Cash and Cash Equivalent - 1st line item in the Statement of Financial Position / Balance Sheet

The presentation in the Philippine Set-up is based on liquidity; the degree on which the asset can be converted into cash.
*Board Subject: Financial Accounting and Reporting (FAR)
*Based on the accounting standards: PFRS and PAS
Philippine Financial Reporting Standards / International Financial Reporting Standards
Philippine Accounting Standards / International Accounting Standards
Basis for Cash and Cash Equivalents: PAS 1 - Presentaiton of Financial Statement / PAS 7 - Statement of Cash Flows

Types of Cash - Sources / Purposes Measurement of Cash: FACE VALUE

1. Cash on Hand - located in the company Cash in Foreign Currency: Foreign Exchange Rate / Spot R
2. Cash in Bank - located in the bank
3. Cash Fund - either in the company or bank
Purpose could either be a long or short term

Cash Equivalent - debt investments not in the form of receivables - bank - that are due to be converted into for a maximum of
if more than 3 months but within 12 months - short term investment
if more than 12 months - long term investment
Measurement of Cash Equivalent: FACE VALUE

Problem 1-1
Unadjusted Cash in Bank - 12/31/2019 3,000,000.00
Less: Customer Stale Check - 18 months 200,000.00
Add: Company Undelivered Check 250,000.00
Add: Company Post Dated Check 100,000.00
Less: Window Dressed Cash Receipts 450,000.00
Adjusted Cash in Bank - 12/31/2019 2,700,000.00
Continuation - 2/19/2021
Cash in Bank: 1. Checking Account / Demand Deposit *Cash is unrestricted; it is used for the operation.
2. Savings Account
3. Time Deposit - Investment *Cash Equivalent - maximum 3 months
*Short Term Investment - more than 3 months but withi
*Long Term Investment - more than 12 months
Other line items:
1. Time Deposit - 30 days - CASH EQUIVALENT
2. Money Market - is the place wheren in short term borrowing happens
a) Banks - Time Deposit
b) Government - Treasury Bills / Bonds or Government Bonds thru BUREAU OF TREASURY UNDER DEPARTMENT OF FINANCE
*Money Market Place - good for 6 months - SHORT TERM INVESTMENT
3. Saving deposit in closed bank will not qualify as "Cash" because of its restriction.
This is treated as "long term investment." This is measured at net realizable value.
4. Cash Fund
Step 1: Related to asset or liability
If related to asset: either to acquire or to help in the construction of the asset
1) Current Asset - Cash Fund is treated as "CASH"
2) Non-Current Asset - Cash Fund is treated as "LONG TERM INVESTMENT"
*Generally, current assets are used for day-to-day operation.

Problem 1-1
Unadjusted Cash in Bank - 12/31/2019 3,000,000.00
Less: Customer Stale Check - 18 months 200,000.00
Add: Company Undelivered Check 250,000.00
Add: Company Post Dated Check 100,000.00
Less: Window Dressed Cash Receipts 450,000.00
Adjusted Cash in Bank - 12/31/2019 2,700,000.00
Other Components Cash:
Petty Cash Fund 20,000.00

Cash Equivalents:
Time Deposit - 30 days 1,000,000.00

TOTAL CASH AND CASH EQUIVALENT 3,720,000.00 AS OF 12/31/2019

Others:
Money Market Placement 2,000,000.00 Short Term Investment
Savings Deposit in Closed Bank 100,000.00 Long Term Investment
Sinking Fund for Bonds Payable 1,500,000.00 Long Term Investment

Continuation - Case 1
Cash in Bank: 1. Checking Account / Demand Deposit *Cash is unrestricted; it is used for the operation.
2. Savings Account
3. Time Deposit - Investment *Cash Equivalent - maximum 3 months
*Short Term Investment - more than 3 months but withi
*Long Term Investment - more than 12 months
Other line items:
1. Time Deposit - 30 days - CASH EQUIVALENT
2. Money Market - is the place wheren in short term borrowing happens
a) Banks - Time Deposit
b) Government - Treasury Bills / Bonds or Government Bonds thru BUREAU OF TREASURY UNDER DEPARTMENT OF FINANCE
*Money Market Place - good for 6 months - SHORT TERM INVESTMENT
3. Saving deposit in closed bank will not qualify as "Cash" because of its restriction.
This is treated as "long term investment." This is measured at net realizable value.
4. Cash Fund
Step 1: Related to asset or liability
If related to asset: either to acquire or to help in the construction of the asset
1) Current Asset - Cash Fund is treated as "CASH"
2) Non-Current Asset - Cash Fund is treated as "LONG TERM INVESTMENT"
*Generally, current assets are used for day-to-day operation.

If related to liability: Question: Kelan babayaran?

Point of Comparison: From Reporting Date to Maturity Date
If the length of period is within one year - CURRENT LIABILITY
If the length of period is more than one year - NON-CURRENT LIABILITY
Reporting Date: December 31, 2019

Case 1: Maturity Date - September 30, 2020 CURRENT

LIABILITY
Case 2: Maturity Date - March 13, 2021 NON-CURRENT LIABILITY

Case 3: Maturiy Date - November 29, 2020 CURRENT

LIABILITY
Case 4: Maturity Date - October 22, 2022 NON-CURRENT LIABILITY

1) Current Liability - Cash Fund is treated as "CASH"

2) Non-Current Liability - Cash Fund is treated as "LONG TERM INVESTMENT"

ALL FUNDS SET ASIDE TO BE USED FOR OPERATION WILL BE CLASSIFIED AS CASH.
1. Fund set aside to pay the payroll or salaries and compensation of employees.
2. Fund set aside to pay small disbursements - PETTY CASH FUND
3. Fund set aside to pay utilities

*When the problem is silent or when the data do not contain maturity, the sinking fund is classified as long term investment be
the bonds payable is long term in nature.

Problem 1-2
Unadjusted Cash on Hand - 12/31/2019 1,000,000.00
Less: Customer Post-Dated Check 150,000.00 As of 12/31/2019, this is still receivable from customer.
Adjusted Cash on Hand - 12/31/2019 850,000.00 At the time that the company received the check:
Cash
*Postal Money Order is part of cash on because it is unrestricted Accounts Receivable
as to withdrawal of cash from the remittance establishment.
Adjustment:
Accounts Receivable
Cash
To signify that the company has not yet received the cash
Unadjusted Petty Cash Fund - 12/31/2019 50,000.00
Less: Unreplenished Checks 10,000.00 *Hindi gumagalaw sa record ang petty cash dahil inaasa
Employee Post-Date Check 5,000.00 agad ang ginastos na pera.
Adjusted Petty Cash Fund - 12/31/2019 35,000.00 *Nagpautang tayo gamit ang petty worth P5,000 sa emp
employee gamit ang check kaya lang check ay post-dated
Security Bank Current Account 2,000,000.00
PNB Current Account 1,500,000.00

BANK OVERDRAFT - OBLIGATIONS OF THE COMPANY IN THE BANK WHICH HAS TO BE PAID IMMEDIATELY.
This represents the amount of money the company withdraw beyond the cash balance.
For example:
Cash Balance - Bank 100,000.00
Intended amount to be withdrawn 200,000.00
The amount that Bank will finance CURRENT
-100,000.00 LIABILITY

BDO Overdraft 200,000.00 Current Liability

BSP Treasury Bills - 120 days 3,000,000.00 Short Term Investment - 4 months

If the fund set aside is a MONEY MARKET PLACEMENT then the choice is either CASH EQUIVALENT or LONG TERM INVESTM

BPI Time Deposit - 90 days 2,000,000.00 Long Term Investment - LONG TERM ASSET (LAND)
Bond Sinking Fund 2,500,000.00 Cash because the bonds will be settled in a year - 12/31

Summary of Cash and Cash Equivalent

Cash on Hand 850,000.00
Cash in Bank 3,500,000.00
Cash Fund 2,535,000.00
TOTAL 6,885,000.00

Problem 1-10
Cash in Checking Account 350,000.00 CASH
Cash in Money Market Account - TIME DEPOSIT 750,000.00 When the problem is silent, time deposit is good for 3 mo
Treasury Bill - 3 months 3,500,000.00
Total Cash and Cash Equivalents 4,600,000.00 LETTER C

*Cash Equivalent Counting Rule - Start from the date of investment until date of maturity
*If it doesn't under the cash equivalent counting rule - SHORT TERM OR LONG TERM INVESTMENT
*The counting classification start at the end of reporting period until maturity date.
*December 31, 2019 - END OF REPORTING PERIOD UNTIL MATURITY DATE.

