Proof of Cash

By: Lailane
 Problem 9 – 13 Frivolous Company
Provided the following information for the bank reconciliation:

Checks and charges returned by bank in June

including a June service charge of 50,000 8,000,000
Service charge made by bank in May and recorded
on book in June 100,000
Total credits to cash in all journals during June 9,000,000
Customer’s NSF check returned as a bank charge
in June (no entry made on book) 1,000,000
Customer’s NSF check returned in May and redeposited
in June (no entry made in book in either May or June) 500,000
Outstanding checks at May 31 3,000,000

What is the amount of outstanding checks on June 30?

A. 5,450,000 Outstanding Checks, May 31 3,000,000
B. 3,950,000 Add: Checks drawn by depositor during the month:
C. 4,950,000 Book credits 9,000,000
D. 4,000,000 Service charge in May and recorded
in June (100,000) 8,900,000
Total checks to be paid by bank 11.900,000
Less: Checks paid by bank during the month:
Bank debits 8,000,000
June Service charge (50,000)
June NSF check (1,000,000) 6,950,000
Outstanding Checks, June 30 4,950,000
 Problem 9 – 16 Cool Company
Prepared the following bank reconciliation for the month of November:

Balance per bank statement, Nov. 30 3,600,000

Add: Deposit in transit 800,000
Total 4,400,000
Less: Outstanding checks 1,200,000
Bank credit recorded in error 200,000 1,400,000
Balance per book, Nov. 30 3,000,000

Data per bank statement for the month of December follow:

December deposits (including note collected of
1,000,000 for Cool Company) 5,500,000
December disbursements (including NSF,
350,000 and service charge, 50,000) 4,400,000

All the items that were outstanding on November 30 cleared through the bank in
December, including the bank credit. In addition, 500,000 in checks were
outstanding and deposits of 700,000 were in transit on December 31.
1. What is the balance of cash per ledger on December 31?
A. 4,100,000 Balance per bank statement, Nov. 30 3,600,000
B. 4,900,000 Add: Deposits 5,500,000
C. 4,700,000 Total 9,100,000
D. 4,300,000 Less: Disbursement 4,400,000
Balance per bank statement, Dec. 31 4,700,000
2. What is the amount of cash receipts perper
Balance book instatement,
bank December? Dec. 31 4,700,000
A. 5,400,000 Add: Deposits in transit, Dec. 31 700,000
B. 4,400,000 Total
Bank Receipts in December 5,400,000
5,500,000
C. 5,500,000 Less: Outstanding
Note collected Checks,
during Dec. 31
December 500,000
(1,000,000)
D. 6,400,000 Adjusted
Deposit incash balance
Transit: 4,900,000
November (800,000)
Cash per
3. What is the amount of cash disbursements ledger
December
per book in December? 4,300,000
700,000
Add: Note collected
Cash Receipts per book, December 1,000,000
4,400,000
A. 3,700,000 Bank
Total Disbursements in December 4, 400,000
5,300,000
B. 3,300,000 December debit memos:
Less: NSF Check 350,000
C. 3,100,000 NSF Service
Check Charge 350,000
50,000 400,000
D. 3,500,000 Service Charge
Adjusted cash balance 50,000 (400,000)
4,900,000
November bank reconciling items:
Outstanding Checks 1,200,000
Erroneous bank credit 200,000 (1,400,000)
Outstanding Checks, December 500,000
Cash Disbursements per book, December 3,100,000
 Problem 9 – 19 Opaque Company

Prepared the following bank reconciliation on March 31:

Balance per bank statement, March 31 4,650,000

Add: Deposit in transit 1,000,000
Total 5,650,000
Less: Outstanding checks 1,200,000
Balance per book, Nov. 30 4,400,000

Data per bank statement for the month of April follow:

