PROOF OF CASH

Judith Kay Cañares

OBJECTIVES 2

• To be able to prepare a two-date bank

reconciliation.
• To know the computation of deposits in
transit and outstanding checks.
• To know the reconciliation of cash
receipts per ledger with cash receipts per
bank statement.
• To know the reconciliation of cash
disbursement per ledger with cash
disbursements per bank statement.
• To understand the nature of proof of
cash
• To be able to prepare a reconciliation
showing proof of cash
 3

PROOF OF CASH
A proof of cash is an expanded reconciliation in that it includes
proof of receipts and disbursements.

Three forms of proof of cash:

A. Adjusted balance method

B. Book to bank method

C. Bank to book method

 4

COMPUTATION OF BOOK BALANCE

Balance per book - beginning of month XX

Add : Book debits during the month XX
Total XX
Less : Book credits during the month XX
Balance per book - end of the 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
 5

COMPUTATION OF BOOK BALANCE

Cash in bank
Balance – beginning XX Book credits XX
Book debits XX Balance-ending XX

Cash in bank in T-account form

 6

COMPUTATION OF BANK BALANCE

Balance per bank - beginning of month XX

Add : Bank credits during the month XX
Total XX
Less : Bank debits during the month XX
Balance per bank - end of the month XX

Bank credits – all items credited to the account of the depositor (e.g. deposits
acknowledge by bank and credit memo)
Bank debits – all items debited to the account of the depositor (e.g. checks paid
by bank and debit memo)
 7

COMPUTATION OF BANK BALANCE

Credit Memos - items not representing deposits

credited by the bank to the account of the
depositor but not yet recorded by the depositor as
cash receipts.

Typical examples:
➢ Notes receivable collected by bank in favor of
the depositor and credited to the account of
the depositor.
➢ Proceeds of bank loan credited to the account
of the depositor
➢ Matured time deposits transferred by the bank
to the current account of the depositor
 8

COMPUTATION OF BANK BALANCE

Debit Memos- items not representing checks paid by bank which are charged or
debited by the bank to the account of the depositor but not yet recorded by the
depositor as cash disbursements.

Typical examples:
➢ NSF or no sufficient fund checks- these are checks deposited but returned by the
bank because of insufficient fund. The other name for NSF is DAIF or “drawn
against insufficient fund”
➢ Technically defective checks- checks deposited but returned by the bank because
of technical defects such as absence of signature or countersignature, erasures not
countersigned, mutilated checks, conflict between amount in words and amount in
figures.
➢ Bank service charges- these include bank charges for interest, collection,
checkbook and penalty.
➢ Reduction of loan- this pertains to amount deducted from the current account of
the depositor in payment for loan which the depositor owes to the bank and
which has already matured
 9

COMPUTATION OF BANK BALANCE

Company X
Bank debits XX Balance - beginning XX
Balance - ending XX Bank credits XX

Depositor’s account in T-account form

 10

COMPUTATION OF DEPOSITS IN TRANSIT

Deposits in transit - beginning of month XX

Add : Cash receipts deposited during the month XX
Total deposits to be acknowledged by bank XX
Less : Deposits acknowledged by bank during month XX
Deposits in transit - end of month XX
 11

OUTSTANDING CHECKS

Outstanding Checks - checks already recorded by the depositor as cash disbursements

but not yet reflected on the bank statement.

OC include:
➢ Checks drawn and already given to payees but not yet presented for payment.
➢ Certified checks- one where the bank has stamped on its face the word “accepted” or
“certified” indicating sufficiency of fund

When the bank certifies a check, the account of the depositor is immediately debited or
charged to insure the eventual payment of the check.

Certified checks should be deducted from the total outstanding checks (if included therein)
because they are no longer outstanding for bank reconciliation purposes
 12

Outstanding checks – beginning of month XX

Add : Checks drawn by depositor during the month XX
Total checks to be paid by banks XX
Less : Checks paid by bank during the month XX
Outstanding checks - end of month XX

COMPUTATION OF OUTSTANDING CHECKS


Balance per book, January 31
Book debits for February,
including January CM for
note collected of P15,000
Book credits for February,
including NSF check of
P5,000 and service charge of
P1,000 for January
CASH IN BANK PER LEDGER
13
Balance, January 31 84,000
50,000 Bank credits for February,
including CM for
note collected of P20,000 and
January
200,000
deposit in transit of P40,000 170,000
Book debits for February,
including NSF check of
P10,000 and January
180,000 outstanding check of P65,000 130,000
BANK STATEMENT FOR
FEBRUARY
 14