Example: December 1, 2019 purchase; December 31, 2020 maturity

Step 1: Identify whether cash equivalent or not - NOT = 13 MONTHS
Step 2: Identify whether short term or long term investment
*Point of Reference: DECEMBER 31, 2019 TO DECEMBER 31, 2020 = 12 MONTHS
Classificaiton: SHORT TERM INVESTMENT

Problem 1-11
Cash in Bank - Checking Account 5,000,000.00
Cash on Hand 400,000.00
Time Deposit 1,500,000.00 Cash Equivalent
Money Order 50,000.00 Cash on Hand
Manager Check 100,000.00 Cash on Hand
Traveler Check 1,000,000.00 Cash on Hand

*Postage stamps unused = OFFICE SUPPLIES

*Postdated customer check is not yet CASH but rather, ACCOUNTS RECEIVABLE

Total Amount of Cash 6,550,000.00 LETTER C

Total Amount of Cash Equivalent 1,500,000.00
CASH AND CASH EQUIVALENT 8,050,000.00

Problem 1-12
Checkbook balance - CASH IN BANK Balance as far as the COMPANY is concerned.
Bank Statement balance - CASH IN BANK Balance as far as the BANK is concerned.

Checkbook Balance 4,000,000.00

Addition: UNDELIVERED COMPANY CHECK 500,000.00
Adjusted Cash in Bank 4,500,000.00 LETTER A

Cash Sinking Fund 2,000,000.00 Long term Investment

Problem 1-13
Unadjusted Petty Cash Fund 50,000.00
Less: Unreplenished expenses 5,000.00
I OWE YOU - Receivable from Employee 5,000.00
Adjusted Petty Cash Fund 40,000.00

Cash on Hand 400,000.00 Exclude the customer post dated check of P100,000
Cash in Bank - Current Account 4,000,000.00
Cash in Bank - Payroll Account 1,000,000.00 Considered as cash fund for operation.
Time Deposit 2,000,000.00 Cash Equivalent because the assumption is within 3 mon
Cash in Bank - Restricted 500,000.00 Cash Fund related to NON-CURRENT asset - long term in
Sinking Fund 1,500,000.00 Bonds Payable is current liability - 6 months before matu

Total Cash as of 12/31/2019 6,940,000.00

Total Cash Equivalent as of 12/31/2019 2,000,000.00
 Total Cash and Cash Equivalent 8,940,000.00 LETTER B

Problem 1-16
Unadjusted Cash in Bank - 12/31/2019 8,000,000.00
Customer Post Dated Check -2,000,000.00
Customer NSF (No Sufficient Fund) Check -500,000.00 Not considered as cash because the check has been rede
Company Undelivered Check 1,500,000.00 the next year. DAIF - Drawn Against Insufficient Fund
Adjusted Cash in Bank - 12/31/2019 7,000,000.00

Cash on Hand - Undeposited Collections 400,000.00 Deposit in Transit

Change Fund 40,000.00 Cash fund used in the operation
Time Deposit - plant expansion 1,000,000.00 Long term investment
Treasury Bill 2,500,000.00 Money Market Placement - Cash Equivalent
Money market placement 3,000,000.00 Cash Equivalent
Postage stamps unused 10,000.00 Office Supplies

Total Cash as of 12/31/2019 7,440,000.00 LETTER B

Total Cash Equivalent as of 12/31/2019 5,500,000.00 LETTER C
Total Cash and Cash Equivalent 12,940,000.00

Problem 1-17
*Investment in Equity Securities do not fall under the category of money market placement since these investments do not re
*If the stocks are actively traded in stock exchange, then the investments are classifed as SHORT TERM INVESTMENT.

Total Amount of Cash = P3, 400,000 LETTER A

Cash Equivalents:
Treasury Bill - 2 months 2,000,000.00
Commercial Papers - 3 months 1,500,000.00
3,500,000.00 LETTER A

Problem 1-14 - Compensating Balance

*Maintaining Cash Balance is considered as CASH because the company can still withdraw.
*Compensating Balance - borrowings from the bank - portion of the borrowing that is maintained in your account
*To compensate for the expenses incurred by the bank.
*For academic purposes, when the problem is silent, the compensating balance is NOT LEGALLY restricted - CASH
*Legally Restricted - short term borrowings - SHORT TERM INVESTMENT
*Legally Restricted - long term borrowings - LONG TERM INVESTMENT

Unadjusted Cash in Bank 6,000,000.00

Less: LEGALLY restricted Compensating Balance 400,000.00 Short Term Investment because the borrowing is SHORT
Adjusted Cash in Bank - Current Account 5,600,000.00
Petty Cash Fund 50,000.00
Time Deposit 2,500,000.00 Cash Equivalent
Saving Deposit 1,000,000.00

Total Cash 6,650,000.00

Total Cash Equivalent 2,500,000.00
TOTAL CASH AND CASH EQUIVALENT 9,150,000.00 LETTER B

Problem 1-15 - Compensating Balance

Step 1: Identify whether the compensating balance is LEGALLY RESTRICTED OR NOT.
Step 2: If legally restricted: it is either SHORT TERM OR LONG TERM INVESTMENT depending on the borrowing's intention.

Cash in Bank 2,250,000.00 *Compensating balance is NOT LEGALLY RESTRICTED, the

Cash on Hand 125,000.00 it is treated as CASH.
Cash Fund for Plant Asset / Building / PPE 1,600,000.00 Long Term Investment

TOTAL CASH 2,375,000.00

Problem 1-3
Unadjusted Cash on Hand - 12/31/2019 1,000,000.00
1. No Sufficient Fund customer check not yet rede -100,000.00
2. Customer Postdated Check -150,000.00
Adjusted Cash on Hand - 12/31/2019 750,000.00

*postal money order is part of cash on hand since the company can get the remittance from the customer immediately upon p

Unadjusted Petty Cash Fund - 12/31/2019 50,000.00

1. Receivable from Employees -10,000.00 Not yet paid by the employees
2. Collections for Christmas Party -5,000.00 Not part of the fund, personal fund of employees
Adjusted Petty Cash Fund - 12/31/2019 35,000.00

Accounted for as:

1. Currency and Coins 2,000.00
2. Replenishment Check received by the petty cash 33,000.00
35,000.00

Unadjusted Cash in Bank - 12/31/2019 4,000,000.00

1. Company Undelivered Check 200,000.00
2. Company PostDated Check 300,000.00
Adjusted Cash in Bank - 12/31/2019 4,500,000.00

*You may observe that the customer checks are adjusted on the cash on hand, while company checks are adjusted on the cash
*As I have said before, checks received by the company as well as coins and currencies need to be deposited as part of the inte
the company, hence while these cash in custody of the company are awaiting deposit then they are called DEPOSITS IN TRANSI
transit are considered as CASH ON HAND, because the receipts are STILL in the custody of the company.
*Meanwhile, checks drawn and issued from the company's fund are to be considered in the CASH IN BANK account because so
to be financed in the check comes from the COMPANY'S BANK ACCOUNT.

