CASH Ex. BSP treasury bill purchased Nov.

1, 2019,
maturing Jan 31,2020.
-must be unrestricted and must be available for  Foreign currency, unrestricted
use in current operations, payment in current withdrawal, unrestricted to foreign
obligations, exchange rate-CASH
- oh hand, deposit with banks, can be withdrawn
 Bank overdraft offset w/ another
immediately
positive bank account in the same
-current asset
bank- CASH
Cash items included in cash
 Net amount of cash balance over the
cash on hand
credit balance- CASH
undeposited cash collections
 Undelivered or unreleased checks
other cash items awaiting deposit such as
drawn of the company and recorded
- customer’s checks
as disbursed but are not actually
-cashier’s or manager’s checks
issued or delivered to the payee as of
-traveler’s checks
the reporting period- CASH
-bank drafts
 Company’s postdated check, recorded
-money orders
as issued and delivered to payee
bills and coins
before or at the end of the reporting
Cash in bank
period. Which means, was not yet
-demand deposit or checking account
recorded by the payee.- CASH
-saving deposit which are unrestricted to
 Compensating balance; not legally
withdrawal
restricted as to withdrawal, used as a
Cash fund
collateral for a short-term loan- CASH
petty cash fund payroll fund
 Cash in closed bank/bankrupt bank-
dividend fund working fund
RECEIVABLE
change fund interest fund
 Customer’s postdated checks, NSF
tax fund
checks, IOU-receivable
CASH EQUIVALENTS
 Postage stamps and expense
- Short-term and highly liquid
advances. i.e employee’s travel-
investment readily convertible into Prepaid expenses
cash  Bank overdraft that cannot be offset
- Acquired 3 months before maturity can against another account-liability
qualify as cash equivalents  Money market placements,
Examples: commercial papers without maturity-
3 month BSP treasury bill noncurrent asset
3 year BSP treasury bill*purchased 3 months  Cash set aside for long-term specific
before date of maturity purpose or for acquisition of a
3-month time deposit noncurrent asset, such as bond
3-month money market instrument or sinking fund and plant expansion-
commercial paper noncurrent financial asset
 money market accounts on demand any
time, and in absence of any specific terms and Measurement of cash
should not exceed for 3months, otherwise it is -at face value
not considered as cash equivalents -cash in foreign currency is measured at the
Note: It is important to know the date of current exchange rate
purchase w/c should be 3mos. Or less before -net realizable value if the amount
maturity. recoverable is estimated to be lower than the
BSP treasury bill purchased one year ago is face value when a bank holding the funds is in
not qualified as cash equivalent even if the financial difficulty.
remaining maturity is 3 months or less
Financial statement presentation account and should be deducted from
-cash and cash equivalentsfirst line item the balance per books
under current assets BANK RECONCILING ITEMS
Details comprising the cash and cash Deposit in transit or undeposited collection-
equivalents should be disclosed in notes of FS. − Cash receipt that has been added to
the company’s cash balance but has
Imprest system- system control of cash which not been added to the balance
requires that all cash receipts should be reported on the bank statement, and
deposited intact and all cash reimbursements therefore added.
should be made by means of check Outstanding checks
- Checks written by the company issued to
BANK RECONCILIATION the payees, and deducted from the
-statement which brings into agreement the company’s cash balance but they have not
cash balance per book and cash balance per yet been reflected in the bank statement,
bank therefore should be deducted.
Bank statement-monthly report of the bank Errors
to the depositor showing: Note first which entity commits the errors, Then
a) The cash balance per book at the either add or deduct from the balance of the party
beginning that committed the error
b) The deposits made by the depositor and
acknowledged by bank To compute deposit in transit
c) The checks drawn by the depositor and Beg. Deposit of transit xx
paid by the bank Add:Cash receipt reflected In the
d) The daily cash balance per bank during company’s records during the month xx
the month Total
Reconciling items: Less: deposits during the month as
1. Book reconciling items Reflected in the bank statement (xx)
a) Credit memos-deposits made directly by Deposits in transit, end of the month xx
the bank to the company’s account
−notes or drafts collected by bank in favor Outstanding checks Beg. Xx
of the depositor, proceeds of bank loan Add: Checks drawn by the company
credited directly to the account of the During the month xx
depositor Total xx
−interest earned on the entity’s checking Less: Checks paid by the bank
account During the month xx
These credits made by the bank increased Outstanding checks end of month
the bank statement balance and should
be added to the cash balance per books PROFORMA RECONCILIATION
b) Debit memos- charges to the depositor’s *Adjusted balance method
account made directly by bank Book balance xx
−NSF, DAIF Add:Credit balance xx
− Defective checks( checks that lacked Xx
authorized signatures, checks w/ Less: Debit memo (xx)
alterations) Adjusted Book balance xx
− Bank service charge
− Charge of the cost of check booklets Bank balance xx
and payment of bank loans Add: Deposit in Transit xx
− These are recorded by bank as direct
deductions from the depositor’s Less: Outstanding checks (xx)
Adjusted bank balance xx
Preparation of adjusting entries
Only the book reconciling items require adjusting
entries on the book of the depositor
PROOF OF CASH
a) Book balance- beg. and end.
b) Bank balance-beg. And end.
c) Deposit in transit-beg. And end.
d) Outstanding checks

Computation of book balance

Balance per book-beg. Of month xx
Add: Book debits during the month xx
Less: Book credit during the month (xx)
Balance per book-end of month xx

BOOK DEBITS- cash receipts or all items

debited to the cash in bank account
BOOK CREDITS- cash disbursements or all
items credited to the cash in bank account

Computation of bank balance

Balance per bank-beg.of month xx
Add: Bank credits during the month xx
Less: Bank debits during the month (xx)
Balance per bank-end of month xx

BANK CREDITS- all items credited to the

account of the depositor which include
deposits acknowledged by bank and credit
memos
BANK DEBITS-all items DR to the account of
the depositor which include checks paid by
the bank and debit memos.