(b) Cheques deposited into bank but not yet credited When the cheques are deposited into bank, the amount is debited in the cash book on the same day. But, these may not be shown in the bank pass book on the same day because these will be entered in the bank statement only after the collection of the cheques. For example, the balances as per cash book and bank statement are ` , for X & Co. X & Co.
receives a cheque on 25th March , from ABC Limited for ` , . On the same day, X & Co, debits its cash book with ` , . But bank credits X & Co’s account only when the cheque is collected from ABC Limited’s bank. This shows that is a time gap between depositing the cheque by the customer (X & Co) and collection of cheque by the bank.
As a result of this, Balance as per cash book ( ` , ) is more than balance as per bank statement Balance as per bank statement ( ` , ) is less than balance as per cash book (c) Bank charges and interest on loan and overdraft charged by the bank The bank has to cover the cost of running the customer’s account. So debit is given to the account of the business towards bank charges. Also, if the business had taken any loan or overdrawn, interest has to be paid by the business. These entries for bank charges and interest are made in the bank statement.
But, the entry is made in the cash book only when the bank statement is received by the business. Till then, the cash book shows more balance than bank statement. For example, the opening balance as per cash book and the bank statement as on 1st March is ` , . Bank debits for bank charges ` as on 27th March .
But there is no entry for the same in the cash book as on such date. As a result of this, Balance as per cash book ( `