Bank a/c balance as per Cash Book & in Pass Book :: Difference - Analysis
Some transactions affecting Bank a/c
Aug 1st | : | Paid Cash into bank (new account opened) 18,000. |
5th | : | Issued a cheque (No. AS01) to Sam 5,400 in full settlement of 5,500 due. |
8th | : | Received a cheque (No. MG41) for 12,000 towards sale proceeds and deposited the same into bank. |
11th | : | Issued a cheque for 4,920 (No. AS02) to a supplier Jax & Co in full settlement of the amount due of 5,000. |
13th | : | Withdrawn for Mr. Rao's personal use by cheque (No. AS03) 5,000 |
14th | : | Mr. Rao, issued a cheque (No. TR82) for 50,000 towards additional capital 50,000. |
15th | : | Issued a cheque (No. AS04) for 24,000 towards purchase of Furniture. |
To make it easy we are considering the same transactions we have dealt with earlier in knowing how these are recorded and appear in the books of the bank as well as the organisation.
Bank a/c in Organisation's Books
Dr Cr | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Date | Particulars | L/F | D/A | Cash | Bank | Date | Particulars | L/F | D/R | Cash | Bank |
01/08/ 08/08/ 14/08/ |
To Cash To Sales To Capital |
C – – |
|
|
18,000 12,000 50,000 |
01/08/ 05/08/ 11/08/ 13/08/ 15/08/ |
By Bank By Sam By Jax & Co By Drawings By Furniture By Balance c/d |
C |
100 80 |
18,000 |
5,400 4,920 5,000 24,000 40,680 |
Total | 80,000 | Total | 80,000 | ||||||||
16/8 | To Balance b/d | – | 40,680 |
Pass Book as per Bank Books
Date | Particulars | Cheque No |
Withdrawal [Debit] |
Deposit [Credit] |
Balance | Initial |
---|---|---|---|---|---|---|
01/08/ 05/08/ 10/08/ 12/08/ 13/08/ 17/08/ 18/08/ 18/08/ |
By Cash (Deposit) To Cheque (Sam) By Cheque (Collection) To Cheque (Jax & Co) By Cheque (Self) By Cheque (Pine Wood Traders) To Cheque (Collection) By Collection Charges |
AS01 MG41 AS02 AS03 AS04 TR82 |
5,400 4,920 5,000 24,000 120 |
18,000 12,000 50,000 |
18,000 12,600 24,600 19,680 14,680 −9,320
40,68040,560 |
Date wise Analysis of balance in the Bank a/c
Aug 1st
Cash Book - 18,000Pass Book - 18,000
The transaction has been recorded on the same date in both the books. Therefore, there is no difference in the Bank balance as revealed by both the books.
Aug 5th
[18,000 − 5,400]Cash Book - 12,600
Pass Book - 12,600
The transaction is also recorded on the same date in both the books. Therefore, there is no difference in the Bank balance as revealed by both the books.
Aug 8th
Cash Book - 24,600 [12,600 + 12,000]Pass Book - 12,600
Cheques deposited but not yet collected
The cheque that has been received towards sale proceeds has been entered in the cash book immediately and deposited in the bank. The bank however would not credit the customer account with this amount till the cheque is collected which would take some time.The bank sends the cheques so deposited for collection and records them in the cheques sent for clearance record, which is a general record for reference and information only. If the cheque is dishonoured (not collected) no credit is made in the customers account.
The Bank balance as revealed by both the books differs.
Aug 10th
Cash Book - 24,600Pass Book - 24,600
The cheque that was deposited on 8th was collected and credited by the bank. There are no bank transactions after that date.
There is no difference in the bank balance as revealed by both the books.
Aug 11th
Cash Book - 19,680 [24,600 − 4,920]Pass Book - 24,600
Cheques issued but not yet presented for payment
A cheque has been issued and has been recorded in the cash book immediately. The bank would deduct this amount from the account only after it has been presented for payment and is paid to the payee.The Bank balance as revealed by both the books differs.
Aug 12th
Cash Book - 19,680Pass Book - 19,680
The cheque issued on Aug 11th has been presented and got paid.
The Bank balance as revealed by both the books is the same.
Aug 13th
[19,680 − 5,000]Cash Book - 14,680
Pass Book - 14,680
This transaction is also recorded on the same date in both the books. Therefore, there is no difference in the Bank balance as revealed by both the books.
Aug 14th
Cash Book - 64,680 [14,680 + 50,000]Pass Book - 14,680
Cheques deposited but not yet collected
The cheque that has been given by the proprietor towards additional capital contribution has been entered in the cash book immediately and deposited in the bank. The bank however would not credit M/s Manzil Enzymes a/c with this amount till the cheque is collected which would take some time.The Bank balance as revealed by both the books differs.
Aug 15th
Cash Book - 40,680 [64,680 − 24,000]Pass Book - 14,680
Cheques issued but not yet presented for payment
The cheque issued towards the purchase of furniture has been recorded in the cash book immediately. The bank however would not debit M/s Manzil Enzymes a/c with this amount till the cheque is presented to it for payment and it has paid the amount on it. If the cheque is an account payee cheque, it would surely take some time to come to the bank for payment.Cheques deposited but not yet collected
The cheque deposited on 14th remains uncollected still.The Bank balance as revealed by both the books differs.
Aug 17th
Cash Book - 40,680Pass Book - −9,320 [14,680 − 24,000]
The cheque issued to pine wood traders has come up for payment and the bank has paid out the cheque even though the amount in the account is less than the cheque amount since it has sanctioned overdrawal limits to M/s Manzil Enzymes. This would create a situation where (as per the banks books here) the organisation is due to the bank.
The Bank balance as revealed by both the books differs.
Aug 18th
Cash Book - 40,680Pass Book - 40,560 [−9,320 + 50,000 − 120]
The cheque deposited on Aug 14th is collected by this day. The bank has debited collection charges to the account. This information has not yet reached the organisation and as such it has not been recorded in the organisation books.
The Bank balance as revealed by both the books differs.
Bank Overdraft
The term overdraft balance is not used in all the situations where the organisation owes money to the bank. Even in cases where the organisation takes some loan from the bank it owes money to the bank. This owing is not termed overdraft.