Summary
1. Cash on Hand 750,000.00
2. Petty Cash Fund 35,000.00
3. Cash in Bank 4,500,000.00
4. Saving Deposit 2,000,000.00
TOTAL CASH AS OF 12/31/2019 7,285,000.00

Accounting for Petty Cash Fund

1. Imprest Fund System - in the absence of any data
2. Fluctuating Fund System
*If the expenses incurred are beyond the petty cash fund, then the company must ISSUE A CHECK under the VOUCHER SYSTEM

Problem 1-5
IMPREST FUND SYSTEM FLUCTUATING FUND SYST
Establishment of Petty Cash Fund Establishment of Petty Cas
Petty Cash Fund 10,000.00 Petty Cash Fund

Cash in Bank
10,000.00

Incurrence of the Expenses Incurrence of the Expenses

Memorandum Entry - Petty Cash Fund Subsidiary Ledger Recognition of expense in
Postage 1,500.00 Postage Expense
Supplies 5,500.00 Supplies Expense
Transportation 1,200.00 Transportation Expense
Miscellaneous 800 Miscellaneous Expense

9,000.00

Balance of the Petty Cash Fund in the LEDGER = P10,000 Balance of the Petty Cash
Petty Cash Fund
10,000.00

Replenishment of Fund Replenishment of Fund

Postage Expense 1,500.00 Petty Cash Fund

Supplies Expense
5,500.00
Transportation Expense 1,200.00
Miscellaneous Expense 800
Cash in Bank 9,000.00

Increase of PCF by P5,000 Increase of PCF by P5,000

Petty Cash Fund 5,000.00 Petty Cash Fund

Cash in Bank
5,000.00
Problem 1-6
IMPREST FUND SYSTEM FLUCTUATING FUND SYST
Establishment of the Fund Establishment of the Fund
Petty Cash Fund 10,000.00 Petty Cash Fund

Cash in Bank
10,000.00

Postage and Supplies Expense as incurred: Postage and Supplies Expe

Memorandum Entry under PCF Subsidiary Ledger Recognition of Expense in
Postage 1,500.00 Postage Expense
Supplies 3,000.00 Supplies Expense

Balance of Petty Cash Fund in the Legder 10,000.00 Balance of Petty Cash Fun

Transporation as incurred and settlement of obligation: Transporation as incurred

Memorandum Entry under PCF Subsidiary Ledger Recognition of Expense in
Transportation 1,000.00 Transportation Expense
Accounts Payable 3,500.00 Accounts Payable

Balance of Petty Cash Fund in the Legder 10,000.00 Balance of Petty Cash Fun

Replenishment of Fund: Replenishment of Fund:

Postage Expense 1,500.00 Petty Cash Fund

Supplies Expense
3,000.00
Transportation Expense 1,000.00
Accounts Payable 3,500.00
Cash in Bank 9,000.00

Balance of Petty Cash Fund in the Legder 10,000.00 Balance of Petty Cash Fun

Increase the PCF by P10,000: Increase the PCF by P10,00

Petty Cash Fund 10,000.00 Petty Cash Fund

Cash in Bank
10,000.00

Balance of Petty Cash Fund in the Legder 20,000.00 Balance of Petty Cash Fun

Imprest Fund System: Imprest Fund System:

The PCF in the ledger only moves when: The PCF in the ledger only
1. Establishing the fund 1. Establishing the fund
2. Adjusting balance of the fund - INCREASE / DECREASE 2. Adjusting balance of the
3. Unreplenished Expenses 3. Expenses as incurred
*Unreplenished expenses a
expenses are recorded righ
the actual balance of PCF c
Problem 1-7
IMPREST FUND SYSTEM FLUCTUATING FUND SYST
May 2 - Establishment of fund May 2 - Establishment of f
Petty Cash Fund 10,000.00 Petty Cash Fund

Cash in Bank
10,000.00

May 2 to 28 - Expenses incurred May 2 to 28 - Expenses inc

Postage 1,000.00 Supplies Expense
Supplies 3,000.00 Transportation Expense
Transporation 2,500.00 Miscellaneous Expense

Miscellaneous Expense
1,500.00
8,000.00
Memorandum Entry under PCF Subsidiary Ledger

BALANCE OF PETTY CASH FUND ACCOUNT 10,000.00 BALANCE OF PETTY CASH

ACTUAL BALANCE OF PETTY CASH FUND 2,000.00 ACTUAL BALANCE OF PETT

May 29 - Replenishment May 29 - Replenishment

Supplies Expense 4,000.00 Petty Cash Fund
Transportation Expense
2,500.00
Miscellaneous Expense 1,500.00
Cash in Bank 8,000.00

BALANCE OF PETTY CASH FUND ACCOUNT 10,000.00 BALANCE OF PETTY CASH

ACTUAL BALANCE OF PETTY CASH FUND 10,000.00 ACTUAL BALANCE OF PETT

June 1 to 29 - Expenses incurred June 1 to 29 - Expenses inc

Supplies 2,000.00 Supplies Expense
Postage 1,000.00 Transportation Expense

Transporation
1,000.00
4,000.00
Memorandum Entry under PCF Subsidiary Ledger

BALANCE OF PETTY CASH FUND ACCOUNT 10,000.00 BALANCE OF PETTY CASH

ACTUAL BALANCE OF PETTY CASH FUND 6,000.00 ACTUAL BALANCE OF PETT

June 30 - Expenses are not yet replenished June 30 - Expenses are not
Supplies Expense 3,000.00 No need for adjustment b
Transportation Expense 1,000.00
Petty Cash Fund 4,000.00

BALANCE OF PETTY CASH FUND ACCOUNT 6,000.00 BALANCE OF PETTY CASH

ACTUAL BALANCE OF PETTY CASH FUND 6,000.00 ACTUAL BALANCE OF PETT

July 1 - Replenishment and Increase in Fund July 1 - Replenishment and

PRELIM EXAM SOLUTIONS

COMPREHENSIVE CASE
Unadjusted Balance of Cash and Cash Equivalent 12,344,187.80
Accounted for as:

Unadjuste
d Balance 70% 8,640,931.46
of Cash

Unadjusted Balance of Ca 30% 3,703,256.34

12,344,187.80

Customer Checks awaiting Deposits or DEPOSIT IN TRANSIT / CASH ON HAND

*First, look at the date of receipt, if within March 31, 2021 then the check will form part of "DEPOSIT IN TRANSIT OR DIT."
*Next, if checks fall within March 31, 2021 then look for the date of check, if within March 31, 2021, then the checks will FINA
OF DIT. Otherwise, checks beyond March 31, 2021 either on date of receipt or date of check will be treatead still as RECEIVABL
Deposit in Transits:
Control
No. 03- 219,482.00
1010

Control
No. 03- 18,913.00
1012

Control
No. 03- 81,617.00
1016

Control
No. 03- 156,739.00
1017

Control
No. 03- 160,161.00
1018

Control
No. 03- 196,156.00
1019

Control
No. 03- 87,621.00 920,689.00
1020

Still Considered as Receivables as of 3/31/2021:

Control
No. 03- 249,631.00
1011

Control
No. 03- 182,090.00
1013

Control
No. 03- 173,720.00
1014

Control
No. 03- 60,952.00 666,393.00
1015

Company Checks
Checks issued by the company dated beyond March 31, 2021 will still be considered as CASH.
Checks still considered as CASH and therefore still OBLIGATIONS AS OF 03/31/2021
 Control
No. 03- 27,363.00
0099

Control
No. 03- 244,558.00
0103

Control
No. 03- 63,178.00
0104

Control
Post Dated
No. 03- 201,051.00 536,150.00
Checks
0107

Control
No. 03- 166,065.00
0098

Control
No. 03- 233,044.00
0101

Control
Undelivered
No. 03- 83,548.00 482,657.00
Checks
0106
1,018,807.00

*Control No. 03-0107 is posted dated and undelivered check.

