Final answer:
To prepare a Bank Reconciliation Statement, reconcile the Pass Book overdrawn balance with the company's Cash Book, accounting for outstanding cheques, deposits in transit, bank fees, errors, and other adjustments to arrive at the correct cash balance.
Step-by-step explanation:
To prepare a Bank Reconciliation Statement, one must examine the differences between the bank statement, known as the Pass Book, and the company's financial records shown in the Cash Book. Since the starting point as per the Pass Book on 31st March 2019 is an overdrawn balance of ₹ 10,000, adjustments must be made for any cheques issued that have not yet cleared, any deposits in transit that have not been recorded by the bank, bank charges and interest that the company has not yet accounted for, errors in records, and other reconciling items.
If, for example, there were outstanding cheques totalling ₹ 5,000 and a deposit in transit of ₹ 3,000, you would add the deposit in transit to the Pass Book balance and subtract the outstanding cheques. If the bank charged a service fee of ₹ 500 not yet accounted for in the company’s Cash Book, you would subtract this amount from the Cash Book balance.
A full Bank Reconciliation Statement will list all such differences, and the adjusted balances from both the Pass Book and the Cash Book should match once all the reconciling items are addressed. The final step will include summing up the adjustments to determine the correct cash balance.