Q.On 31 May 2026, the Cash Book of Kavya Traders showed a bank overdraft of ₹6,000. On comparison with the Pass Book, the following differences were found:

Treat the overdraft as a negative figure and apply the same additions/subtractions used for a favourable Cash Book balance directly to that signed number.

Starting at −6,000 (overdraft), adding the cheques issued but not presented (+2,500) reduces the overdraft; subtracting cheques deposited not yet collected (−1,000) and bank charges (−80) increases it further. Net: −6,000 + 2,500 − 1,000 − 80 = −4,580.

Bank Reconciliation Statement of Kavya Traders as on 31 May 2026 (starting from Cash Book balance, an overdraft)

The overdraft is carried through the statement as a NEGATIVE figure throughout, exactly like any other Cash Book balance, rather than trying to recall a separately 'reversed' rule for overdraft cases. Adding ₹2,500 (cheques issued, not yet presented) makes the negative figure LESS negative — the overdraft shrinks from ₹6,000 to ₹3,500 — because once those cheques ARE presented, the bank will reduce its own balance further, meaning the bank's CURRENT figure is, right now, relatively better (less overdrawn) than the firm's own Cash Book shows. Subtracting the cheques deposited but not yet collected (₹1,000) and the bank charges (₹80) makes the figure MORE negative, since the bank has not yet recorded the deposit (so its balance is relatively worse) and has already charged the ₹80 that the firm hasn't. Working: −6,000 + 2,500 = −3,500; −3,500 − 1,000 = −4,500; −4,500 − 80 = −4,580.

The most common mistake with an overdraft is forgetting that it is a NEGATIVE figure and adding/subtracting items as if starting from a positive number — always write the overdraft with a minus sign (or in brackets) and carry the arithmetic through consistently as a signed number from start to finish.