Accounting and Financial Management Unit:1: Accounting: It is defined as the procedure of analyzing, classifying and recording transactions in accordance

with a pre-conceived plan for the benefit of Providing a means by which an enterprise can be conducted in orderly fashion Establishing a basis for reporting the financial condition of enterprise and the results of its operation Need for accounting: To ascertain the profit To ascertain the financial position by the owner and the outsiders To be produced before the tax authorities

Methods of accounting: Single entry system (Rough method of accounting wherein particulars are being gathered in a haphazard manner-used by very small business men- It is not a systematic method or a fool-proof method) Double entry system (A systematic recording of transactions- Each and every transaction is entered in two different accounts, one account is debited and the other credited- This is a universally followed system)

Concepts, Conventions and Accounting Assumptions: Dual aspect concept- Each and every transaction affects two aspects one on the debit side and the other on the credit side. Money measurement concept- Only transactions having money value can be recorded in the books of account. Cost concept- Irrespective of the intrinsic value of the asset purchased, the cost incurred only is entered in the books of account. It is also known as Historical cost concept. Going concern concept- Books of account are maintained with the fundamental accounting assumption that the business will not be closed in the near future. Accrual concept- The transactions are recorded without considering whether payments are made or amounts are received. All expenses relating to the accounting period are accounted whether paid or not. Similarly all incomes are accounted in the period to which they relate whether received or not. This is also a fundamental accounting assumption. (This is the basis for the Matching concept or Matching principle)

Business Entity concept: - It is also known as Entity concept or Separate entity concept. The books of account are maintained considering the business and the proprietors as separate entities. That is the reason why even the proprietors accounts are also maintained in the books of account of the business (of which they are the owners). Consistency concept- The various accounting policies followed in the preparation of the books of account have to be followed consistently year after year. If any accounting policy is decided to be altered or changed, it can be done. The main point is that the changed policy has to be followed thereafter consistently, year after year. Changes in the accounting policies should not be often done. Changes should be with the aim to present the accounts in a better way, to show true and fair picture of the financial position of the business. If there is a change in the accounting policies it should be disclosed in the Statement of accounts. If nothing is stated in the Statement of accounts regarding the changes, it has to be assumed that all accounting policies that have been followed in the earlier year have now been followed. It is also a fundamental accounting assumption. Realization concept-Unless the profit is realized the accountants are not expected to take it into account. The profit is normally accounted only on the sale of goods. As soon as some goods are purchased, profit will not be accounted unless they are actually sold to third parties either on cash or credit basis. Conservatism concept-The expenses or losses incurred in business, have to be accounted atleast on estimate basis even if the same cant be precisely determined. On the other hand, if the income has not accrued, the accountants are not expected to account for the same. This concept is due to the principle that the accounts should not show a better than the actual picture. In short, window dressing or showing a rosy picture should be avoided. Materiality concept and Disclosure concept-These concepts go together. Material items are important items. In a company form of organization, the shareholders may be spread all over the country. The directors prepare the Annual report and circulate it among the shareholders. This is the tool with which the directors convey the financial position of the company to the shareholders. All important things happening in the company have to be disclosed in the financial statements which are part and parcel of the Annual report.

Fundamental Accounting Assumptions: Going concern Accrual Consistency

Accounting Conventions: Consistency Materiality Disclosure Conservatism

Process of Accounting: Journal Ledger Trial balance Final accounts (Trading and profit and loss account and Balance sheet)

Types of Accounts: Personal accounts Natural personal accounts Artificial personal accounts Representative personal accounts Real Accounts (or property accounts) Nominal Accounts (or revenue accounts) Double Entry Book keeping: Each and every transaction affects two accounts. As in the example given herein below find out the two accounts affected by each of the transactions. Transaction Accounts affected Cash Purchase of Goods Cash Sale of Goods Purchase of Goods on Credit basis Sale of Goods on Credit basis Return of Goods from the Customer Return of Goods to the Supplier Salary Paid Salary Paid by Cheque Purchase of Goods against cheque payment Sale of Goods and proceeds recd by chq Wages Paid Interest received Purchase of Building Salary paid by Cheque Sale of Furniture Purchase of Stationery Capital Brought in by the Proprietor Purchase of Computer Household expenses incurred Example: Cash and Goods

