Whenever some people wish to enter into the business world it is a must for them to approach a bank. What services do banks provide them in this regard?
A. Banks act as payment agents by operating current accounts, paying cheques and receiving payments for them.
B. Maintaining account books for them for their day-to- day activities so that they are not required to appoint account/finance personnel on a regular basis.
C. Lending money by way of overdraft, instalment loan, credit or advance for business activities
On checking Ram’s Cash Book with the Bank statement of his overdraft current account for the month of November, 2012, you find the following:
(i) Cash Book showed an overdraft of Rs 45,000.
(ii) The payment side of the Cash Book had been under cast by Rs 1,500.
(iii) A cheque for Rs 7,500 drawn on his saving account has been shown as drawn on his current account.
(iv) Cheques amounting to Rs 70,000 drawn and entered in the Cash Book had not yet been presented.
(v) Cheques amounting to Rs 60,000 sent to the bank for collection,though entered in the Cash Book,had not been credited by the bank.
(vi) Bank charges of Rs 750 as per Bank Statement had not been taken into the Cash Book.
(vii) Dividends of Rs 25,000 had been paid direct into the bank and not entered in the Cash Book. You are required to prepare a Bank Reconciliation Statement on 30th November, 2012.
Enter the following transactions in cash book.
2013RsJan.01Cash in hand1,500Jan.05Paid to Ram300Jan.05Discount allowed by him10Jan.08Purchased goods400Jan.10Received from R. Gupta980Jan.10Discount allowed20Jan.16Sold goods400Jan.21Paid to S. Sharma295Jan.21Discount received5Jan.25Paid wages50Jan.31Paid to Narayan in full settlement of his account which shows a creditbalance Rs 400390
A cheque of Rs 15,000 was received from a customer Mr. Ram & it was sent for clearance to bank on the same day. Next day, Mr. Ram informed us that the amount has been deducted from his account, so the entry to this regard was made in the books. But later on, it was discovered that the amount has not been credited in our account but credited to some one else's account due to a mistake by the bank. It was credited to our account in the next month. How should this be treated in the bank reconciliation of both the months if starting point is cash book balance?