Journal Entries 6.

Imprest System
a. Establish fund:
CASH AND CASH EQUIVALENT
Petty CF xx
1. Undelivered Check Cash in Bank xx
Cash xx b. Payment of expenses:
A/P xx No entry
2. Postdated Check c. Replenishment of PCF
Cash xx payments:
A/P xx Expenses xx
Cash in Bank xx
3. Stale Check
d. Adjustment to unreplenished
If immaterial:
expenses:
Cash xx
Expenses xx
Miscellaneous Inc xx
Petty CF xx
If material: (adjustment reversed at beg of
Cash xx next period)
A/P xx e. Increase in fund:
4. Cash Shortage Petty CF xx
Cash short/over xx Cash in Bank xx
Cash xx f. Decrease in fund:
(should be adjusted to:) Cash in Bank xx
Due from Cashier xx Petty CF xx
Cash short/over xx 7. Fluctuating fund system
OR a. Establishment of fund:
Loss from cash shortage xx Petty CF xx
Cash S/O xx Cash in Bank xx
5. Cash Overage b. Payment of expenses:
Cash xx Expenses xx
Cash S/O xx Petty CF xx
(adjusted to:) c. Replenishment of fund:
Cash S/O xx Petty CF xx
Misc Income xx Cash in Bank xx
OR (may or may not be equal to
Cash S/O xx disbursement)
Payable to cashier xx d. No adjustment at end of rp
 e. Decrease of fund Bank Balance xx
Cash in Bank xx Add: Deposit in Transit xx
Petty CF xx Less: Outstanding check (xx)
Add/Less: Errors xx
Adjusted bank balance xx
BANK RECONCILIATION
1. Record collection 4. Bank to book method
On entity: Bank Balance xx
Cash xx Add:
A/R xx Deposit in transit xx
On bank: Dr memos xx
Cash xx NSF Check xx
Company X xx Service Charge xx
2. Issued check Less:
On entity: Outstanding Checks (xx)
A/P xx Cr memos (xx)
Cash xx N/R by bank xx
On bank: Interest earned xx
Company X xx Book balance xx
Cash xx
3. Adjusted balance method 5. Book to bank method
Book Balance xx Book Balance xx
Add: Cr memos xx Add: Cr memos xx
N/R by bank xx N/R by bank xx
Interest earned xx Interest earned xx
Less: Dr memos (xx) Add: Outstanding check xx
NSF Check xx Less: Dr memos (xx)
Service Charge xx NSF Check xx
Add/Less: Errors xx Service Charge xx
Adjusted book balance xx Less: Deposit in transit (xx)
Bank balance xx
6. Adjusting entries PROOF OF CASH
a. Note collected by bank:
1. Computation of book balance
Cash in Bank xx
Book balance, beg xx
Notes Receivable xx
Add: Book debits xx
b. NSF customer check:
Less: Book credits xx
A/R xx
Book balance, end xx
Cash in Bank xx
c. Bank service charge:
2. Computation of bank balance
Bank Serv Charge xx
Bank balance, beg xx
Cash in Bank xx
Add: Bank credits xx
Less: Bank debits xx
(for errors)
Bank Balance, end xx
a. Understatement of cash
receipts
3. Computation of deposit in transit
Cash in Bank xx
DIT, beg xx
A/R xx
Add: Cash receipts deposited
b. Understatement of checks
Book debits xx
drawn
Less: CM collected xx xx
A/P xx
Less: Deposits acknowledged
Cash in Bank xx
Bank credits xx
c. Deposit of another entity and
Less: CM xx (xx)
credited by bank.
DIT, end xx
Deduction from bank balance.
No effect on book record.
4. Computation of outstanding
d. Check of another entity
checks
debited by bank.
OC, beg xx
Addition to bank balance.
Add: Checks drawn xx
No effect on book record.
Book credits xx
Less: DM xx xx
Less: Checks paid
Bank Debits xx
Less: DM xx (xx)
OC, end xx
5.
ACCOUNTS RECEIVABLE NOTES RECEIVABLE
Accounting for Bad Debts LONG TERM N/R – INTEREST
BEARING
(Allowance Method)
1. Sale of land (First Year)
1. Recognize DA
a. Notes Receivable xx
Doubtful Account xx
Land xx
Allowance for DA xx
Gain on Sale xx
2. Subsequently found uncollectible
b. Accrued I/R xx
Allowance for DA xx
Interest Income xx
A/R xx
2. Sale of land (Second Year)
3. Account unexpectedly recovered
Accrued I/R xx
A/R xx
Interest income xx
Allowance for DA xx
Solution:
Cash xx
Face Value xx
A/R xx
Interest accrued 1st year xx
Total xx
(Direct Write off Method)
Interest for second year
1. Consider doubtful accounts
(answer*percentage) xx
No entry
2. Prove to be uncollectible
3. Sale of land (Third Year)
Bad debts xx
Cash xx
A/R xx
N/R xx
3. Unexpectedly recovered
Accrued I/R xx
A/R xx
Interest income xx
Bad debts xx
Cash xx
Solution:
A/R xx
Face Value xx
Interest accrued
1st Year xx
nd
2 Year xx xx
TOTAL xx
Interest for 3rd year
(total*percentage) xx
Cash received xx
LONG TERM N/R – NON-INTEREST 5. Effective Interest Method
BEARING Interest Received xx
Interest Income xx
1. Record sale
Amortization xx
N/R xx
CA,beg xx
Sales xx
CA, end (amortized cost) xx
Unearned Income xx
6. Impairment
2. Record first installment
CA of L/R xx
Cash xx
PV of future cash flow
N/R xx
Discounted @ effective
3. Recognize unearned interest
rate (xx)
income
Impairment loss xx
Unearned Interest income xx
Interest income xx
Loan impairment loss xx
Accrued Int. Receiv xx
LOANS RECEIVABLE Allowance for loan xx
1. Initial carrying amount of loan impairment
Principal amount xx
Orig fees received (xx)
RECEIVABLE FINANCING
Direct orig costs incurred xx
INITIAL CA xx PLEDGE OF A/R
1. Recording loan
2. To record sale
Face value of loan xx
L/R xx
Deduction of interest xx
Cash xx
Net Cash xx
3. Record Orig Fees
Cash xx
Cash xx
Unearned I/inc xx
Discount on N/P xx
4. Record distribution costs
Note Payable xx
Unearned I/inc xx
Cash xx ASSIGNING OF A/R
1. Separate assigned accounts
A/R – assigned xx
A/R xx
2. Record loan
Cash xx
Service Charge xx
N/P xx