Principles of Double entry Book-keeping (Golden Rules of Accounting): (This is the very basis for preparing the Journal entries and this has to be understood thoroughly and remembered for learning this chapter and working out problems in this chapter) Personal accounts Debit the Receiver and Credit the Giver Real Accounts (or property accounts) Debit what comes in and credit what goes out Nominal Accounts (or revenue accounts) Debit all expenses and losses and credit all incomes and gains Journal: This is the book of prime entry. As soon as a transaction takes place, it has to be entered in the Journal. Journal Format is furnished below: Date Particulars LF Debit amount Credit amount 01.05.2005 Cash account Dr. 10 100000 To Mr.As account 100000 (Being Cash received from Mr.AReceipt No.xxxxx) In a Journal one account will be debited and there will be a corresponding and equal credit. This is what is the very basis of the Double entry book keeping system. All business transactions have basically two effects, one debit and the other credit. The last part of the Journal describing the transaction is called as Narration. Unless a narration is given the Journal entry is not complete. (Examiners may not give full marks if the narration is not given even if the debit and credit entries are correct)

Composite Journal Entry: It is a combination of more than one journal entry. For example: Mr.A owes Rs. 10000 to the business. He pays only Rs.9500 in full settlement: Here two transactions have taken place viz., Receipt of Rs.9500/- and Discount allowed of Rs.500/-. The following entries have to be passed for recording the above transactions: 1. Cash a/c Dr. 9500 To Mr.A 9500 2. Discount a/c Dr. 500 To Mr.A 500 Instead of passing the above two entries, it is sufficient if the following only one composite journal entry is passed: Cash a/c Discount a/c To Mr.A Dr. Dr. 9500 500 10000

In a composite journal entry such as the above, there may be more than one debit or/and credit. However, the totals of debit and credit entries should tally. Some Important Accounting Terminologies: Trade Discount- It is a rebate given by the seller to the buyer at the time of Trade. Trade means purchase and sale. At the time of trade, discount may be given by the seller, as a result of bargaining or due to bulk purchase. Discount given due to bulk purchase is also referred to as Quantity discount. Cash Discount- This discount is given, for repaying the dues promptly or as per the time schedule. This is also used as a bait by a creditor to tempt the debtor to repay the amount due. This is also known as Prompt payment discount. Debit Note (or Debit advice): It is an intimation to the other party stating that his account has been debited in the books of the sender. (Charges taken by a banker is intimated to the customer through a Debit advice) Credit Note (or Credit advice): It is an intimation to the other party stating that his account has been credited in the books of the sender. (Ex: For passing on quantity discount a credit note may be sent) Prepaid expenditure: An expenditure is said to be prepaid if the same is paid in the current year but the benefit from the same extends beyond the closure of the current financial year. Outstanding expenses: These are expenditures, which have been incurred (or have accrued- See Accrual Concept) but have not yet been actually paid.

