Unfavourable Balance of Cash Book Solutions
Unfavourable Balance of Cash Book Solutions addresses problems where the Balance as per Cash Book is negative. The Balance as per Passbook may be positive or negative. This Note addresses situations where Cash Book has an unfavorable balance.
Unfavourable Balance of Cash Book Solutions to Question 1 :
Unfavourable balance as per the Cash book / Debit balance as per pass book – Cheque issued but not presented for payment
If the Balance as per Cash Book is a (Cr.) of Rs. 10000 , cheque of Rs. 4000 has been issued, but not presented for payment would result an/a ____________ in Cr. balance ?
Explanation:
When a Cheques is issued by the company, it reduces it from its Cash Balance. However, if such cheque is not presented for payment , this implies that the same has not been reduced by the bank from its balance.
When starting with the Cr. Balance of Cash Book, Cheques issued but not presented for payment, would be added to the overdraft balance, thereby reducing the negative balance. This would make the balance as per Cash Book to an amount, which would have been if such cheque were not issued at all.
Unfavourable Balance of Cash Book Solutions to Question 2 :
Unfavourable balance as per the Cash book/ Deit balance as per pass book – Cheque directly deposited into bank
If the Balance as per Cash Book is a (Cr.) of Rs. 1200 , cheque of Rs. 500 directly deposited by a customer into the Bank would result an/a __________ in Cr. balance ?
Explanation:
When a Cheque is directly deposited by a debtor into the bank, overdraft balance as per the Pass Book would reduce on collection of such cheque.
However, if such cheque deposit is not recorded in the cash book, the cash book balance would not be impacted.
Since cheque deposit would reduce negative cash book balance, Cheque directly deposited by a debtor into the bank would be added to the Cash Book Balance to bring it at equal to the balance as per the pass book.
Unfavourable Balance of Cash Book Solutions to Question 3 :
Unfavourable balance as per the Cash book/ Debit balance as per pas book – Interest allowed by the bank not recorded
If the Balance as per Cash Book is a (Cr.) of Rs. 1000 , interest of Rs. 400 ,allowed by the Bank would result an/a ______________ in Cr. balance ?
Explanation:
When interest is allowed by the Bank, overdraft balance as per the Pass Book would have reduced on allowance of such interest.
However, if such interest is not recorded in the cash book,the cash book balance would not be impacted and remain the same.
To reconcile the two, such interest would be added to the Cash Book balance (reduce negative cash book balance) to bring it at par with balance as per the pass book.
Unfavourable Balance of Cash Book Solutions to Question 4 :
Unfavourable balance as per the Cash book – Dividend collected by the bank not recorded in the cash book
If the Balance as per Cash Book is a (Cr.) of Rs. 1200 , dividend collected by the Bank of Rs. 900 not recorded in the Cash Book would result an/a ______________ in Cr. balance ?
Explanation:
When Dividend is collected by the bank, but not recorded in the Cash Books of recipient, overdraft balance as per the Pass Book would have reduce on collection of such dividend.
However, if such collection is not recorded in the cash book, the cash book balance would not be impacted and remain the same.
To reconcile the two, such collection would be added to the Cash Book balance (reduce negative cash book balance) to bring it at par with balance as per the pass book.
Unfavourable Balance of Cash Book Solutions to Question 5 :
Unfavourable balance as per the Cash book/ Debit balance as per pas book – Wrong credit granted by the bank
If the Balance as per Cash Book is a (Cr.) of Rs. 1400 , wrong credit of Rs. 700 by the bank would result an/a ________ in Cr. balance ?
Explanation:
When a Wrong credit is granted by the bank, overdraft balance as per the bank would have reduce on such credit.
However, if such Credit is not recorded in the cash book, the cash book balance would not be impacted and remain the same.
Wrong credit granted by the bank would be added to the Cash Book Balance (reduce negative cash book balance ) to bring it at equal to the balance as per the pass book.
To reconcile the two, such credit would be added to the Cash Book balance to bring it at par with balance as per the pass book.
