what does the question number 9 subno 3 in pg 11.45 mean ..

Dear Student,

The third point says "A bills of Rs 700 retired by bank under a rebate of Rs 20, the full amount of the bill was credited in the Cash Book".

It means that bill payable of  Rs 700 was honoured by the bank of which Rs 20 was not payable as rebate. However, full amount i.e. Rs 700 was credited in the cash book, but actually the bank paid Rs 680 (700 - 20).

Thus, Pass Book balance was reduced by Rs 680
Cash Book balance was reduced by Rs 700.

So, in order to rectify the effect we add (Debit) Rs 20 to the Cash Book balance, hence, both the balances stand equal.

Hope this clarifies your doubt.
Keep posting!!

  • 0
What are you looking for?