Invoice: This is the Bill raised by the seller claiming the value of the goods sold from the purchaser. Bad debts: It represents the dues from debtors which can not be recovered due to many factors such as the debt is barred by limitation or the debtor can not be found or the debtor has been declared as an insolvent by a court of law. Provision for Doubtful debts: If there is doubt regarding the recovery of the debt, the loss is considered as accrued and hence, a provision has to be made from out of the profits. (Provision is what is set apart from out of the profits for meeting a known liability or a loss that has accrued) Depreciation: It is a reduction in value of a Fixed asset (such as building, furniture, plant and machinery) due to wear and tear (i.e., usage) or passage of time. It is also provided for replacing the asset after its useful life. Straight Line Method-(SLM): In this method of providing for depreciation, the rate of depreciation is always applied on the cost the amount of depreciation is always same p.a. Depreciation = (Cost minus salvage value)/Estimated useful life of the asset Salvage value or the scrap value is the estimated value that the asset is expected to fetch after its useful life. Written Down Value Method: (WDV): It is also known as Reducing Balance method. As the names suggest, in this method of depreciation, the depreciation is calculated on the book value, which is the value after providing for depreciation during the period for which the asset has already been used. In this method of depreciation the rate of depreciation is applied always on the WDV. As a result the amount of depreciation keeps on reducing year after year. Ledger: After passing the entries in the Journal register, the same entries have to be posted in the Ledger. Ledger is nothing but a compilation of entries involving a single account. For example, each and every sale transaction has to be entered in the Journal. Each such Journal entry will have Sales account in it. Subsequently all sales (journal) entries will be compiled in the Ledger under an account called as Sales account. The total of this ledger account will give the figure of sales achieved in a given period. The Ledger Format is furnished below: Dr. Date Particulars JF Amount Date

Particulars

JF

Cr. Amount

Problem 1: Journalize Ledgerize the following transactions and prepare a Trial Balance. 01-Apr-12 Capital introduced in business Rs.100000/02-Apr-12 Own furniture brought in for office use Rs.5000/03-Apr-12 Purchased goods and cash paid Rs.25000/04-Apr-12 Bank account opened Rs.25000/04-Apr-12 Sold goods and received cash Rs.38000/05-Apr-12 Purchased goods worth Rs.35000/- for Cash 06-Apr-12 Sold goods to Ramachandran on credit Rs.15000/07-Apr-12 Ramachandran returned goods worth Rs.1000/07-Apr-12 Bought goods on credit Rs.10000/- from Shyam Sundar 08-Apr-12 Defective goods returned to Shyam Sundar Rs.800/08-Apr-12 Received from Ramachandran Rs.13500/- in full settlement by cheque 09-Apr-12 Paid Shyam Sundar Rs.9000/- in full settlement 10-Apr-12 Invoice value of goods purchased Rs.10000/- (Trade discount Rs.250) 11-Apr-12 Paid Wages Rs.500/12-Apr-12 Purchased a Machine by issuing a cheque for Rs.15000 12-Apr-12 Installation charges for the above machine Rs.2000 13-Apr-12 Paid Freight Rs.1000/14-Apr-12 Paid Freight Rs.1500/- by cheque 15-Apr-12 Insurance paid Rs.1200/-(Accounting year ended 31.03.2012 ) 17-Apr-12 Bank charges found in the pass book only Rs.25 19-Apr-12 LIC premium paid Rs.5000 on the life of the proprietor 26-Apr-12 Paid rent by cheque Rs.1500/30-Apr-12 Salary payable/outstanding Rs.15000/Trial Balance: It is a list of balances extracted from the Ledger Accounts. Basically, under the double entry book-keeping system, transactions are first entered in the Journal, in two accounts, one on the debit and the other on the credit side. After preparing the Journal entries, they are posted in the Ledger accounts (to the debit of the account shown as debited in the journal and to the credit of the account shown as credited in the journal). Then the ledger accounts are balanced and the balances are extracted in the Trial Balance. Due to the process followed above, the total of the debit and credit sides of the Trial Balance should tally or be equal. (Tutorial Note: All formats are given for the guidance of the students only. The items given therein are not exhaustive or comprehensive. Students have to work out more and more problems and strengthen their knowledge about these accounts and statements.) Trading Account: This account basically compares the purchase and sale figures and disclose the Gross profit contained in the sales. The expenses debited in the Trading account are those which are incurred for purchasing the goods and bringing the goods to the point of sale of the