Deposits 6,000,000
Disbursements 5,000,000

All reconciliation items on March 31cleared through the bank in April. Outstanding
checks on April 30 totaled 750,000 and deposits in transit amounted to 1,500,000.
1. What is the balance of cash per ledger on April 30?
A. 6,400,000 Balance per bank statement, March 31 4,650,000
B. 5,650,000 Add: Deposits 6,000,000
C. 4,900,000 Total 10,650,000
D. 4,650,000 Less: Disbursement 5,000,000
Balance per bank statement, April 30 5,650,000
2. What is the amount of cash receipts perper
Balance book
bankinstatement,
April? April 30 5,650,000
A. 5,000,000 Add:
FromDeposits
the monthin of
transit,
April:April 30 1,500,000
B. 6,500,000 Total 7,150,000
C. 7,500,000 Less: Outstanding Checks, April 30
Deposits 750,000
6,000,000
D. 5,500,000 Adjusted
Deposit incash balance
Transit: 6,400,000
March (1,000,000)
Cash per
3. What is the amount of cash disbursementsledger
April
per book in April? 6,400,000
1,500,000
A. 5,000,000 Cash Receipts per book, April 6,500,000
From the month of April:
B. 5,500,000
C. 4,500,000 Disbursements 5,000,000
D. 5,750,000 Outstanding Checks:
March (1,250,000)
April 750,000
Cash Disbursements per book, April 4,500,000
 Proof of Cash

- An expanded reconciliation in that it includes proof of receipts and

disbursements.

- Also called four-column or two date bank reconciliation

Objectives
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.
 Recap

Book reconciling items:

-Credit Memos
-Debit Memos
-Errors

Bank reconciling items:

-Deposits in transit
-Outstanding Checks
-Errors
 Problem 9 – 3 Beehive Company
Provided the following information:

Balance per book October 31 600,000

Receipts per book for November (collection from customer,
100,000 recorded as 10,000) 2,200,000
Disbursements per book for November (check for 300,000
in payment of account recorded as 30,000) 1,800,000
Balance per bank statement November 30 930,000
Deposit in transit, October 31 300,000
Outstanding Checks, November 30 400,000
Bank receipts for November including an erroneous credit of
100,000 which should have been credited to Beeline Company 2,500,000
Bank disbursements for November including check of Beeline
Company, 200,000 1,970,000

REQUIRED:
• Prepare bank reconciliation on October 31 and November 30.
• Adjusting Entries on November 30.
 Beehive Company
Bank Reconciliation Beehive Company
October 31 Bank Reconciliation
November 30
Adjusted book balance 600,000
Balance per book 1,000,000
Balance per bank 400,000
Add: Understated cash receipt
Add: Deposit in transit 300,000
Correct 100,000
Total 700,000
Recorded as 10,000 90,000
Less: Outstanding Checks 100,000
Total 1,090,000
Adjusted bank balance 600,000
Less: Understated cash disbursement
Correct 300,000
Recorded as 30,000 270,000
Adjusted book balance 820,000

Balance per bank 930,000

Add: Deposit in transit 190,000
Erroneous bank
charge 200,000 390,000
Total 1,320,000
Less: Outstanding Checks 400,000
Erroneous bank
credit 100,000 500,000
Adjusted bank balance 820,000
Adjusting entry:
2015

Nov. 30 Cash in Bank 90,000

Accounts Receivable 90,000

Collected from customer 100,000

Recorded as 10,000

Understated Cash Receipts 90,000

Accounts Payable 270,000

Cash in Bank 270,000

Check written in payment of account 300,000

Recorded as 30,000

Understated Cash Disbursement 270,000

 Forms of Proof of Cash

Bank to
Book
Adjusted Method
Balance
Method

Bank receipts and

disbursements for the current
Book receipts and month are adjusted to equal the
Book to
disbursements, and bank bank receipts and
receipts and disbursements for Bank
disbursements for the current
the current month are adjusted Method month
to equal the correct receipts
and disbursements of the
current month
Book receipts and
disbursements are adjusted to
equal the bank receipts and
disbursements for the current
month
 Pro-forma Proof of Cash for ADJUSTED BALANCE METHOD
xxx Company
Proof of Cash
For the month of February

January Receipts Disbursements February

31 28
Cash in bank account balance 50,000 200,000 180,000 70,000

Note collected
January 15,000 (15,000)
February 20,000 20,000
NSF Check
Book
January (5,000) (5,000) Book
February Debits 10,000 (10,000)
Credits
Service Charge
January (1,000) (1,000)
ADJUSTED BOOK BALANCE 59,000 205,000 184,000 80,000

