Attempt any ONE of the two sub-parts i.e. either (i) or (ii) : (i) On 31st March 2026, the Bank Pass Book of Ms. Veena showed a balance of ₹…

CA Foundation · Accounting · MTP · September 2026
Attempt any ONE of the two sub-parts i.e. either (i) or (ii) : (i) On 31st March 2026, the Bank Pass Book of Ms. Veena showed a balance of ₹ 1,50,000 to her credit while balance as per cash book was ₹ 1,12,050. On scrutiny of the two books, she ascertained the following causes of difference: (a) She has issued cheques amounting to ₹ 80,000 out of which only ₹ 32,000 were presented for payment. (b) She received a cheque of ₹ 5,000 which she recorded in her cash book but forgot to deposit in the bank. (c) A cheque of ₹ 22,000 deposited by her has not been cleared yet. (d) Mr. Gupta deposited an amount of ₹ 15,700 in her bank which has not been recorded by her in Cash Book yet. OR (ii) Mr. A accepts two bills of exchange on June 1, 2025 for ₹ 3,00,000 and ₹ 1,20,000 drawn on him by Mr. B. The bill of exchange for ₹3,00,000 is for two months while the bill of exchange for ₹ 1,20,000 is for three months. Mr. B got the first bill discounted with the bank for ₹ 2,98,000 on June 3, 2025. On August 2, 2025 Mr. A requested Mr. B to cancel both the bills and drew a new bill on him with the combined amount of both the bills along with interest @ 12% per annum for a period of two months. Before the due date of the renewed bill on September 3, 2025, Mr. A becomes insolvent and only 40 paise in a rupee could be recovered from his estate. You are required to give the journal entries in the books of Mr. B

Suggested Answer and Working Notes:

(i) Bank Reconciliation Statement as on 31st March, 2026 Particulars Details (₹) Amount (₹) Balance as per Pass Book (Cr.) 1,50,000 Add: Cheque deposited but not yet cleared 22,000 Add: Cheque recorded in Cash Book but not yet deposited 5,000 Add: Bank Charges debited by bank 250 27,250 Less: Cheque issued but not yet presented 48,000 Less: Amount deposited but not recorded in Cash Book 15,700 Less: Interest allowed by bank 1,500 (65,200) Balance as per Cash Book 1,12,050 OR (ii) Journal Entries in the books of Mr. B Date Particulars Amount Amount (₹) 2025 1st June Bills receivable (No. 1) A/c Dr. 3,00,000 Bills receivable (No. 2) A/c Dr. 1,20,000 To Mr. A's A/c 4,20,000 (Being drawing of bills receivable No. 1 due for maturity on 4.8.2025 and bills receivable No. 2 due for maturity on 4.9.2025) 3rd June Bank A/c Dr. 2,98,000 Discount A/c Dr. 2,000 To Bills receivable (No.1) A/c 3,00,000 (Being Bills receivable (No.1) discounted from bank) 2nd August Mr. A's A/c Dr. 4,20,000 To Bank A/c 3,00,000 To Bills receivable (No.2) A/c 1,20,000 (Being the reversal entry for cancellation of both the bills) 2nd August Bills receivable (No. 3) A/c Dr. 4,28,400 To Interest A/c 8,400 To Mr. A's A/c 4,20,000 (Being the bill of exchange no. 3 drawn together with interest at 12 %p.a. in lieu of the original acceptance of Mr. A) 3rd Sep Mr. A's A/c Dr. 4,28,400 To Bills receivable (No. 3) A/c 4,28,400 (Being the amount due from Mr. A on dishonour of his acceptance on presentation on the due date) 3rd Sep Bank A/c Dr. 1,71,360 Bad Debts A/c Dr. 2,57,040 To Mr. A's A/c 4,28,400 (Being the amount received from official assignee of Mr. A at 40 paise per rupee against dishonoured bill)

Topics: Bank Reconciliation Statement, Bills of Exchange and Promissory Notes

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