businessman (generally referred to as Direct Expenses). The format of the Trading account is furnished below: Trading Account for the year ended -----------------To Opening Stock By Sales less returns To Purchases less returns By Closing Stock To Wages By Samples distributed To Freight By Goods destroyed by fire To Carriage inwards To Gross Profit (Balancing figure) ----------------------------------------------------------------The chances of getting Gross loss is very remote. No businessman will sell goods at a rate lesser than his purchase cost. Hence, in most of the cases, Gross Profit only will be the result of the Trading account. Profit and loss Account: From the Gross profit all other expenses are reduced to arrive at the Net profit or Net loss. The Format of the Profit and loss account is furnished below: Profit and Loss Account for the year ended ----------------Salaries and Bonus Gross Profit Rent Commission received Traveling Rent received Postage Discount received Printing and Stationery Rent received Telephone Expenses Bad debts recovered Bad debts Provision for DD & Discounts Conveyance Vehicle maintenance Interest on Bank Loan Discount Commission & Brokerage Depreciation Bank charges Insurance premium(Gen.Insurance only) All other expenses (except personal expenses and capital expenses) Net profit (Balancing figure) ___________ __________ ========== =========

Balance Sheet: It is not an Account. It is a statement extracted on a particular day, usually at the end of the year. On the closure of business operations on that day, it lists the liabilities and assets of the business. It shows the state of affairs of the business. Assets=Liabilities, Liabilities=Capital + outside liabilities and Assets=Capital + Outside liabilities (These are called as the accounting equation) (Various authors refer to this Equation as follows: Assets=Capital + Liabilities, wherein Liabilities mean amounts payable to outsiders). Balance Sheet as at ----------------Assets Current Assets Sundry Debtors Bills Receivable Bank Cash on hand Loan from Financial Institutions and Banks Short term Investments Current Liabilities Fixed Assets Sundry Creditors (At Book value, after reducing Depreciation) Bills Payable Outstanding Expenses __________ __________ Liabilities Capital Add: Net Profit Less: Drawings Balance of Capital ========= =========

Problem 2: Journalize the following transactions: a Goods returned by a customer Rs.1500 b Goods returned to a Supplier Rs.2500 c Cheque deposited in to Bank earlier but dishonoured now Rs.10000 d Salary payable to Mr.A e Insurance prepaid f Provision for Bad and Doubtful debts(Debtors balance Rs.50000 and B/R Rs.20000) g Provide for Bad and doubtful debts 5% and Discount on Debtors 2% (Debtors balance Rs.60000 and B/R Rs.30000) h Deposited a cheque received from Mohammed in toBank (Discount being Rs.500) Rs.20000 i. Preliminary expenses incurred Rs.5000 and decided to write it off over a period of 5 years, commencing from the current year. j Patents Rs.10000 (effective life being 10 years) k Depreciate Plant and Machinery on WDV method @ 10%(Cost Rs.15000-Book value before depn Rs.10000) l Write off Depreciation on Cost of Furniture @ 10%(Cost Rs.10000- SLM methodBook value Rs.8000)

Problem 3: Set out below is a Trial Balance correctly. Dr./Rs. Capital 80000 Bad debts recovered 2500 Creditors 12500 Return outwards 3500 Bank overdraft 15700 Rent 3600 Salaries 8500 Trade expenses 3000 Cash in hand 2100 Stock on 01.04.05 24500 Purchases 118700 Total 274600

of Mr.Premanand drawn on 31-03-06. Redraw it Cr./Rs. Debtors 75800 Bank deposit 27500 Discounts allowed 400 Drawings 6000 Returns Inwards 4500 Sales 146900 Bills Payable 13500