Other Items
Unadjusted Balance of Petty Cash Fund 50,000.00
Less: Unreplenished expenses as of 3/31/2021 14,500.00
Adjusted Balance of Petty Cash Fund 35,500.00

Accounted for As:

Actual Balance in Petty Cash Fund 2,500.00
Replenishment Check (Control No. 03-0105) 33,000.00
Adjusted Balance of Petty Cash Fund 35,500.00

Under Annex 1:
1. Fund is classified as CASH because the obligation will be settled within 1 year from March 31, 2021.
2. Fund is classified as LONG TERM INVESTMENT because the obligation will be settled beyond 1 year from March 31, 2021.
3. Fund is classied as CASH because materials also known as inventory will still not yet used in production, are classified as cur
Besides, the fund is to be used for the OPERATION or in the case for PRODUCTION.
4. Fund is classied as LONG TERM INVESTMENT because equipment is NON-CURRENT ASSET.
5. Temporary overdraft or BANK DRAFT will not be added back since the company maintains several accounts with Philippine N
In other words, no action to be taken on this draft.
Unadjusted Cash Balance as of 3/31/2021 8,640,931.46
Less: Customer Checks still considered as receivabl -666,393.00
Add: Company Checks still considered as cash 1,018,807.00
Less: Unreplenished expenses -14,500.00
Less: Funds classified as LONG TERM INVESTMENT -1,100,000.00
Adjusted Cash Balance as of 3/31/2021 7,878,845.46

Unadjusted Cash Equivalent as of 3/31/2021 3,703,256.34

Less: Money Market Instrument classified as
short term investment 1,110,976.90
Adjusted Cash Equivalent as of 3/31/2021 2,592,279.44

Counted No. of Days (90 days for Cash Equivalent)Category

Time Deposit (3/4/2021 to 5/3/2021 60 Cash Equivalent
Time Deposit (2/1/2021 to 5/12/20 100 Short Term Investment
Treasury Bills (3/15/2021 to 4/24/2 40 Cash Equivalent
Treasury Bonds (2/26/2021 to 5/17 80 Cash Equivalent

Adjusted Cash and Cash Equivalent as of 3/31/20 10,471,124.90

*Cash on Hand comprises of:

Deposit in
920,689.00
Transits

Petty
Cash 35,500.00
Fund
956,189.00

Bank Reconciliation
The Company - Record The objective is to make sure that the records in the company equal the actu
Bank - Actual Cash Custody amount of CASH IN BANK in the BANK.

Problem 2-1
First Bank - CASH IN BANK ACCOUNT in the records of APATHY 65,000.00
As per the BANK STATEMENT - FIRST BANK ACCOUNT 108,000.00 Running Balance on the Ba
For Reconciliation:
1. Deposit in Transit 80,000.00
2. Credit Memo for Notes Collected by the Bank 30,000.00
3. Outstanding Checks (No. 102, 105 and 107) 95,000.00 These are regular checks - NOT POST DATE
4. Debit Memo for Service Charge 2,000.00
Reconciliting Items of the BOOK (COMPANY RECORDS) Reconciliting Items of the BANK
1. Credit Memoranda - ADD 1. Deposit in Transit - ADD
2. Debit Memoranda - DEDUCT 2. Outstanding Checks - DEDUCT
3. Book Errors - DEPENDS 3. Bank Errors - DEPENDS

ADJUSTED BALANCE METHOD

BOOK BANK
Unadjusted Balance 65,000.00 108,000.00
Credit Memorandum 30,000.00
Debit Memorandum -2,000.00
Deposit In Transit 80,000.00
Outstanding Checks -95,000.00
Adjusted Balance 93,000.00 93,000.00

Adjusting Entries:
Cash in Bank 30,000.00
Notes Receivable 30,000.00

Bank Service Charge 2,000.00

Cash in Bank 2,000.00

FIRST BANK
65,000.00 2,000.00 ADJ#2
ADJ#1 30,000.00

95,000.00 2,000.00

Balance 93,000.00

Problem 2-2
Deposit in Transit 60,000.00 BANK
Outstanding Checks as of December:
From November - No. 770 20,000.00
From December - No. 775 and 777 70,000.00
90,000.00 BANK

Credit Memo from Promissory Note 45,000.00 BOOK

Debit Memo - Customer Check 10,000.00 It may be originated from the checks in the December. -B
Debit Memo - Service Charge 5,000.00 BOOK
Bank Error in OUTFLOW - not the owner 8,000.00 BANK
Book Error in OUTFLOW - Understated 27,000.00 BOOK
 BOOK BANK
Unadjusted Balance 110,000.00 135,000.00
Credit Memo from Promissory Note 45,000.00
Debit Memo - Customer Check -10,000.00
Debit Memo - Service Charge -5,000.00
Book Error in OUTFLOW - Understated -27,000.00 Since understated - dagdagan ang outflow
Deposit in Transit 60,000.00 The action taken by the bank should be refl
Outstanding Checks as of December: -90,000.00
Bank Error in OUTFLOW - not the owner 8,000.00
Adjusted Balance 113,000.00 113,000.00

Adjusting Entries
Cash in Bank 45,000.00
Bank Service Charge 5,000.00
Notes Receivable 50,000.00

Accounts Receivable 10,000.00

Cash in Bank 10,000.00

Bank Service Charge 5,000.00

Cash in Bank 5,000.00

Accounts Payable 27,000.00

Cash in Bank 27,000.00
Problem 2-3
Deposit in Transit 450,000.00
Outstanding Checks:
No. 116 60,000.00
No. 122 180,000.00
No. 124 120,000.00
No. 125 250,000.00 610,000.00
Credit Memo from Notes 270,000.00
Debit Memo - BSC 5,000.00

BOOK BANK
Unadjusted Balance 2,840,000.00 3,265,000.00
Credit Memo from Notes 270,000.00
Debit Memo - BSC -5,000.00
Deposit in Transit 450,000.00
Outstanding Checks -610,000.00
Adjusted Cash in Bank Balance 3,105,000.00 3,105,000.00 -

For January BOOK BANK

Unadjusted Balance 440,000.00 300,000.00
Deposit in Transit 600,000.00
Outstanding Checks -460,000.00
440,000.00 440,000.00

Assumptions:
1. No reconciliting items from previous month so the receipts and disbursements of present month EXCLUDE those book recon
items from previous month.
1. If there are reconciliting items from previous month so the receipts and disbursements of present month EXCLUDE those bo
items from previous month.

