Intermediate Accounting Part 1

Proof of Cash
A proof of cash is an expanded reconciliation in that it includes proof of receipts and disbursements.
This approach may be useful in discovering possible discrepancies in handling cash particularly when
cash receipts have been recorded but have not been deposited.

A four-column worksheet is necessary, although under the adjusted balance method, an 8-column
worksheet may be required.

The two-dated bank reconciliation of Sam Makulet Company was presented below:

January 31 February 28
Balance per book 50000 70000
Balance per bank 84000 124000
Book debits 200000
Book credits 180000
Bank debits 130000
Bank credits 170000
Deposit in transit 40000 75000
Outstanding checks 65000 119000
NSF checks 5000 1000
Service charge 1000
Note collected by bank 15000 20000

Prepare a proof of cash.

Exercise 1: Efficient Company showed the following information:

Cash in bank balance, March 31 300,000

Book credits for April 720,000
Book debits for April 800,000

Bank statement balance, March 31 330,000

Bank debits 530,000
Bank credits 700,000

The following transactions appeared in the months of March and April:

March April
Note collected by bank 60,000 100,000
Service charge 8,000 2,000
NSF Check 20,000 30,000
Deposits in transit 80,000 220,000
Outstanding checks 178,000 372,000

Prepare a proof of cash.

1|Page AK Sampang