Total

274600 MCA-Madras University

Problem 4: Sri.Prashnav provides you the following information for the year ended 31.12.2005, using which you are required to prepare a Trading and Profit and Loss account and the Balance sheet. (Balance of stock as at the end of the year was determined at Rs.75000/-) Sales 535000 Salaries and Bonus 25000 Misc. Income 5000 Fixed Assets 15000 Purchases 400000 Current liabilities 30000 Opening stock 50000 Current assets (other than stock) 15000 Carriage inwards 5000 Wages 15000 Other Administration expenses 28000 Selling and Distribution expenses 18000 Capital Account 25000 Drawings 24000 Problem 5: From the following data prepare a Trading, Profit & Loss account for the year ended 31.03.08 and a Balance sheet as on that date: Dr. Drawings/Capital .............................. 10000 Purchases/ Sales .............................. 30000 Returns .............................. 5000 Carriage in .............................. 2000 Carriage out .............................. 3000 Depreciation on Plant .............................. 4000 Plant .............................. 20000 Salaries and Wages .............................. 3000 Bad debts .............................. 2000 Premises .............................. 20000 Opening stock .............................. 25000 Sundry debtors .............................. 15000 Wages outstanding .............................. Rent received .............................. Reserve for Bad and doubtful debts . . . . . . . . . . . . . . . . . . . . Sundry creditors .............................. Loans ..............................

Cr. 30000 60000 1000

2000 1000 1000 6000 38000

Additional information: a. Closing stock Rs.45000/-. b) A fire broke-out in the godown and destroyed stock worth Rs.5000/- on 08.03.08. The insurance company has accepted 80% of the claim made in this regard. c) Provide for doubtful debts @10% and discount @5%. d) It is estimated that the business will be in a position to avail 5% of the creditors as discount. e)Depreciate buildings @15%. f)Interest on capital and Drawings have to be accounted @10% g) Samples distributed during the year costs Rs.1000/- h) Rent payable and outstanding was Rs.1000/-.i)Closing stock includes samples worth Rs.2000/Problem 6: The following balances have been extracted from the books of M/s.Bliss and co. and you are required to prepare the Trading and Profit and Loss account for the year ended 31.03.2005 and the Balance Sheet as on that date: Cash on hand 20000 Opening Stock 32000 Cash at Bank 5000 Purchases 425000 Machinery 25000 Insurance 700 Furniture 10000 Bank charges 800 Freight 8000 Drawings 20000 Salary 2500 Bad debts 1000 Postage 600 Sales 500000 Capital 55100 Accounts payable 28000 Discount received 7000 Accounts receivable 50000 Provision for Depreciation 15000 Fixed deposit with Bank 15000 Provision for Bad and Doubtful debts 2500 Bank loan (received on 01.01.2005 @ interest of 10%) Rs.10000 Interest on Fixed deposit received during the year Rs.500 Additional Information: a)Salary Payable Rs.1500 b)Provision for Doubtful debts to be maintained at 10% of Debtors c)Depreciate Machinery @ 10% and Furniture @ 20% on Straight Line Method d)Insurance prepaid Rs.350 e)Rate of interest receivable on Bank deposit is @ 10% f) Closing stock Rs.30000. Problem 7: From the following Trial balance and additional information prepare a Trading,Profit & Loss account for the year ended 30.06.06 and a Balance sheet as on that date: Dr. Cr. Bad debts 2000 Capital 25100 Buildings 20000 Bills Payable 1000 Carriage inwards 1500 Borrowings 33000 Cash on hand 3500 Creditors 6000 Debtors 20000 Purch.Returns 1000 Drawings 5000 Sales 68000 Opening stock 22500 Provision for Plant 18000 Doubtful debts 1500 Purchases 33000 Rent 1800 Salaries 1800 Sales Returns 4500 Wages 2000 Total Rs. 135600 Total Rs.135600 Additional information: a) Closing stock Rs.48000/- b) Outstanding Wages Rs.1000/- c) Provide for Doubtful debts @ 10% and discount @ 5% d) Depreciate buildings @ 15% and Plant @ 5%.