Problem 2-4
BOOK BANK
Unadjusted Balance 1,405,000.00 5,630,000.00
Deposit in Transit 750,000.00
Credit Memo from Notes 2,650,000.00
Erroneous Bank Credit 1,100,000.00 Ibawas kasi hindi pera ng company
Debit Memo - BSC 5,000.00
Erroneous Book Credit - Overstated 45,000.00 Sobrang payment ang nairecord - babawa
Debit Memo - Light and Water 245,000.00 Auto Debit Arrangement
Debit Memo - NSF Check 220,000.00
Outstanding Checks 1,650,000.00
Adjusted Cash in Bank Balance 3,630,000.00 3,630,000.00

Proof of Cash - 2 succeeding bank reconciliation

> The objective is to make sure that cash in bank is correct and no fraud has happened during the period.

Book Debits - CASH INFLOW / RECEIPTS Cash Receipt Journal

Book Credits - CASH OUTFLOW / DISBURSEMENTS Cash Dibursement Journal
Bank Debits - CASH OUTFLOW / DISBURSEMENTS Bank Statement
Bank Credits - CASH INFLOW / RECEIPTS Bank Statemnet

Problem 3-5
POV of the Book PREVIOUS FOR THE MONTH OF APRIL CURRENT
BOOK
31-Mar BOOK DEBITS 30-Apr 1ST AND 4TH COLUMN - B
CREDITS
Unadjusted Balances 200,000.00 800,000.00 720,000.00 280,000.00 2ND AND 3RD COLUMN - A
Noted Collected by Bank 2nd column - INFLOW
For
60,000.00 60,000.00 3rd column - OUTFLOW
March
For April 100,000.00 100,000.00 Assumptions: All reconcili
Service Charge only recorded in the succe
 For
8,000.00 8,000.00
March

For April 2,000.00 2,000.00

NSF Customer Check Makatabi - OPPOSITE SIGN

For
20,000.00 20,000.00 Malayo - SAME SIGN
March
For April 30,000.00 30,000.00

Adjusted Balance 232,000.00 840,000.00 724,000.00 348,000.00 348,000.00

POV of the Bank PREVIOUS FOR THE MONTH OF APRIL CURRENT

31-Mar BANK CREDITS BANK DEBITS 30-Apr

Unadjusted Balances 330,000.00 700,000.00 530,000.00 500,000.00

Deposit in Transit
For
80,000.00 80,000.00
March
For April 220,000.00 220,000.00
Outstanding Checks
For
178,000.00 178,000.00
March
For April 372,000.00 372,000.00

Adjusted Balance 232,000.00 840,000.00 724,000.00 348,000.00 348,000.00

Problem 3-6
POV of Book FOR THE MONTH OF AUGUST
DISBURSEME
31-Jul RECEIPTS 31-Aug
NTS

Unadjusted Balance 1,200,000.00 4,400,000.00 3,600,000.00 2,000,000.00

Reconciliting Items:
NSF Check:

For July 100,000.00 100,000.00

For August 50,000.00 50,000.00

Note Collected:
For July 200,000.00 200,000.00
For August 300,000.00 300,000.00

Errors:

No. 1 - August 180,000.00 180,000.00

 No. 2 - August 540,000.00 540,000.00

Adjusted Balance 1,300,000.00 4,680,000.00 4,090,000.00 1,890,000.00 1,890,000.00

POV of BANK FOR THE MONTH OF AUGUST

DISBURSEME
31-Jul RECEIPTS 31-Aug
NTS
Unadjusted Balance 800,000.00 5,000,000.00 3,940,000.00 1,860,000.00

Reconciliting Items:

Deposit in Transit:

For July 600,000.00 600,000.00

For August 480,000.00 480,000.00

Outstanding Checks:

For July 100,000.00 100,000.00

For August 650,000.00 650,000.00
Errors:
No. 3 - August 200,000.00 200,000.00

No. 4 - August 400,000.00 400,000.00

Adjusted Balance 1,300,000.00 4,680,000.00 4,090,000.00 1,890,000.00 1,890,000.00

Problem 3-4
FOR THE MONTH OF
POV of the Book
NOVEMBER
BOOK
31-Oct BOOK DEBITS 30-Nov
CREDITS
Unadjusted Balance 990,000.00 710,000.00 1,200,000.00 500,000.00
Reconciliting Items:
Bank Service Charge:
For October 5,000.00 5,000.00
 For November 10,000.00 10,000.00
Unrecorded Collections:
For October 45,000.00 45,000.00
NSF Customer Check:
For November 50,000.00 50,000.00
Book Error:
For November 100,000.00 100,000.00

Adjusted Balances 1,030,000.00 565,000.00 1,255,000.00 340,000.00 340,000.00

FOR THE MONTH OF

POV of the Bank
NOVEMBER

31-Oct BANK CREDITS BANK DEBITS 30-Nov

Unadjusted Balance 1,100,000.00 500,000.00 1,000,000.00 600,000.00

Reconciliting Items:
Deposit In Transit:
For October 45,000.00 45,000.00
For November 120,000.00 120,000.00
Outstanding Checks:
For October 125,000.00 125,000.00
For November 380,000.00 380,000.00
Bank Error:
For October 10,000.00 10,000.00

Adjusted Balances 1,030,000.00 565,000.00 1,255,000.00 340,000.00 340,000.00

*For the analysis of previous month error, tingnan ang ginawang action sa bank recon, kung ginawa mo ay dagdag - receipt;
bawas - disbursement then apply the short method.
*Deposit in transit and outstanding checks are always present both months involved.

Problem 3-7

POV of the Book FOR THE MONTH OF DECEMBER

BOOK
30-Nov BOOK DEBITS 31-Dec
CREDITS
Unadjusted Balance 2,032,000.00 2,568,000.00 1,440,000.00 3,160,000.00
Reconciliting Items:
Bank Service Charge:
For November 2,000.00 2,000.00
For December 4,000.00 4,000.00
Book Error:
For November 200,000.00 200,000.00
 For December 300,000.00 300,000.00

Adjusted Balances 1,830,000.00 2,468,000.00 1,442,000.00 2,856,000.00 2,856,000.00

*For the current month error, the adjustment will be the origin of error kung saan nangyari ang error.

POV of the Bank FOR THE MONTH OF DECEMBER

30-Nov BANK CREDITS BANK DEBITS 31-Dec

Unadjusted Balance 1,890,000.00 2,090,000.00 1,080,000.00 2,900,000.00

Reconciliting Items:
Deposit in Transits:
For November 80,000.00 80,000.00
For December 498,000.00 498,000.00
Outstanding Checks:
For November 180,000.00 180,000.00
For December 592,000.00 592,000.00
Bank Error:
For November 40,000.00 40,000.00
For December 50,000.00 50,000.00

Adjusted Balances 1,830,000.00 2,468,000.00 1,442,000.00 2,856,000.00 2,856,000.00

Problem 3-8

POV of Book FOR THE MONTH OF OCTOBER

DISBURSEME
30-Sep RECEIPTS 31-Oct
NTS
Unadjusted Balances 1,900,000.00 1,400,000.00 2,400,000.00 900,000.00
Reconciling Items:
NSF Check:
For September 60,000.00 60,000.00
For October 40,000.00 40,000.00
Book Error No. 1: *Unrecorded colletion of A
For September 30,000.00 30,000.00
For October 50,000.00 50,000.00
Book Error No. 2: *Overstated Payment
For September 90,000.00 90,000.00
For October 120,000.00 120,000.00

Adjusted Balances 1,960,000.00 1,330,000.00 2,260,000.00 1,030,000.00 1,030,000.00

*Previous Month Error - bank recon action

*Current Month Error - Origin of Error

POV of Bank FOR THE MONTH OF OCTOBER

DISBURSEME
30-Sep RECEIPTS 31-Oct
NTS
Unadjusted Balances 2,100,000.00 1,200,000.00 2,500,000.00 800,000.00
Reconciling Items:
Deposit in Transit:
For September 130,000.00 130,000.00
For October 260,000.00 260,000.00
Outstanding Checks:
For September 270,000.00 270,000.00
For October 30,000.00 30,000.00

Adjusted Balances 1,960,000.00 1,330,000.00 2,260,000.00 1,030,000.00 1,030,000.00

Accounts Receivable - liability of the customer to the seller. - future collections manifested by credit terms (INVOICE).
This is medium / a financial instrument used in the ordinary course of business.
Normally, accounts receivable are SHORT TERM assets.
Accounts Receivable is measured initially at FACE VALUE (Invoice Value) and subsequently at NET REALIZABLE VALUE.

