Cashbook shows bank balance ₹ 3,000 on 1 – 1 -’16 while on 31 – 1 -’16 cashbook shows bank overdraft of ₹ 1,000. Passbook shows bank balance of ₹ 4,000 on 1 – 1 -’16. The bank reconciliation statement prepared for the month of January 2016 will start by which balance and why ?

Cashbook shows bank balance ₹ 3,000 on 1 – 1 -’16 while on 31 �

1.	Cashbook shows bank balance ₹ 3,000 on 1 – 1 -’16 while on 31 – 1 -’16 cashbook shows bank overdraft of ₹ 1,000. Passbook shows bank balance of ₹ 4,000 on 1 – 1 -’16. The bank reconciliation statement prepared for the month of January 2016 will start by which balance and why ?
Answer» As bank reconciliation statement is to be prepared for the month of January, it can be started with the bank overdraft of ₹ 1,000 as per cashbook on 31-1-’16. One thing is remembered, if the opening and the closing balance of a particular time period are given then in such circumstances, take the closing balance only for preparing the bank reconciliation statement.