PREPARATION OF BANK RECONCILIATION STATEMENT WHEN OVERDRAFT BALANCES ARE GIVEN :

In case the books show an adverse balance i.e. an overdraft, the procedure is just the reverse of that which has been discussed in the case of a favorable balance. Overdraft means overdrawing of a bank account. The customer is allowed to draw from his account over and above his balance subject to a limit agreed upon. The bank pass book will show a debit balance in the account of the customer and similarly there will be a credit balance in the bank column of the cash book.

SPECIMEN OF BANK RECONCILIATION STATEMENT
(From overdraft balances)
Bank Reconciliation Statement as on….

Particulars	Rs.	Rs.
Overdraft as per Cash Book		XXX
Add :
Cheques deposited into bank but not yet collected	XXX
Bank charges	XXX
Insurance premium paid by the bank	XXX
Interest on overdraft charged by the bank	XXX
Dishonoured cheques / bills	XXX
Drawings made but not entered in cash book	XXX
Cheques received and entered in the cash book but not deposited	XXX
Any wrong debit in the pass book	XXX	XXX
Less :
Cheques issued but not yet presented for payment	XXX
Interest allowed by the bank	XXX
Direct payment by customers into bank	XXX
Interest on investment received by the bank	XXX
Dividend on shares collected by the bank	XXX
Rebate on bills retired under rebate through the bank but full amount entered in the cash book	XXX
Any wrong credit in the pass book	XXX	XXX
Overdraft as per Pass Book		(XXX)

 

Note: If the reconciliation statement has been started with overdraft as per the pass book to arrive at overdraft
as per the cash book the entries made above should be reversed i.e. all added items should be deducted and
all deducted items should be added.

 

SUMMARY PREPARATION OF BANK RECONCILIATION STATEMENT
Transactions	Starting with the Overdraft    as    per Cash Book	Starting with the Overdraft as per Pass Book
Cheques issued but not presented	Deduct: The amount of unpresented cheques.	Add: The amount of unpresented cheques.
Cheques deposited but not yet collected	Add: The amount of cheques deposited	Deduct: The amount of cheques deposited
Cheques received entered in the bank column of the cash book but not deposited	Add: The amount of cheques	Deduct: The amount of cheques.
Dishonour of cheques deposited earlier	Add: The amount of dishonoured cheques	Deduct: The amount of dishonoured cheques
Collection of interest and dividends and interest by banks	Deduct: The amount of these items	Add: The amount of these items.
Bank charges	Add: The amount of bank charges	Deduct: The amount of bank charges.
Balance/ Overdraft	Bank Overdraft as per Cash Book	Bank Overdraft as per Pass Book

 

Alternative Method is to keep two columns ‘Plus’ and ‘Minus’. All additions are to be shown in ‘plus’ column while all deductions in the ‘minus’ column. Balance is to be shown in ‘plus’ column while overdraft is shown in ‘minus’ column.