Face Value
Less: Allowances for Uncertainty in Collection Represents the ESTIMATED PORTION that
Net Realizable Value / Book Value / Net Book Value / Carrying Amount Represents the probable portion to be col

Case 1
Credit Sales / Charged Sales / Sales on Account
Accounts Receivable 5,400,000.00
Sales 5,400,000.00

Collection from Customers

Cash in Bank 4,750,000.00
Accounts Receivable 4,750,000.00

Accounts Written Off - Refers to the accounts receivable that is 100% certainty that it will not be collected.
*Direct Write Off Method - Bad Debts / Doubtful Accounts Expense is recognized when an account is written off.
*Allowance Method - alllowance account is recognzied instead of expense. When the problem is silent, use this method.

Allowance for Doubtful Accounts 125,000.00

Accounts Receivable 125,000.00
What if direct write off method:
Doubtful Accounts Expense 125,000.00
Accounts Receivable 125,000.00

Recovery - colleciton of accounts previously written off

1. Re-establish the account of the customer
Accounts Receivable 25,000.00
Allowance for Doubtful Accounts 25,000.00

2. Collection of accounts previously written off

Cash in Bank 25,000.00
Accounts Receivable 25,000.00

Compound Entry:
Cash in Bank 25,000.00
Allowance for Doubtful Accounts 25,000.00

No effect in the accounts receivable

ACCOUNTS RECEIVABLE

Beg. Balance 1,300,000.00 4,750,000.00 Collections from Customer

Sales on
5,400,000.00 125,000.00 Accounts Written Off
Account

Ending
1,825,000.00
Balance

For Posting: General Ledger and Subsidiary LedgerCustomer A 500,000.00

Customer B -
Customer C 725,000.00
Customer D -
Customer E 300,000.00
Customer F -
Customer G 300,000.00
1,825,000.00

Case 2
Credit Sales / Charged Sales / Sales on Account
Accounts Receivable 3,600,000.00
Sales 3,600,000.00

Credit Term - Cash Discount Incentive - Example: 2/10, n/30

n = no. of days to collect the accounts from the customer.
What is the base amount for cash discount? Can cash discount be availed on partial collection?
Case 2
Sales on Account / Charged Sales / Credit Sales
POV of the
Accounts Receivable 3,600,000.00
Seller
Sales 3,600,000.00

Accounts Receivable to Notes Receivable - evidenced by Promissory Note

Notes Receivable 400,000.00
Accounts Receivable 400,000.00

Provision for Doubtful Accounts - Allowance Method

Doubtful Accounts Expense 90,000.00
Allowance for Doubtful Accounts 90,000.00

Accounts receivable deemed to be worthless

Allowance for Doubtful Accounts 25,000.00
Accounts Receivable 25,000.00

Purchase on Account
POV of the
Purchases 3,900,000.00
Customer
Accounts Payable 3,900,000.00

Payment to Creditors
Accounts Payable 3,200,000.00
Cash in Bank 3,200,000.00

Discount allowed by Creditors - Full Settlement is qualified for discount

Accounts Payable 260,000.00
Purchase Discount 260,000.00

Merchandise returned by customers

Sales Returns 15,000.00
Accounts Receivable 15,000.00

Collections received to settle accounts

Cash in Bank 2,450,000.00
Accounts Receivable 2,450,000.00

Notes given to creditors in settlement of accounts

Accounts Payable 250,000.00
 Notes Payable 250,000.00

Merchandise returned to suppliers

Accounts Payable 70,000.00
Purchase Return 70,000.00

Payment on Notes Payable

Notes Payable 100,000.00
Cash in Bank 100,000.00

Discounts taken by customers

Sales Discount 40,000.00
Accounts Receivable 40,000.00

Collection received in settlement of notes

Cash in Bank 180,000.00
Notes Receivable 180,000.00

Balance of Accounts Receivable 670,000.00

Face Value of Accounts Receivable 670,000.00

Less: Allowance for Doubtful Accounts 65,000.00
Net Realizable Value 605,000.00

Case 3
ACCOUNTS RECEIVABLE
Beginning
1,200,000.00 6,990,000.00 Collections excluding RECOVERY
Balance
Sales on Accounts
Account 8,000,000.00 30,000.00 Written Off

AR converted
400,000.00
to NR

Ending
1,780,000.00
Balance

ALLOWANCE FOR DA
Accounts
30,000.00 60,000.00 Beginning
Written Off Balance
100,000.00 Provision for Doubtful Accounts - Allowance Method
10,000.00 Recovery
 Ending
140,000.00
Balance

Face Value of Accounts Receivable 1,780,000.00

Less: Allowance for Doubtful Accounts 140,000.00
Net Realizable Value 1,640,000.00
Case 4
Cash and Credit Sales
Cash in Bank 2,100,000.00
Accounts Receivable 3,800,000.00
Sales 5,900,000.00

Cash in Bank 2,100,000.00 Cash Customers / Cash Sales

Sales 2,100,000.00

Accounts Receivable 3,800,000.00 Credit Customers / Credit Sales / Sales on Account / Cha
Sales 3,800,000.00

Cash received within the discount period; Credit Term - 4/10, n/30
Cash in Bank 3,024,000.00 Represents 96% of the Accounts Receivable
4% Cash
Sales Discount 126,000.00
Discount
Accounts Receivable 3,150,000.00

Accounts Written Off

Allowance for Doubtful Accounts 50,000.00
Accounts Receivable 50,000.00

Sales Returns and Allowances evidenced by Credit Memorandum (POV of Seller) / Debit Memorandum (POV of Buyer) - app
Sales Returns and Allowances 250,000.00
Accounts Receivable 250,000.00

Sales Returns and Allowances evidenced by Credit Memorandum (POV of Seller) / Debit Memorandum (POV of Buyer) - app
Sales Returns and Allowances 20,000.00
Cash in Bank 20,000.00

Recovery from accounts previously written off

Cash in Bank 80,000.00 No effect in Accounts Receivable
Alllowance for Doubtful Accounts 80,000.00

Provision for Doubtful Accounts

Doubtful Accounts Expense 70,000.00
Alllowance for Doubtful Accounts 70,000.00
 ACCOUNTS RECEIVABLE
Beginning
950,000.00 3,150,000.00 Cash Collections within Discount Period
Balance
Sales on Accounts
3,800,000.00 50,000.00
Account Written Off
250,000.00 Sales Returns and Allowances

