although entered by her in the bank column of cash book, was omitted to be paid into the bank.

(v) On 30th March, 2016 a cheque of Rs. 1,570 received by her was paid into bank but the same was omitted to be entered in the cash book.

(vi) There was a credit of Rs. 150 for interest on current account and a debit of Rs. 25 for bank charges.

Draw up a bank reconciliation statement

Analyse the effect of each transaction and prove that the accounting equation (A = L + C) always remains balanced.
(i) Introduced Rs. 4,00,000 as cash and Rs. 25,000 by stock.
(ii) Purchased plant for Rs. 1,50,000 by paying Rs. 7,500 in cash and balance at a later date.
(iii) Deposited Rs. 3,00,000 into the bank.
(iv) Purchased office furniture for Rs. 50,000 and made payment by cheque.
(v) Purchased goods worth Rs. 40,000 for cash and for Rs. 17,500 on credit.
(vi) Goods amounting to 22,500 was sold for Rs. 30,000 on cash basis
(vii) Goods costing to Rs. 40,000 was sold for Rs. 62,500 on credit basis.
(viii) Cheque issued to the supplier of goods worth Rs. 17,500.
(ix) Cheque Received from customer amounting to Rs. 37,500.
(x) Withdrawn by the owner for personal use Rs. 12,500.

Q. On March 31,2010, the cash showed a balance of Rs.3,700 as cash at bank, but the bank pass book made up to same date showed that cheques for Rs. 700, Rs. 300, and Rs. 180 respectively had not presented for payment.Also, cheque amounting to Rs. 1,200 deposited into the account had not been credited.Prepare a bank reconciliation statement.

Q. (i) On 31st March, 2018, the bank pass book of Radh showed a credit balance of Rs. 15,000.
(ii) Before that date, she had issued cheques amounting to RS. 8,000 out of which cheques Rs. 3,200 were presented for payment.
(iii) A cheque of Rs. 2,200 deposited by her into the bank on 26th March, 2018 is not yet credited in the pass book.
(iv) She had also received a cheque of Rs. 500 which although entered by her in ther bank column of Cash Book, was omitted to be paid into the bank.
(v) On 30th March, 2018, a cheque of Rs. 1,570 received by her was paid into the bank but the same was omitted to be entered in the cash book.
(vi) There was a credit of Rs. 150 for interest on Current account and a debit of Rs. 25 for bank charges.
Prepare Bank Reconciliation Staement.

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We had to pay a sum of Rs 40,000 to Mr. Akhil. By mistake, Rs 4,00,000 was entered on the cheque instead of Rs 40,000 but our bank account did not have such a large amount of balance. What will happen to that cheque?

The correct option is D It shall become a dishonored chequeIn the given situation when bank did not have sufficient balance, then the cheque shall become a dishonored cheque.

The correct option is D It shall become a dishonored cheque
In the given situation when bank did not have sufficient balance, then the cheque shall become a dishonored cheque.