Railway Accounts Department Examinations

Showing posts with label Reconciliation. Show all posts
Showing posts with label Reconciliation. Show all posts

Wednesday, December 12, 2018

Cheques & Bills Suspense head and its reconciliation



Cheques and Bills

·         It is a suspense head under the Major Head "L-Suspense and Miscellaneous" suspense accounts

·         Object: To keep a watch over the Cheques issued by a Railway.

·         What is Cheques & Bills ?   It is nothing, but similar to Bank A/c Operated in Commercial Accounts.

Example:  Salaries Rs. 20,000 /-paid by the firm through cheque.  Journal entry is as follows.

Date
Particulars
Debit
Credit
--
Salaries A/c
Rs.20,000

----
    To Bank

Rs. 20,000


 In Railways, Salary of SSO/A Rs.20,000 paid by the Railways.

Date
Particulars
Debit
Credit
--
Erstwhile Demand No.03
Rs.20,000

----
    To Cheques & Bills A/c

Rs. 20,000

·         The only difference between Commercial firms and Indian Railways is, that we operate Cheques and Bills A/c instead of Bank A/c.( Deposit with RBI A/c in case of Indian Railways)

·         Deposit with RBI A/c of Indian Railways is similar to Bank A/c of commercial firms

·         The reason is why Deposit with RBI A/c is not operated is that the cheques issued are not encashed immediately at the Bank and thereby affecting the Railway Account in RBI i.e., Deposit with RBI.
·         To keep a watch over the cheques and avoid excess payment, Cheques and Bills suspense A/c is operated.

Journal entries – Flow of Cheques and Bills Account

1.      When payments are made by Railways

Date
Particulars
Debit
Credit
--
Respective Demand No.__ Dr
Rs.20,000

----
    To Cheques & Bills A/c

Rs. 20,000

2.      When individual Cheques are encashed by the parties at PSBs (Public Sector Banks)

Date
Particulars
Debit
Credit
--
Cheques & Bills A/c Dr
Rs.20,000

----
    To PSB Suspense A/c

Rs. 20,000

Or Cheques & Bills A/c is Minus Credit

3.      When the PSBs (Public Sector Banks) adjust the amount of payment of encashed cheque against RBI (Reserve Bank of India)

Date
Particulars
Debit
Credit
--
PSB Suspense A/c Dr
Rs.20,000

----
    To Deposit with RBI A/c

Rs. 20,000

Or PSB Suspense A/c is Minus Credit

·         Net of the above 3 journal entries is

Date
Particulars
Debit
Credit
--
Respective Demand No.__ Dr
Rs.20,000

----
    To Deposit with RBI A/c

Rs. 20,000


Cheques and Bills Reconciliation :

Proforma



January, 2018
February, 2018
Cheque No.
Date
Credit
Minus Credit
Credit Balance
Credit
Minus Credit
Credit Balance
001
01.01.2018
Rs.20000
-
Rs.20,000
-
Rs.20,000
Nil
002
02.01.2018
Rs. 1000
Rs.10000
Nil
-
-
-
003
03.01.2018
Rs.1000
Rs.10,000
(-) Rs.9,000
-
-
(-) Rs.9,000

·         The issued cheques are entered as Credit in the month of issue.  Whenever the cheque is encashed at the concerned bank, the same is entered as Minus credit in the month, it  encashed.
·         It always show Credit Balance and will represent the amount of unencashed cheques.   Suppose, in any case the balance against any cheque show Debit balance or Minus Credit balance, it is either fraud /excess of cash paid by the bank against the cheque. Example is Cheque No. 003 of the above table. This fraud or excess payment by the Banks is found only by reconciliation of Cheques & Bills.

·         The cheques drawn statement is prepared by the Accounts officer indicating the cheque number, the bank and the amount of cheques. The total amount of the cheque drawn is reconciled with the amount shown in the General Cash book under cheques & bills.

·         When Individual cheques are encashed: Public Sector Bank branches forward (through their Focal Point branch) Daily Main Scrolls accounting for individual cheques encashed.  After verification of the statement (either manually or through IPAS) received from focal point branch, the DMS-Date wise Monthly Statement, the amount there of will be adjusted.

·         Uncashed cheques for more than 6 months old, the amount cheques is written back from the Cheques and Bills Head duly transferring the same to Sundry earnings.


Date
Particulars
Debit
Credit
--
Cheques & Bills A/c Dr
------

----
To Sundry Earnings A/c

------

Or Cheques and Bills A/c is Minus Credited.

·         The monthly reconciliation  of cheques and bills is made and balance under the head "cheques and bills" at the end of every month is reconciled with the General books and a certificate of reconciliation is recorded on the final reconciliation register of cheques and bills under the signature of Gazetted officer.

·         Now, due to IPAS, the entire mechanism of Cheques and Bills Suspense Account is done through Programme.

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