Ending
1,300,000.00
Balance

ALLOWANCE FOR DA
Accounts Beginning
50,000.00 100,000.00 Balance
Written Off
70,000.00 Provision for Doubtful Accounts
80,000.00 Recoveries

Ending
200,000.00
Balance

Presentation in the Balance Sheet as of 12/31/2021:

Face Value 1,300,000.00
Less: Allowance for Doubtful Accoun 200,000.00
Net Realizable Value 1,100,000.00

Case 5
Presentation in the Balance Sheet as of 12/31/2021:
Face Value 2,700,000.00 Ending Balance
Less: Allowance for Doubtful Accoun 200,000.00 Ending Balance
Net Realizable Value 2,500,000.00 Ending Balance

ALLOWANCE FOR DA
Accounts
230,000.00 280,000.00 Beginning Balance - Jan. 1
Written Off
100,000.00 Provision for Doubtful Accounts
50,000.00 Recoveries

200,000.00 Ending Balance - Dec. 31

Provision for Doubtful Accounts

Doubtful Accounts Expense 100,000.00
Alllowance for Doubtful Accounts 100,000.00
Case 6
ALLOWANCE FOR DA
Accounts
60,000.00 900,000.00 Beginning Balance - Jan. 1
Written Off
160,000.00 Provision for Doubtful Accounts
- Recoveries

1,000,000.00 Ending Balance - Dec. 31

Methods of Providing Provision for Doubtful Accounts Result Procedural
1. Percent of Sales (Credit Sales / Sales on Account / Charged Sales) Doubtful Accounts Expense Expense then ADA
2. Percent of Accounts Receivable (Ending Balance) Allowance for Doubtful AccounADA then Expense
3. Aging of Accounts Receivable (Modified Version of % of AR) Allowance for Doubtful AccounADA then Expense

Case 7
Gross Sales 9,500,000.00
Less:
Sales returns and allowa 800,000.00
Sales discount 200,000.00
Net Sales 8,500,000.00

Doubtful Accounts Expense 255,000.00 Provision for Doubtful Accounts

Doubtful Accounts Expense 255,000.00

Allowance for Doubtful Accounts 255,000.00

ALLOWANCE FOR DOUBTFUL

ACCTS.
Accounts Beginning
200,000.00 180,000.00
Written Off Balance
255,000.00 Provision for Doubtful Accounts
- Recoveries

Ending
235,000.00
Balance

What if the method is percent of AR and the ending balance of accounts receivable is P8,500,000?

ALLOWANCE FOR DOUBTFUL

ACCTS.
Accounts
200,000.00 180,000.00 Beginning
Written Off Balance
275,000.00 Provision for Doubtful Accounts
- Recoveries
 Ending
255,000.00
Balance

Doubtful Accounts Expense 275,000.00

Allowance for Doubtful Accounts 275,000.00

Case 8 - Aging of Accounts Receivable

AR Ending % of
Category Amount
Balance Uncollectibility
Nov. to Dec.
1,300,000.00 1.50% 19,500.00
2021
Jul. to Oct.
600,000.00 8.00% 48,000.00
2021
Jan. to June
400,000.00 35.00% 140,000.00
2021
Prior to Jan. 70,000.00 70.00% 49,000.00
1, 2021
2,370,000.00 256,500.00 Ending Balance of ADA

*Credit Balance of AR is treated as CURRENT LIABILITY; and ADD BACK TO THE AR BALANCE to cancel the effect.
ACCOUNTS RECEIVABLE
1,000.00 1,500.00

500 Overpayment by the customer

*Normally, accounts written off are assigned with 100% chance of uncollectability.
For Computation
ALLOWANCE FOR DOUBTFUL
ACCTS.
Accounts Beginning
90,000.00 130,000.00 Balance
Written Off
Additional
60,000.00 261,500.00 Final Provision for Doubtful Accounts
Write Off
15,000.00 Recoveries

Ending
256,500.00
Balance

Interim Provision 180,000.00 This was already recorded

Final Provision 261,500.00
Increased in Doubtful Accounts Ex 81,500.00
Doubtful Accounts Expense 81,500.00
Allowance for Doubtful Accounts 81,500.00

ALLOWANCE FOR DOUBTFUL

Actual Record
ACCTS.
Accounts Beginning
90,000.00 130,000.00
Written Off Balance
Additional Interim
60,000.00 180,000.00
Write Off Provision
81,500.00 Adjustment
15,000.00 Recoveries

256,500.00 Ending
Balance

As of December 31, 2021:

Face Value 2,370,000.00
Less: Allowance for Doubtful Accoun 256,500.00
Net Realizable Value 2,113,500.00
nverted into cash.

f Cash Flows

n Exchange Rate / Spot Rate / Current Exchange Rate

d into for a maximum of 3 months.

Checks are related to Cash in Bank

*Customer Check - Cash Inflow / Cash Receipts *Post Date Checks- checks where the date
*Company Check - Cash Outflow / Cash Disbursements Therefore as of the present time, these che
*Stale Checks - checks that are still outstanding beyond 6 months. *Window Dressing - considers activities be
*Undelivered Checks - checks that are not yet received by the intended recipient
Collection from Customer - Journal Entry:
Cash 200,000.00
Accounts Receivable 200,000.00

Adjustment for Stale Check

Accounts Receivable 200,000.00 Hindi pa nagbabayad si customer as of 12/31/2019
Cash 200,000.00

Payment for Supplier- Journal Entry:

Accounts Payable 250,000.00
Cash 250,000.00

Adjustment for Undelivered Check

Cash 250,000.00
Accounts Payable 250,000.00 Hindi pa nagbabayad ang company as of 12/31/2019

Payment for Supplier- Journal Entry:

Accounts Payable 100,000.00
 Cash 100,000.00

Adjustment for Post Dated Check

Cash 100,000.00
Accounts Payable 100,000.00 Hindi pa nagbabayad ang company as of 12/31/2019

Collection from Customer - Journal Entry: (Window Dressed)

Cash 450,000.00
Accounts Receivable 450,000.00

Adjustment for Stale Check

Accounts Receivable 450,000.00
Cash 450,000.00

or the operation.

han 3 months but within 1 year.

han 12 months

ARTMENT OF FINANCE

Checks are related to Cash in Bank

*Customer Check - Cash Inflow / Cash Receipts *Post Date Checks- checks where the date
*Company Check - Cash Outflow / Cash Disbursements Therefore as of the present time, these che
*Stale Checks - checks that are still outstanding beyond 6 months. *Window Dressing - considers activities be
*Undelivered Checks - checks that are not yet received by the intended recipient
Collection from Customer - Journal Entry:
Cash 200,000.00
Accounts Receivable 200,000.00
 Adjustment for Stale Check
Accounts Receivable 200,000.00 Hindi pa nagbabayad si customer as of 12/31/2019
Cash 200,000.00

Payment for Supplier- Journal Entry:

Accounts Payable 250,000.00
Cash 250,000.00

Adjustment for Undelivered Check

Cash 250,000.00
Accounts Payable 250,000.00 Hindi pa nagbabayad ang company as of 12/31/2019

Payment for Supplier- Journal Entry:

Accounts Payable 100,000.00
Cash 100,000.00

Adjustment for Post Dated Check

Cash 100,000.00
Accounts Payable 100,000.00 Hindi pa nagbabayad ang company as of 12/31/2019

Collection from Customer - Journal Entry: (Window Dressed)

Cash 450,000.00
Accounts Receivable 450,000.00

Adjustment for Stale Check

Accounts Receivable 450,000.00
Cash 450,000.00

or the operation.

han 3 months but within 1 year.

han 12 months

ARTMENT OF FINANCE
long term investment because by default,

eivable from customer.

eived the check:

not yet received the cash.

petty cash dahil inaasahan natin na babalik din

tty worth P5,000 sa employee, then nagbayad ang
ang check ay post-dated.

r LONG TERM INVESTMENT

ERM ASSET (LAND)

settled in a year - 12/31/2020

deposit is good for 3 months.

 check of P100,000

umption is within 3 months.