BANK RECONCILIATION FOR JANUARY

 15

COMPUTATION OF BOOK BALANCE

 16

Balance per bank – January 31 84,000

Add: Bank credits during February 170,000

Total 254,000

Less: Bank debits during February 130,000

Balance per bank 124,000

COMPUTATION OF BANK BALANCE

 17

Deposit in transit - January 31 40,000

Add: Cash receipts during February:
Book debits 200,000
Less: January CM for note collected 15,000 185,000
Total 225,000
Less: Deposits acknowledged by bank in
February
Bank credits 170,000
Less: February CM for note collected 20,000 150,000
Deposits in transit – February 28 75,000

COMPUTATION OF DEPOSITS IN TRANSIT

 18

all items
debited toDeposit
CM is deducted the in transit - January 31 40,000
from thecashbook
account
Add: Cash receipts during February:
in bank
which
debits because
this is do
cashnot Book debits 200,000
receiptrepresent
not
deposits should
Less: January CM for note collected 15,000 185,000
representing
deposit befor deducted
the
Total 225,000
month from
of the book
The February
Less:
CMto
Deposits acknowledged by bank in
debits total
February
of P20,000
arrive atfor February
the
note cash
collected is
receipts Bank credits 170,000
deposited.
deducted from the
bank credits
Less: February CM for note collected 20,000 150,000
because this isDepositsin transit – February 28 75,000
not a deposit.

COMPUTATION OF DEPOSITS IN TRANSIT

 19

Outstanding checks – January 31 65,000

Add: Checks drawn by depositor during
February:
Book credits 180,000
Less: January DMs 6,000 174,000
Total 239,000
Less: Checks paid by bank during February:
Bank debits 130,000
Less: February NSF 10,000 120,000
Outstanding checks – February 28 119,000

COMPUTATION OF OUTSTANDING CHECKS

 Company X 20

Bank Reconciliation
February 28

Balance per book 70,000

Note collected by bank in February 20,000
Total 90,000
NSF check for February -10,000
Adjusted book balance 80,000
Balance per bank 124,000
Deposits in transit for February 75,000
Total 199,000
Outstanding checks for February -119,000
Adjusted bank balance 80,000
 21

PROOF OF CASH
A proof of cash is an expanded reconciliation in that it includes
proof of receipts and disbursements.

This approach may be useful in discovering possible discrepancies in

handling cash particularly when cash receipts have been recorded
but have not been deposited

Three forms of proof of cash:

A. Adjusted balance method

B. Book to bank method

C. Bank to book method

 22

TWO-DATE BANK RECONCILIATION

This is so-called “two-date” because it literally involves two dates

Omitted information may be any one or a combination of the following:

a. Book Balance–beginning and ending

b. Bank Balance–beginning and ending

c. Deposit in transit–beginning and ending

d. Outstanding checks–beginning and ending

 23

TWO-DATE RECONCILIATION
January 31 February 28
Balance per book 50,000 70,000
Balance per bank 84,000 124,000
Book debits 200,000
Book credits 180,000
The book debits and credits
Bank debits 130,000
and the bank debits and Bank credits 170,000
credits for January are not Deposits in transit 40,000 75,000
listed anymore
because they are not Outstanding checks 65,000 119,000
necessary. The proof of NSF check 5,000 10,000
cash pertains to the
receipts and disbursements Service charge 1,000
for the current month of Note collected by bank 15,000 20,000
February.
 24

Three forms of proof of cash:

A. Adjusted balance method

B. Book to bank method

C. Bank to book method

 COMPANY X
PROOF OF CASH 25

For the month of February

January February
Receipts Disbursem
31 28
ents
Balance per book 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 0 -1,000 0
Adjusted book balance 59,000 205,000 184,000 80,000
Balance per bank 84,000 170,000 130,000 124,000
Deposits in transit:
January 40,000 -40,000
February 75,000 75,000
Outstanding checks:
Adjusted balance method January -65,000 -65,000
February 0 0 119,000 -119,000
Adjusted bank balance 59,000 205,000 184,000 80,000
 COMPANY X
PROOF OF CASH 26
For the month of February General comments:

January 31 Receipts Disburseme February 28 a) The January 31 and February 28 columns

nts require no further explanation.
Balance per book 50,000 200,000 180,000 70,000
Note collected:
b) The receipts and disbursements columns
January 15,000 -15,000
February 20,000 20,000 pertain to the current month of February.
NSF check: Actually,
January -5,000 -5,000 the proof of cash is a reconciliation of the
February 10,000 -10,000 receipts and disbursements for the current
Service charge:
January -1,000 0 -1,000 0
period.
Adjusted book balance 59,000 205,000 184,000 80,000
Balance per bank 84,000 170,000 130,000 124,000 c) The proof of cash, following the adjusted
Deposits in transit: balance method, means that the book receipts
January 40,000 -40,000
February
and disbursements for the current month are
75,000 75,000
Outstanding checks: adjusted to equal the correct receipts and
January -65,000 -65,000 disbursements for the current month
February 0 0 119,000 -119,000
Adjusted bank balance 59,000 205,000 184,000 80,000