Unfavourable Balance of Cash Book Solutions to Question 6 :
Unfavourable balance as per the Cash book/ Debit balance as per pass book – Cheque deposited but not collected (credited) by the bank
If the Balance as per Cash Book is a (Cr.) of Rs. 9600 , cheque of Rs. 2400 deposited into the Bank,but not collected by Bank would result an/a _____________ in Cr. balance ?
Explanation:
When a Cheque is deposited but not collected by the bank, overdraft balance as per the Cash Book would have been reduced on deposit of such cheque.
However, if such cheque is not collected by the bank, the Pass book balance would remain the same.
To reconcile the two, such deposit would be reduced from Cash Book balance (increase negative cash book balance )to bring it at par with balance as per the pass book.
Unfavourable Balance of Cash Book Solutions to Question 7 :
Unfavourable balance as per the Cash book/ Debit balance as per pass book – Cheque or bill of exchange dishonoured
If the Balance as per Cash Book is a (Cr.) of Rs. 12000 , cheque of Rs. 4000 which is dishonoured due to insufficient fund would result an/a __________ in Cr. balance ?
Explanation:
When a Cheque or bill of exchange dishonored, the balance as per the Pass Book would have remained the same and not increased.
However, as such cheque is considered as collected, it would have reduce the Cash book overdraft balance.
To reconcile the two, such deposit would be reduced from Cash Book (increase negative cash book balance ) balance to bring it at par with balance as per the Pass book.
Unfavourable Balance of Cash Book Solutions to Question 8 :
Unfavourable balance as per the Cash book – Bank charges
If the Balance as per Cash Book is a (Cr.) of Rs. 10000 , Bank charges of Rs. 1100 not recorded in the Cash Book would result an/a ___________ in Cr. balance ?
Explanation:
When the Bank Debits Bank charges, overdraft balance as per the Pass Book would have increased.
However, as such charges are not considered in Cash Book, the Cash book balance would have remained the same.
To reconcile the two, such charges would be reduced from Cash Book balance (increase negative cash book balance ) to bring it at par with balance as per the Pass book.
Unfavourable Balance of Cash Book Solutions to Question 9 :
Unfavourable balance as per the Cash book- Interest charged by the bank
If the Balance as per Cash Book is a (Cr.) of Rs. 10000 , interest charges of Rs. 650 of Bank not recorded in the Cash Book would result an/a ____________ in Cr. balance ?
Explanation:
When the Bank Debits Interest, overdraft balance as per the Pass Book would have increased.
However, as such interest charges are not considered in Cash Book, the Cash book balance would have remained the same.
To reconcile the two, such interest charges would be reduced from Cash Book balance (increase negative cash book balance ) to bring it at par with balance as per the Pass book.
Unfavourable Balance of Cash Book Solutions to Question 10 :
Unfavourable balance as per the Cash book/ Direct payment made by the bank
If the Balance as per Cash Book is a (Cr.) of Rs. 11000 , direct payment of Rs. 2000 by the Bank would result an/a ____________ in Cr. balance ?
Explanation:
When the Bank makes direct payments,overdraft balance as per the Pass Book would have increased.
However, as such payments are not considered in Cash Book, the Cash book balance would have remained the same.
To reconcile the two, such payments would be reduced from Cash Book balance (increase negative cash book balance ) to bring it at par with balance as per the Pass book.
Unfavourable Balance of Cash Book Solutions to Question 11 :
Unfavourable balance as per the Cash book/ Wrong debited by the bank
If the Balance as per Cash Book is a (Cr.) of Rs. 10000 , amount of Rs. 4000 wrongly debited by the Bank would result an/a _____________ in Cr. balance ?
Explanation:
When the Bank makes wrong debit, overdraft balance as per the Pass Book would have increased.
However, as such debits are not considered in Cash Book, the Cash book balance would have remained the same.
To reconcile the two, such charges would be reduced from Cash Book balance (increase negative cash book balance ) to bring it at par with balance as per the Pass book.
However, no entry is not recorded in the books of accounts for wrong debit made by the bank.
