Calculate the Balance as per pass book from given information:
(i) Debit balance as per cash book Rs. 25,000.
(ii) Cheques issued but not yet presented for payment Rs. 8,900.
(iii) Cheques deposited into bank but not yet collected and credited by the bank Rs. 12,300.
(iv) Interest allowed by the bank Rs. 1,250.
(v) Bank charges of Rs. 250 were not entered in the cash book.
(vi) Bank paid insurance premium as per our standing order but no information has been given to us Rs. 3,500.

Question

Calculate the Balance as per pass book from given information:
 (i) Debit balance as per cash book Rs. 25,000. 
(ii) Cheques issued but not yet presented for payment Rs. 8,900. 
(iii) Cheques deposited into bank but not yet collected and credited by the bank Rs. 12,300. 
(iv) Interest allowed by the bank Rs. 1,250. 
(v) Bank charges of Rs. 250 were not entered in the cash book. 
(vi) Bank paid insurance premium as per our standing order but no information has been given to us Rs. 3,500.

Accepted Answer

Here's a detailed explanation for the calculation of the Balance as per Pass Book:

**1. Justification for Option 2 (Rs. 19,100) being correct:**

To calculate the Balance as per Pass Book, we start with the Debit balance as per Cash Book and adjust it for items that have been recorded in one book but not the other.

**Starting Point:** Debit balance as per Cash Book = **Rs. 25,000**

**Additions:**

*   **(ii) Cheques issued but not yet presented for payment Rs. 8,900:** When cheques are issued, the cash book balance is reduced. However, the bank (pass book) balance remains unchanged until the cheques are presented for payment. To reconcile, we need to add this amount back to the cash book balance to arrive at the pass book balance.
    *   Add: Rs. 8,900
*   **(iv) Interest allowed by the bank Rs. 1,250:** The bank credits interest to the account, increasing the pass book balance. This entry is not yet in the cash book. To reconcile, we add this amount to the cash book balance.
    *   Add: Rs. 1,250

**Deductions:**

*   **(iii) Cheques deposited into bank but not yet collected and credited by the bank Rs. 12,300:** When cheques are deposited, the cash book balance is increased. However, the bank (pass book) balance is not increased until the cheques are collected. To reconcile, we need to deduct this amount from the cash book balance.
    *   Deduct: Rs. 12,300
*   **(v) Bank charges of Rs. 250 were not entered in the cash book:** The bank debits charges from the account, reducing the pass book balance. This entry is not yet in the cash book. To reconcile, we deduct this amount from the cash book balance.
    *   Deduct: Rs. 250
*   **(vi) Bank paid insurance premium as per our standing order but no information has been given to us Rs. 3,500:** The bank has paid the premium, reducing the pass book balance. This payment is not yet recorded in the cash book. To reconcile, we deduct this amount from the cash book balance.
    *   Deduct: Rs. 3,500

**Calculation:**

Debit balance as per Cash Book = Rs. 25,000
Add: Cheques issued but not presented = + Rs. 8,900
Add: Interest allowed by bank = + Rs. 1,250
Subtotal = Rs. 25,000 + Rs. 8,900 + Rs. 1,250 = Rs. 35,150

Deduct: Cheques deposited but not collected = - Rs. 12,300
Deduct: Bank charges = - Rs. 250
Deduct: Insurance premium paid by bank = - Rs. 3,500
Total Deductions = Rs. 12,300 + Rs. 250 + Rs. 3,500 = Rs. 16,050

Balance as per Pass Book = Subtotal - Total Deductions
Balance as per Pass Book = Rs. 35,150 - Rs. 16,050 = **Rs. 19,100**

Therefore, the Balance as per Pass Book is Rs. 19,100, which matches Option 2.

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**2. Explanation for why other options are incorrect:**

*   **Option 1: Rs. 20,200**
    This option is incorrect because it does not result from the correct application of all the given adjustments to the cash book balance. For example, if the bank charges of Rs. 250 were mistakenly omitted from the deductions, the balance would be Rs. 19,100 + Rs. 250 = Rs. 19,350, which is still not Rs. 20,200. Any combination of errors leading to Rs. 20,200 would mean a deviation from the standard reconciliation process.

*   **Option 3: Rs. 19,000**
    This option is incorrect as it differs from the accurately calculated balance of Rs. 19,100 by Rs. 100. Such a discrepancy would arise from a minor calculation error or misreading of one of the amounts by Rs. 100. For instance, if the interest allowed by the bank was mistakenly taken as Rs. 1,150 instead of Rs. 1,250, the result would be Rs. 19,000. However, based on the given figures, the correct calculation leads to Rs. 19,100.

*   **Option 4: Rs. 28,000**
    This option is significantly higher than the correct balance and suggests major errors in the reconciliation process. For example, if some of the deductions were incorrectly treated as additions, or if large deductions were entirely missed, the balance would be inflated. If only the cheques deposited but not collected (Rs. 12,300) were deducted, and all other deductions (Rs. 250 + Rs. 3,500 = Rs. 3,750) were missed, the balance would be Rs. 25,000 + Rs. 8,900 + Rs. 1,250 - Rs. 12,300 = Rs. 22,850, which is still not Rs. 28,000. Therefore, Rs. 28,000 is not the correct balance.