Bank statement balance 84,000 170,000 130,000 124,000

ADJUSTED BOOK
Deposit in transit:
BALANCE
January 40,000 (40,000)
should be
February
equal to
75,000 75,000
ADJUSTED
OutstandingBANK
Checks Bank Bank
BALANCE
January (65,000)
Credits (65,000) Debits
February 119,000 (119,000)

ADJUSTED BANK BALANCE 59,000 205,000 184,000 80,000

 Problem 9 – 8 Bedlam Company
The following data are for the month of December:
November 30 December 31
Cash in bank account balance 2,032,000 3,160,000
Bank statement balance 1,890,000 2,900,000
Bank debits 1,080,000
Bank credits ?
Book debits ?
Book credits 1,440,000
Outstanding Checks 180,000 592,000
Deposit in transit 80,000 498,000
Check erroneously charged by the bank against
entity’s account (corrected in subsequent month) 40,000 50,000
Bank service charge 2,000 4,000
Note recorded as cash receipt by the entity when
placed with bank for collection
(Note is actually collected by bank in subsequent
month and credited by bank to entity’s account
in same month) 200,000 300,000
REQUIRED:
• Prepare four - column reconciliation showing adjusted
balances.
• Prepare one adjusting entry only on December 31.
 Bedlam Company
Proof of Cash
For the month of December
November Receipts Disbursements December
30 31
Cash in bank account balance 2, 032,000 2,568,000 1,440,000 3,160,000

Cash in bank account balance:

Bank service charge:
November November 30 (2,000)
2,032,000 (2,000)
December Receipts or Book debits 2,568,000 4,000 (4,000)
Disbursements
Note recorded as cash receipt by or Book
entity when placed withcredits
bank for 1,440,000
collection December 31 2,900,000
November (200,000) 200,000
December (300,000) (300,000)
ADJUSTED BOOK BALANCE 1,830,000 2,468,000 1,442,000 2,856,000

Bank statement balance 1,890,000 2,090,000 1,080,000 2,900,000

Deposit in transit: Bank statement balance:

November 80,000 (80,000) November 30 1,890,000
December 498,000 Receipts or Bank credits 498,000
2,090,000
Erroneous bank charge Disbursements or Bank
November 40,000 (40,000) debits 1,080,000
December December 31(50,000) 2,900,000
50,000
Outstanding Checks
November (180,000) (180,000)
December 592,000 (592,000)

ADJUSTED BANK BALANCE 1,830,000 2,468,000 1,442,000 2,856,000

Adjusting entry:

2015

Dec. 31 Bank Service Charge 4,000

Note Receivable 300,000

Cash in Bank 304,000

#
 Pro-forma Proof of Cash for BOOK TO BANK METHOD
xxx Company
Proof of Cash
For the month of February

January Receipts Disbursements February

31 28
Cash in bank account balance 50,000 200,000 180,000 70,000

Note collected
January 15,000 (15,000)
February 20,000 20,000
NSF Check
January (5,000) (5,000)
February 10,000 (10,000)
Service Charge
January (1,000) (1,000)
Deposit in transit:
January (40,000) 40,000
February (75,000) (75,000)
Outstanding Checks
January 65,000 65,000
February (119,000) 119,000

BALANCE PER BANK STATEMENT 84,000 170,000 130,000 124,000

 Pro-forma Proof of Cash for BANK TO BOOK METHOD
xxx Company
Proof of Cash
For the month of February

January Receipts Disbursements February

31 28
Balance per bank statement 84,000 170,000 130,000 124,000

Deposit in transit:
January 40,000 (40,000)
February 75,000 75,000
Outstanding Checks
January (65,000) (65,000)
February 119,000 (119,000)
Note collected
January (15,000) 15,000
February (20,000) (20,000)
NSF Check
January 5,000 5,000
February (10.000) 10,000

Service Charge
January 1,000 1,000

BALANCE PER BOOK 50,000 200,000 180,000 70,000