Adjusted balance method

 COMPANY X
PROOF OF CASH 27
For the month of February Comments on the book items:

January 31 Receipts Disburseme February 28 a) Credit memos of the previous month do not
nts affect the bank receipts for the current but
Balance per book 50,000 200,000 180,000 70,000 increased the book receipts for the current
Note collected:
month because the credit memos for the
January 15,000 -15,000
February 20,000 20,000 previous month are recorded only by the
NSF check: depositor during the current month.
January -5,000 -5,000
February 10,000 -10,000 Consequently, the book receipts for the current
Service charge:
January -1,000 0 -1,000 0
month are overstated in relation to the correct
Adjusted book balance 59,000 205,000 184,000 80,000 receipts for the current month.
Balance per bank 84,000 170,000 130,000 124,000
Deposits in transit: Hence, credit memos of the previous month are
January 40,000 -40,000
February
deducted from the book receipts for the
75,000 75,000
Outstanding checks: current month.
January -65,000 -65,000
February 0 0 119,000 -119,000 Thus, the January note collected amounting to
Adjusted bank balance 59,000 205,000 184,000 80,000 P15,000, is deducted from the February book
receipts.
Adjusted balance method
 COMPANY X
PROOF OF CASH 28
For the month of February Comments on the book items:

January 31 Receipts Disburseme February 28 b) Credit memos of the current month already
nts increased the bank receipts for the current
Balance per book 50,000 200,000 180,000 70,000 month but have no effect on the book receipts
Note collected:
for the current month because the credit
January 15,000 -15,000
February 20,000 20,000 memos of the current month are not yet
NSF check: recorded by the depositor during the current
January -5,000 -5,000 month.
February 10,000 -10,000
Service charge:
January -1,000 0 -1,000 0
Consequently, the book receipts for the current
Adjusted book balance 59,000 205,000 184,000 80,000 month are understated in relation to the
Balance per bank 84,000 170,000 130,000 124,000 correct receipts for the current month.
Deposits in transit:
January 40,000 -40,000
February
Hence, credit memos of the current month are
75,000 75,000
Outstanding checks: added to the book receipts for the current
January -65,000 -65,000 month.
February 0 0 119,000 -119,000
Adjusted bank balance 59,000 205,000 184,000 80,000 Thus, the February note collected, amounting to
P20,000, is added to the February book receipts
Adjusted balance method
 COMPANY X
PROOF OF CASH 29
For the month of February Comments on the book items:

January 31 Receipts Disburseme February 28

c) Debit memos of the previous month do not
nts affect the bank disbursements for the current
Balance per book 50,000 200,000 180,000 70,000 month but increased the book disbursements for
Note collected: the current month because the debit memos
January 15,000 -15,000
February 20,000 20,000
of the previous month are recorded only by the
NSF check: depositor during the current month.
January -5,000 -5,000
February 10,000 -10,000 Consequently, the book disbursements for the
Service charge:
January
current month are overstated in relation to the
-1,000 0 -1,000 0
Adjusted book balance 59,000 205,000 184,000 80,000 correct disbursements for the current month.
Balance per bank 84,000 170,000 130,000 124,000 Hence, debit memos of the previous month are
Deposits in transit: deducted from the book disbursements for the
January 40,000 -40,000
current month.
February 75,000 75,000
Outstanding checks:
January -65,000 -65,000 Thus, the January NSF of P5,000 and January
February 0 0 119,000 -119,000 service charge of P1,000 are deducted from the
Adjusted bank balance 59,000 205,000 184,000 80,000 February book disbursements

Adjusted balance method

 COMPANY X
PROOF OF CASH 30
For the month of February Comments on the book items:

January 31 Receipts Disburseme February 28 d) Debit memos of the current month already
nts increased bank disbursements for the current
Balance per book 50,000 200,000 180,000 70,000 month but have no effect on the book
Note collected:
disbursements for the current month because
January 15,000 -15,000
February 20,000 20,000 the debit memos of the current month are not
NSF check: yet recorded by the depositor.
January -5,000 -5,000
February 10,000 -10,000 Consequently, the book disbursements for the
Service charge:
January -1,000 0 -1,000 0
current month are understated in relation to
Adjusted book balance 59,000 205,000 184,000 80,000 the correct disbursements for the current
Balance per bank 84,000 170,000 130,000 124,000 month.
Deposits in transit:
January 40,000 -40,000
February
Hence, debit memos of the current month are
75,000 75,000
Outstanding checks: added to the book disbursements for the
January -65,000 -65,000 current month.
February 0 0 119,000 -119,000
Adjusted bank balance 59,000 205,000 184,000 80,000 Thus, the February NSF of P10,000 is added to
the February book disbursements.
Adjusted balance method
 Adjusted balance method
COMPANY X 31
PROOF OF CASH
For the month of February

