PROOF OF CASH

CFRAMEWORK
1 st Semester S.Y. 2020-2021
Two-Date Bank Reconciliation
❖A bank reconciliation that involves two dates
❖Also called four-column reconciliation.
❖Procedures followed are the same with that of a one-date reconciliation
❖Becomes complicated only when certain facts or data are omitted:
a) Book balance – Beginning and Ending
b) Bank balance – Beginning and Ending
c) Deposit in Transit – Beginning and Ending
d) Outstanding Checks – Beginning and Ending
Proof of Cash
❖An expanded reconciliation in that in includes proof of receipts and
disbursements.
❖Useful in discovering possible discrepancies in handling cash particularly when
cash receipts have been recorded but have not been deposited.
❖To discover or identify cash receipts and cash disbursements:
❖Recorded in the accounting records but not on the bank statement.
❖Recorded on the bank statement, but not on the accounting records.
❖Recorded at different amounts by the bank than in the accounting records.
❖3 Forms of Proof of Cash
1. Adjusted balance method
2. Book to bank method
3. Bank to book method
Proof of Cash
❖3 Forms of Proof of Cash
1. Adjusted balance method
◦ Book receipts and disbursements, and bank receipts and
disbursements for the current month are adjusted to equal the
correct receipts and disbursements of the current month
2. Book to bank method
◦ Book receipts and disbursements are adjusted to equal the bank
receipts and disbursements for the current month
3. Bank to book method
◦ Bank receipts and disbursements for the current month are
adjusted to equal the book receipts and disbursements for the
current month
Computation of Book Balance: Beginning
and Ending
Balance per book – Beginning xxx
Add: Book debits during the month xxx
Total xxx
Less: Book credits during the month xxx
Balance per book - Ending xxx
Computation of Bank Balance: Beginning
and Ending
Balance per bank – Beginning xxx
Add: Bank credits during the month xxx
Total xxx
Less: Bank debits during the month xxx
Balance per bank - Ending xxx
Computation of Deposit in Transit

Deposit in Transit – Beginning xxx

Add: Cash receipts deposited during the month
Book Debits xxx
Previous Month’s Credit Memo (xxx) xxx
Total deposits to be acknowledged by the bank xxx
Less: Deposits acknowledged by the bank during the month
Bank Credits xxx
Current Month’s Credit Memo (xxx) xxx
Deposit in Transit - Ending xxx
Computation of Outstanding Checks
Outstanding Checks – Beginning xxx
Add: Checks drawn by depositor during the month
Book credits xxx
Previous Month’s Debit Memos (xxx) xxx
Total checks to be paid xxx
Less: Checks paid by the bank during the month
Bank debits xxx
Current Month’s Debit Memo (xxx) xxx
Outstanding Checks - Ending xxx
 Proof of Cash: Adjusted Balance Method
End of Receipts Payments End of
Item Previous (Current (Current Current
Month Month) Month) Month
Balance per Book xxx xxx xxx xxx
Credit Memo – Previous Month xxx (xxx)
Credit Memo – Current Month xxx xxx
Debit Memo – Previous Month (xxx) (xxx)
Debit Memo – Current Month xxx (xxx)
Adjusted Book Balance xxx xxx xxx xxx
 Proof of Cash: Adjusted Balance Method
End of Receipts Payments End of
Item Previous (Current (Current Current
Month Month) Month) Month
Balance per Bank xxx xxx xxx xxx
Deposit in Transit – Previous Month xxx (xxx)
Deposit in Transit – Current Month xxx xxx
Outstanding Checks – Previous Month (xxx) (xxx)
Outstanding Checks – Current Month xxx (xxx)
Adjusted Bank Balance xxx xxx xxx xxx
 Proof of Cash: Book to Bank Method
End of Receipts Payments End of
Item Previous (Current (Current Current
Month Month) Month) Month
Balance per Book xxx xxx xxx xxx

Credit Memo – Previous Month xxx (xxx)

Credit Memo – Current Month xxx xxx

Debit Memo – Previous Month (xxx) (xxx)

Debit Memo – Current Month xxx (xxx)

Deposit in Transit – Previous Month (xxx) xxx

Deposit in Transit – Current Month (xxx) (xxx)

Outstanding Checks – Previous Month xxx xxx

Outstanding Checks – Current Month (xxx) xxx

Balance per Bank xxx xxx xxx xxx

 Proof of Cash: Bank to Book Method
End of Receipts Payments End of
Item Previous (Current (Current Current
Month Month) Month) Month
Balance per Bank xxx xxx xxx xxx

Deposit in Transit – Previous Month xxx (xxx)

Deposit in Transit – Current Month xxx xxx

Outstanding Checks – Previous Month (xxx) (xxx)

Outstanding Checks – Current Month xxx (xxx)

Credit Memo – Previous Month (xxx) xxx

Credit Memo – Current Month (xxx) (xxx)

Debit Memo – Previous Month xxx xxx

Debit Memo – Current Month (xxx) xxx

Balance per Book xxx xxx xxx xxx

End of Chapter