Problem 8: From the following Trial balance and the additional information, prepare a Trading and Profit and Loss account for the year ended 31.12.2005 and a Balance sheet as on that date: Cost of Goods sold 1000000 Sales 1400000 Closing stock 100000 Commission received 20000 Wages 25000 Capital 590000 Salary 60000 Sundry Creditors 200000 Traveling expenses 15000 Loan (12%-recd on 01.10.05) 80000 Telephone expenses 12000 Interest received on Invts 22000 Insurance (Paid on 01.09.05) 9000 Bad debts 1000 Sundry Debtors 100000 Bills Receivable 50000 Building 200000 Land 300000 Machinery 100000 15% Investments 220000 Drawings 120000 Total 2312000 Total 2312000 Additional Information: Provide Depreciation @ 10% on Building and 5% on Machinery (During the year, on 01.08.2005, Machinery worth Rs.20000 was purchased) Provide for Doubtful debts @ 5% and Discount @ 10% Outstanding expenses Salary Rs.10000/- Rent Rs.18000/-

Bank Reconciliation Statement The accountant of a business organization prepares his set of books of account for the transactions entered in to by the business. The transactions, the business has with the Bank shall be maintained by him in a Book called as Cash book which contains separate columns for Cash and Bank transactions. The bank on its part maintains the transactions it has with this customer in a separate account, a copy of which is furnished to the customer in a book called as Pass book or in a Bank statement . The student should remember the fact that there is every chance for a difference in the balance maintained by these two sets of books due to the time lag between the point of time the entries are made in one set of books when compared to the other set of books. The Accountant should compare both the sets of books and should prepare a Bank reconciliation statement periodically in order to sort out the differences. If he is not in a position to sort it out himself, he should bring it to the notice of the Banker in order to set right the difference. The Differences can arise due to various reasons, some such instances are listed hereunder: Cheques issued but not presented for payment (Entries would have been passed in the Cash book but the Banker has no knowledge about the cheques as they have not yet been presented before him for payment) Cheques deposited but not yet realized by the Bank (As soon as a cheque is deposited, an entry will be made in the Cashbook but the Banker may pass an entry in the Pass book , on realization of cheque only. For a local cheque, officially the Banker can take one day for realization and for out station cheques up to a maximum of 15 days. The banker shall pass an entry in the pass book only on realization of the cheque and in the meantime the balances shown in both the books naturally differ) Bank charges entered in the Pass book only (The Accountant of the businessman does not have any knowledge about the same) Total errors in the Cash book Total errors in the Pass book Cheque entered in the Cash book but the cheque is not yet deposited in the bank Wrong posting in the Cash book (debited instead of credited and vice versa) Wrong posting in the Pass book (debited instead of credited and vice versa) Collection made by the Banker directly on instructions from the Customer Standing instructions executed by the Banker Local cheques paid into bank but not entered in cash book Interest entry made by the Banker (and the Accountant of the customer has no information about the same)

A cheque sent for collection and returned unpaid had not been entered in the Cash Book Some party paying directly into the account Cheque discounted with the Banker has been dishonoured and the same is entered in the Pass book only

From the following particulars ascertain the Bank Balance as per pass book of Ms.Pavithra as on December 31,2011. a) The balance as per cash book on that date was Rs.11,500 b) Cheques issued but not cashed before that date amounted to Rs.1,750 c) Cheques paid into bank, but not cleared before December 31, 2011 amounted to Rs.2150 d) Interest on investments collected by the bank not entered in the cash book amounted to Rs.275 e) Local cheques paid into bank but not entered in cash book Rs.300 f) Bank charges debited in the pass book Rs.25 From the following particulars extracted from the book of Mr. Sai, prepare a Bank reconciliation statement showing the balance as per pass book as on 31st January 2012. a) The bank balance as per cash book was Rs.7000 on 31.1.2012 b) Cheques amounting to Rs. 800 were issued in January 2012 but presented for payment in February 2012. c) Cheques amounting to Rs.1800 were paid in the bank in January 2012 but were credited in the bank in February 2000. d) A cheque of Rs. 600, which was received from a customer, was entered in the bank column of the cash book in January 2012 but the same was paid into the bank in February 2012. e) The Pass book shows a credit of Rs.250 for interest and a debit of Rs.50/- for Bank charges. From the following particulars of Mr. Sathya ascertain the Bank Balance as per pass book in December 31,2008. a) The Bank Balance as per cash book was Rs. 11500 on December 31,2008 b) Cheques issued but not cashed before 31.12.94 amounted to Rs. 1750/-. c) Cheques paid in to Bank but not cleared before December 31, 2008 amounted to Rs. 2150/-. d) Interest on Investments collected by the Bank but not entered in the cash book amounted to Rs.275. e) Local cheque paid in but not entered in the cash book Rs. 250. f) Bank charges debited in the pass book Rs. 95. The pass book of Mr.Narayan showed a balance of Rs. 15500 on December 31, 2011.Cheques issued by him before that date but were not presented for payment amounted to Rs. 3200. Cheques amounting to Rs.1800 were paid into Bank on December 30, but were not credited until January 2, 2001. On