ENT asset - long term investment
- 6 months before maturity - Cash
 the check has been redeposited
nst Insufficient Fund

e investments do not represent borrowings.

M INVESTMENT.

our account

ALLY restricted - CASH

he borrowing is SHORT TERM.

orrowing's intention.

EGALLY RESTRICTED, therefore

mer immediately upon proof.

nd of employees

are adjusted on the cash in bank.

osited as part of the internal control of
led DEPOSITS IN TRANSIT. Deposit in

ANK account because source of fund

r the VOUCHER SYSTEM.

UCTUATING FUND SYSTEM

tablishment of Petty Cash Fund
tty Cash Fund 10,000.00
Cash in
Bank 10,000.00

currence of the Expenses

cognition of expense in the JOURNAL
stage Expense 1,500.00
pplies Expense 5,500.00
ansportation Expense 1,200.00
scellaneous Expense 800

Petty
Cash
Fund 9,000.00

lance of the Petty Cash Fund in the LEDGER = P1,000

Petty Cash Fund
10,000.00 9,000.00

1,000.00

plenishment of Fund
tty Cash Fund 9,000.00
Cash in
Bank 9,000.00

crease of PCF by P5,000

tty Cash Fund 5,000.00
Cash in
Bank 5,000.00

UCTUATING FUND SYSTEM

tablishment of the Fund
tty Cash Fund 10,000.00
Cash in
Bank 10,000.00

stage and Supplies Expense as incurred:

cognition of Expense in the Journal:
stage Expense 1,500.00
pplies Expense 3,000.00

Petty
Cash
Fund 4,500.00

lance of Petty Cash Fund in the Legder 5,500.00

ansporation as incurred and settlement of obligation:

cognition of Expense in the Journal:
ansportation Expense 1,000.00
counts Payable 3,500.00

Petty
Cash
Fund 4,500.00

lance of Petty Cash Fund in the Legder 1,000.00

plenishment of Fund:
tty Cash Fund 9,000.00
Cash in
Bank 9,000.00
lance of Petty Cash Fund in the Legder 10,000.00

crease the PCF by P10,000:

tty Cash Fund 10,000.00
Cash in
Bank 10,000.00

lance of Petty Cash Fund in the Legder 20,000.00

prest Fund System:

e PCF in the ledger only moves when:
Establishing the fund
Adjusting balance of the fund - INCREASE / DECREASE
Expenses as incurred
nreplenished expenses are not considered because these
penses are recorded right away and directly to PCF hence,
e actual balance of PCF can be seen immediately.

UCTUATING FUND SYSTEM

ay 2 - Establishment of fund
tty Cash Fund 10,000.00
Cash in
Bank 10,000.00

ay 2 to 28 - Expenses incurred
pplies Expense 4,000.00
ansportation Expense 2,500.00
scellaneous Expense 1,500.00

Petty
Cash
Fund 8,000.00

LANCE OF PETTY CASH FUND ACCOUNT 2,000.00

TUAL BALANCE OF PETTY CASH FUND 2,000.00

ay 29 - Replenishment
tty Cash Fund 8,000.00
 Cash in
Bank 8,000.00

LANCE OF PETTY CASH FUND ACCOUNT 10,000.00

TUAL BALANCE OF PETTY CASH FUND 10,000.00

ne 1 to 29 - Expenses incurred
pplies Expense 3,000.00
ansportation Expense 1,000.00

Petty
Cash
Fund 4,000.00

LANCE OF PETTY CASH FUND ACCOUNT 6,000.00

TUAL BALANCE OF PETTY CASH FUND 6,000.00

ne 30 - Expenses are not yet replenished

o need for adjustment because the expenses were already recorded.

LANCE OF PETTY CASH FUND ACCOUNT 6,000.00

TUAL BALANCE OF PETTY CASH FUND 6,000.00

y 1 - Replenishment and Increase in Fund

N TRANSIT OR DIT."
hen the checks will FINALLY FORM PART
eatead still as RECEIVABLE.
 rom March 31, 2021.
tion, are classified as current assets.

ccounts with Philippine National Bank.

company equal the actual

nning Balance on the Bank Statement

checks - NOT POST DATE / UNDELIVERED / NSF

ecks in the December. -BOOK
- dagdagan ang outflow
y the bank should be reflected in the next bank statement.
 CLUDE those book reconciling

month EXCLUDE those book reconciling

pera ng company

ang nairecord - babawasan ANG PAYMENT

T AND 4TH COLUMN - Bank Reconciliation

D AND 3RD COLUMN - ANALYSIS

d column - INFLOW

d column - OUTFLOW

sumptions: All reconciling items are

ly recorded in the succeeding month.
 Addition

Deductio
n
akatabi - OPPOSITE SIGN

alayo - SAME SIGN

Error No.
1
1. Book
Error
2. Error sa Receipts
3. Kulang ang record by P180,000 (P200,000 - P20,000)
4.
Correctio Date
n:
Magdagdag ng P180,000 sa RECSEPTEMBER
5. Effect sa Cash Balance:
Tataas ang Cash Balance

Error No.
2
1. Book
Error
2. Error sa Disbursements
3. Kulang ang record by P540,000 (P600,000 - P60,000)
4.
Correctio Date
n:
Magdagdag ng P540,000 sa DIS SEPTEMBER
5. Effect sa Cash Balance:

Mababawasan ang Cash Balance

Error No.
3
1. Bank
Error
2. Error sa Receipts
3. Naidagdag ang pera na hindi sa company - P200,000
4.
Correctio Date
n:
Magbabawas ng P200K sa ReceiSEPTEMBER
5. Effect sa Cash Balance:
Mababawasan ang Cash Balance

Error No.
4
1. Bank
Error
2. Error sa Disbursements
3. Nabawasan ang pera dahil sa maling charge - P400,000 Nagdagdagan ang disburse,emt
4.
Correctio Date
n:
Magbabawas ng P400K sa DisburSEPTEMBER
5. Effect sa Cash Balance:
Tataas ang Cash Balance
mo ay dagdag - receipt;
nrecorded colletion of AR

verstated Payment
terms (INVOICE).

ALIZABLE VALUE.

TIMATED PORTION that will not be collected

obable portion to be collected

t, use this method.

Allowance Method
/ Sales on Account / Charged Sales

m (POV of Buyer) - applicable to CREDIT CUSTOMERS

m (POV of Buyer) - applicable to CASH CUSTOMERS

 pense then ADA
DA then Expense
DA then Expense
l the effect.
e Checks- checks where the date is presented in post skip time.
as of the present time, these checks do not have fund yet.
Dressing - considers activities beyond the financial report period.

er as of 12/31/2019

pany as of 12/31/2019
pany as of 12/31/2019

e Checks- checks where the date is presented in post skip time.

as of the present time, these checks do not have fund yet.
Dressing - considers activities beyond the financial report period.
er as of 12/31/2019

pany as of 12/31/2019

pany as of 12/31/2019