ACCO 20053 Lecture 2

2020-10-09

Imprest system: where petty cash is used only for miscellaneous/small expenses.
a. Establishment of the petty cash fund:
Dr. Petty cash fund
Cr. Cash in Bank
Total cash balance is not affected. However, the cash on hand shall increase
(PCF = cash on hand), while Cash in Bank is decreased due to the issuance of a
check.
Imprest Balance = the amount established for the petty cash fund.
b. When the fund is used:

12/28 P5000 advances to employees

12/29 P1000 meals
12/30 P500 - Transportation
12/31 P1500 – Repairs

All of these occurrences are entered in a voucher that is numbered. Under the
imprest system, note that when the fund is used, there is no entry. However,
the amount of the petty cash fund is decreased.

Entries are only done for replenishment or adjustments at year-end.

c. When the fund is replenished.

The purpose of replenishment is to bring back the balance of the PCF to its
original amount. Original amount/imprest balance or the amount established.

Debit the expenses and credit cash in bank.

Advances 5000
Meals 1000
Transportation Expense 500
Repairs Expense 1500
Cash in Bank 8000

The credited amount is called a Replenishment Check (included in the balance

of the PCF).

d. No replenishment in our petty cash fund

-make an adjusting entry at year-end to update the balance of the PCF.

(adjustments are only at year-end)

Advances 5000
Meals 1000
Transportation Expense 500
Repairs Expense 1500
Petty Cash Fund 8000

作成した: 2020-10-08
Alcera, Vincent Luigil C.
 The petty cash fund is used as an adjustment if the fund is not replenished
before year-end.
Cash count: an actual count of all items found during the cash count (not a
computation of the correct cash balance).
What is counted:
a. Working funds (PCF)
b. Undeposited receipts (either a cash or check collection)
c. Other forms of collections and items (third party collections and
liabilities) (unclaimed salaries = liabilities)
Accountability: Accepted by the petty cash custodian that are cash or non-cash items
(or part of the items received).
In computing for the accountability, any cash collection/amount existing, regardless
if postdated or not or replenished or not, is included in the count.
Given:

PCF 10000

Undeposited Receipts 20000

Dated Checks 50000

Postdated Checks 30000

Accommodation Check 1000

Collection for charity

8000
(inside the envelope)

Unclaimed Salaries
5000
(inside the envelope)

Total Accountability P124000.00

Accounted For: computes for what is counted.

Note: The imprest balance is always included in the computation for what is accounted
for.
Petty Cash Vouchers:

2020/12/26 400 (Meals)

2020/12/27 500 (Transportation)

作成した: 2020-10-08
Alcera, Vincent Luigil C.
 2020/12/28 4000 (Travel Advances)

2020/12/30 1200 (Repairs)

2020/12/31 300 (Meals)

2021/01/02 1200 (Meals)

2021/01/03 700 (Meals)

Liquidation of Travel Advances:

Air Travel 1500

Hotel Accommodation 1000

Meals 500

Travel Advances
P3000.00
Expensed

Total Travel Advances 4000

Travel Advances
3000
Expensed

Accommodation Check P1000.00

Replenishment Check: Meals (12/26) and Transportation (12/27): P900.00

Third-party collections/Liabilities: 1500

Cash Collections: 20000 (from undeposited receipts)

Computation for what is accounted for:
PCF: 1,100

Bills and Coins 22600

Replenishment Checks 900

Unreplenished Vouchers 7400

作成した: 2020-10-08
Alcera, Vincent Luigil C.
 Cash Collections

Dated Checks 50000

Postdated Checks 30000

Accommodation Check 1000

Charity 7000

Unclaimed Salaries 4500

Accounted for: P123400.00

Priority for Bills and Coins Structure:

a. Third party collections/liabilities.
b. Cash collections.
c. Petty Cash Fund.
Inside the envelope, our charities and unclaimed salaries are P8000 and P5000
respectively. Since what is accounted lacked 1500, the said amount will be part of
other cash collections and liabilities in the bills and coins, which is first
prioritized.
Since we have undeposited receipts of 20000, they are part of the second priority for
computing bills and coins: Cash Collections.
The remaining priority shall go to the PCF amount that is accounted for, which is
P1,100.

Accounted petty cash fund:

Petty Cash Fund

Imprest 10000

Add: Accommodated
1000
Checks

Less: Checks not

5500
replenished

Accountability of Petty
P5500.00
Cash Balance

作成した: 2020-10-08
Alcera, Vincent Luigil C.
 Petty Cash Fund

From Bills and Coins 1100

Replenished Checks 900

Accommodating Checks 1000

Postdated Vouchers 1900

Petty Cash Fund

P4900.00
Accounted For:

Accountability of PCF 5500

Accounted PCF 4900

Cash Shortage P600.00

Accountability P124000

Accounted for 123400

Cash Shortage P600.00

Adjusting Entries on December 31:

Travel Advances 4000
Repairs 1200
Meals 300

Petty Cash Voucher 5500

Travel Expenses 3000

Petty Cash Fund 1000

Travel Advances 4000

Accounts Receivable 30000

作成した: 2020-10-08
Alcera, Vincent Luigil C.
 Cash 30000

Cash 5000

Salaries Payable 5000

Cash Shortage 600

Petty Cash Fund 600

Cash in Bank
Demand Deposits
a. Savings Account
b. Checking account
Maintaining Balance (compensating balance)
- Usually restricted for withdrawal – not reported as cash
a. Short term if restriction is 1 year or less
b. Long term investment if restriction is more than a year

- If not restricted for withdrawal, it is included in cash

PAS 7 – if the restriction of cash is for an available loan facility, then it is
considered as not restricted.
Bank overdraft – generally it shall be reported as current liability unless otherwise
there is a right of offset (agreement to offset an account provided that the company
has more than one account in the same bank at the same branch)
BDO SA1 1000000
BDO SA2 (100000)
Cash in Balance: P900,000
If silent: there is no overdraft if there is no agreement
BDO SA1 100000
Issued a check for 120,000 by an agreement
If no agreement is given, the above example is considered an NSF/DAIF/DAUD (adjust as
Dr. A.R. and Cr. Cash)
Cash Equivalents
- Short-term highly liquid investments (readily convertible into known amounts
of cash subject into an insignificant interest rate risk)
- Purchased or acquired with a maturity of three months (ninety days) or less.
a. Time Deposits
b. Money Market Funds
c. Redeemable preference shares (If P shs = issued, it’s a liability. If bought,
it’s an asset)
d. Treasury Bills and notes

作成した: 2020-10-08
Alcera, Vincent Luigil C.
If silent, only a, b and d are cash equivalents. C is not a cash equivalent if
silent.
(Escrows cannot be offset or used for operations)

作成した: 2020-10-08
Alcera, Vincent Luigil C.