31st December a cheque for Rs. 540 was received and entered in the Bank column of the cash book but was omitted to be paid into the bank. Prepare a Bank Reconciliation Statement as on 31st, December 2011. 5 On 31st December 2008 your pass book showed a Credit balance of Rs.10020. Before that date you had issued a cheque amounting to Rs.4000 but they were not presented for payment. A cheque for Rs.1000 paid by you in to the bank was not credited before 31 st December, 2008. You had also received a cheque for Rs.2000 which, though entered by you in your cash book was omitted to be paid to the bank. Besides, to your credit there was an entry of Rs.150 for interest.

From the following particulars ascertain the balance that would appear in the pass book of Mr. Imanuel as on 31 st December 2011. a) The Cash Book showed a Credit Balance of Rs. 18500. b) Out of the cheques worth Rs. 30000 issued prior to this date, it was found that the bank had paid only cheques worth Rs. 14500 c) There was also a credit in the pass book for an amount paid by our customer directly to the bank Rs. 11610. d) Cheques paid in before 31.12.2011 amounted to Rs. 23000 but the bank had collected and credited cheques worth Rs. 9000 only. e) Interest on Investments collected by bank and credited in the pass book amounts to Rs. 95. f) There was an entry on the debit side in the pass book for bank charge Rs. 25.

On 31st December 2008, the cash book of Mr. Baghwan Prasad shows that his account with the bank indicates an overdraft balance of Rs. 1200. On checking his cash book with the Bank pass book he finds that cheques issued amounting to Rs. 212 have not been passed through the bank and also that the bank has not credited him with a sum of Rs.108 being a Cheque paid in on 31st December 2008. On the same date the pass book shows that the bank had debited him with interest and charges Rs. 24, which was not passed through his cash book. Draw a Bank Reconciliation statement showing the overdraft as per pass Book. On 31st December 2007 the cash book of Ms.Thirumala Balaji showed an overdraft of Rs. 5670. From the following particulars make out a Bank Reconciliation statement and find out the balance as per Bank pass book. (a) Cheques drawn but not cashed before 31st December 2007 amounted to Rs. 3946. (b) Cheques paid into the bank but not cleared before 31st December 1988 amounted to Rs.4891. (c ) A cheque for Rs.520 previously discounted with bank had been dishonoured and debited in the pass Book

(d) Debit is also made in the pass Book for Rs.120 on account of interest on overdraft and Rs.55 on account of charges for collecting bills and cheques. (e) Bank has collected interest on investment and credited Rs. 760 in the Pass Book. 10 From the following particulars, prepare a Bank Reconciliation statement for Mr.Sai Samarpan as on 31.3.2007. 1. Overdraft as per pass book on March 31, 1989 was Rs. 12900. 2. Cheques issued before that date but presented for payment after that date amounted to Rs.1200. 3. Cheques paid in to the bank but not cleared and credited before 31.3.2007. amounted to Rs.3200. 4. Interest on overdraft amounting to Rs. 175 debited in the pass book but not entered in to the cash book. 5. Interest on investments amounting to Rs. 700 was collected by the bank and credited in the pass book but not entered in the cash book. 6. Bank charges Rs. 22 not entered in to the cash book. --------------------------------------------------End------------------------------------------------