Debit balance as per cash book as on 31st March, 2021 in ₹ 4,000. Cheques deposited but not yet cleared amounted to ₹ 300 and cheques issued but not presented yet of ₹ 200. The bank allowed interest amounting to ₹ 100 and collected dividend ₹ 100 on directly, balance as per pass book should be ... on that date.

Question

Accepted Answer

The correct option is 3:
The correct answer of ₹ 4,100 is reached by preparing a Bank Reconciliation Statement (BRS) to align the Cash Book's Debit balance with the Pass Book's balance. When starting with a favourable Cash Book balance, a simple rule must be followed: transactions that have increased the Pass Book balance but not yet the Cash Book balance are added, and transactions that have decreased the Pass Book balance but not yet the Cash Book balance are subtracted. The final calculation is as follows: Start with the Cash Book Debit Balance (₹ 4,000). The direct credits from the bank (Interest ₹ 100 and Dividend ₹ 100) are added since the Pass Book is higher, and the cheques issued but not presented (₹ 200) are also added as the Cash Book is currently lower. The cheques deposited but not cleared (₹ 300) must be subtracted because the Cash Book had recorded the receipt, but the Pass Book had not. Therefore, ₹ 4,000 + ₹ 200 + ₹ 100 + ₹ 100 - ₹ 300 results in the correct Pass Book balance of ₹ 4,100.

The incorrect option is 1, 2, and 4:
Option 1 (₹ 3,300) is incorrect because it reflects a major error in BRS logic. It appears to result from subtracting all four items from the starting balance (₹ 4,000 - ₹ 300 - ₹ 200 - ₹ 100 - ₹ 100), incorrectly treating the cheques issued, bank interest, and dividend collection as deductions from the Cash Book balance instead of additions. Option 2 (₹ 3,700) is incorrect as it results from a mix-up in which items are added and subtracted, such as incorrectly adding the cheques deposited and subtracting all other items. Option 4 (₹ 3,900) is incorrect, suggesting a partial error in calculation where only some of the necessary adjustments were made, or an adjustment was applied with the wrong sign. The only calculation that correctly applies the add/subtract rules for a BRS starting with a Cash Book debit balance leads to ₹ 4,100, which confirms Option 3 as correct.