CJ ALLAUIGAN

§ Imprest system is a form of control for cash where all cash receipts and
disbursements are made through checks. However, as it may be impractical to issue
checks at all times, even for small disbursements, petty cash funds is typically
established.
Petty Cash Fund

a.Imprest fund system

ü entry is prepared upon establishment of the fund or when the fund balance is increased
ü when small expenses are incurred and paid, no formal entry is made
ü the journal entry for the expenses is prepared when the fund is replenished

b.Fluctuating fund system

ü Everything an imprest fund system is not.
Reversing entry
§ This is a statement which brings into agreement the cash balance per book and
cash balance per bank. The bank compares its cash in bank balance per books to
the bank statement provided by the banks (typically on a monthly basis).
1.Adjusted balance method
2.Book to Bank method
3.Bank to Book method
1.Adjusted balance - the reconciliation of bank and book balances to corrected cash
balance. This form is composed of two separate sections that begin with the bank
balance and book balance, respectively. Reconciling items that apply to the bank
balance are added and subtracted to arrive at the corrected cash balance. Likewise,
reconciling items that apply to the book balance are added and subtracted to arrive
at the same corrected cash balance. The corrected cash balance is the amount that
should be shown on the balance sheet at the reconciliation date.

2.Bank to book – reconciles from the bank statement balance to the book balance.

3.Book to bank - reconciles from the book balance to the bank statement balance.
Book reconciling Items
Credit Memos
Debit Memos
Errors

Bank Reconciling Items

Deposit in Transit (DIT)
Outstanding Checks (OT)
- excluding Certified Checks
Errors
Book Reconciling Items
a.Bank Debit memos and Bank Charges. These are NSF or DAIF and charges by the
bank for services that are deducted from the account by the bank and which the
company learns of when it receives the bank statement.

b.Bank Credits. Collections or deposits in the company's account that the company
is not aware of until receipt of the bank statement.

c.Depositor or book Errors. Errors made by the company that must be corrected for
the reconciliation to balance.
Bank Reconciling Items

a.Deposits in Transit. Deposits recorded in the cash account in one period but not
received by the bank until the next period.

b.Outstanding Checks. Checks written by the depositor that have yet to be

presented at the bank for collection.

- Certified Checks should be deducted from the outstanding checks

c. Bank Errors. Errors made by the bank that must be corrected for the reconciliation
to balance.
oA two-date bank reconciliation
oFollows the procedures of bank reconciliation except that there are two dates
(months) involved
oIt is the expanded reconciliation showing receipts and disbursements ( four
column worksheet is necessary)
oUseful in detecting discrepancies in handling cash
Forms:
1.Adjusted balance method
2.Book to Bank method
3.Bank to Book method