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Chap 9 - Proof of Cash Fin Acct 1 - Barter Summary Team PDF
Chap 9 - Proof of Cash Fin Acct 1 - Barter Summary Team PDF
NOTE: Proof of cash revolves mostly around Two-Date Bank Reconciliation in order to gain PROOF that the CASH recorded truly
exists.
Definition of terms:
Bank Reconciliation – Matching balances of the Entity’s accounting records for cash, that
with the Bank Records.
Two-Date Bank Reconciliation – It is the same as bank reconciliation, but with two dates.
The beginning and the ending period.
Deposit in Transit – Cash (currency, coins, checks, electronic transfers) that has rightfully
been reported in the balance sheet as cash, but has not yet been updated at the banks’
books
o If the DIT is from a previous month, it has already been added to the beginning
balance of the bank because the DIT has been confirmed and recorded by the
bank at present; therefore is deducted from the deposits or receipts of the bank.
o If the DIT is in the current month, although received by the entity, it is not yet
recorded by the bank. It will then be added to the deposits column and to the
bank books total updated balance.
Outstanding Checks – These are checks already recorded by the depositor as cash
disbursements, but not yet reflected in the bank statement.
o If the Outstanding Check is from the previous month, deduct from the beginning
balance, deduct from the withdrawals.
o If the Outstanding Check is from the present month, deduct from ending
balance, then add to withdrawals.
Bank Service Charges – These are charges from the bank in processing the client
transactions.
Bank Credit Memos – These are items on a company’s bank account statement that
increases a company’s checking account balances like refunds from previous bank
charges, a note collected by the bank, interest earned for having money on deposit
added by the bank to the company’s account, etc.
NSF “No Sufficient Funds” Checks – These are checks that have been rejected by the
bank due to insufficient funding of the client bank balances.
Pro-Forma Computations in Summary: (In T-Account Form)
Unadjusted Balances XX XX XX XX
Deposits in Transit:
Beginning XX (XX)
Ending XX XX
Outstanding Checks:
Beginning (XX) (XX)
Ending XX (XX)
Adjusted Balances XX XX XX XX
BOOK
Beginning
Receipts Disbursements Ending
Participles Period
(Dr) (Cr) Period
Unadjusted Balances XX XX XX XX
Adjusted Balances XX XX XX XX
Notes/Reminders for the chapter:
Three Methods:
Adjusted Balance Method
Book to Bank Method
Bank to Book Method
Problem 1 (AICPA Adapted) Page 191 from the book, Problem 17-1
The bank statement for the month of July showed the following:
* Deposits, including P200,000 note collected for Lazer 9,000,000
* Disbursements, including P140,000 NSF Customer checks 7,000,000
and P10,000 service charge
All reconciling items on June 30 cleared through the bank in July. The outstanding checks
totaled P600,000 and the deposit in transit amounted to P1,000,000 on July 31.
Questions:
1. What is the adjusted cash in bank on July 31?
2. What is the cash balance per book on July 31?
3. What is the amount of cash receipts per book in July?
4. What is the amount of cash disbursement per book in July?
Problem 2 (AICPA Adapted) Page 197 from the book, Problem 17-4