Comments on the bank items: January 31 Receipts Disburseme February 28

nts
Balance per book 50,000 200,000 180,000 70,000
a) Deposits in transit of previous month do not Note collected:
affect book receipts for the current month but January 15,000 -15,000
increased bank receipts for the current month February 20,000 20,000
NSF check:
because the deposits are recorded only by the January -5,000 -5,000
bank during the current month. February 10,000 -10,000
Service charge:
Consequently, bank receipts for the current January -1,000 0 -1,000 0
Adjusted book balance 59,000 205,000 184,000 80,000
month are overstated in relation to the correct Balance per bank 84,000 170,000 130,000 124,000
receipts for the current month. Hence, deposits Deposits in transit:
in transit of the previous month are deducted January 40,000 -40,000
from the bank receipts for the current month. February 75,000 75,000
Outstanding checks:
January -65,000 -65,000
Thus, January deposit in transit of P40,000 is February 0 0 119,000 -119,000
deducted from the February bank receipts. Adjusted bank balance 59,000 205,000 184,000 80,000
 Adjusted balance method
COMPANY X 32
PROOF OF CASH
For the month of February

Comments on the bank items:

January 31 Receipts Disburseme February 28
b) Deposit in transit of the current month nts
Balance per book 50,000 200,000 180,000 70,000
already increased book receipts but have no Note collected:
effect on January 15,000 -15,000
the bank receipts for the current month February 20,000 20,000
because the deposits are not yet recorded by NSF check:
January -5,000 -5,000
the bank
February 10,000 -10,000
during the current month. Service charge:
January -1,000 0 -1,000 0
Consequently, the bank receipts for the current Adjusted book balance 59,000 205,000 184,000 80,000
month are understated in relation to the correct Balance per bank 84,000 170,000 130,000 124,000
Deposits in transit:
receipts for the current month. January 40,000 -40,000
February 75,000 75,000
Hence, deposits in transit of the current month Outstanding checks:
are added to the bank receipts of the current January -65,000 -65,000
February 0 0 119,000 -119,000
month. Adjusted bank balance 59,000 205,000 184,000 80,000

Thus, the February deposit in transit of P75,000

is added to the February bank receipts.
 Adjusted balance method
COMPANY X 33
PROOF OF CASH
For the month of February

Comments on the bank items:

January 31 Receipts Disburseme February 28
c) Outstanding checks of the previous month do nts
Balance per book 50,000 200,000 180,000 70,000
not affect the book disbursements but increased
Note collected:
bank disbursements for the current month because January 15,000 -15,000
the outstanding checks of the previous February 20,000 20,000
month are paid only by the bank during the current NSF check:
month. January -5,000 -5,000
February 10,000 -10,000
Service charge:
Consequently, the bank disbursements for the January -1,000 0 -1,000 0
current month are overstated in relation to the Adjusted book balance 59,000 205,000 184,000 80,000
correct disbursements for the current month. Balance per bank 84,000 170,000 130,000 124,000
Deposits in transit:
January 40,000 -40,000
Hence, outstanding checks of the previous month February 75,000 75,000
are deducted from the bank disbursements for the Outstanding checks:
current month. January -65,000 -65,000
February 0 0 119,000 -119,000
Adjusted bank balance 59,000 205,000 184,000 80,000
Thus, the January outstanding check of P65,000 is
deducted from the February bank disbursements.
 Adjusted balance method
COMPANY X 34
PROOF OF CASH
Comments on the bank items: For the month of February

d) Outstanding checks of the current month

January 31 Receipts Disburseme February 28
increased the book disbursements for the nts
current month but have no effect on the bank Balance per book 50,000 200,000 180,000 70,000
disbursements for the current month because Note collected:
the checks are not yet paid by the bank during January 15,000 -15,000
February 20,000 20,000
the current month. NSF check:
January -5,000 -5,000
Consequently, the bank disbursements for the February 10,000 -10,000
current month are understated in relation to Service charge:
January -1,000 0 -1,000 0
the correct disbursements for the current Adjusted book balance 59,000 205,000 184,000 80,000
month. Balance per bank 84,000 170,000 130,000 124,000
Deposits in transit:
Hence, outstanding checks of the current January 40,000 -40,000
February 75,000 75,000
month
Outstanding checks:
are added to the bank disbursements for the January -65,000 -65,000
current month. February 0 0 119,000 -119,000
Adjusted bank balance 59,000 205,000 184,000 80,000
Thus, the February outstanding check of
P119,000 is added to the February bank
disbursements.
 COMPANY X
PROOF OF CASH 35

For the month of February

January 31 Receipts Disbursement February 28

s
Balance per book 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 0 -1,000 0
Deposits in transit:
January -40,000 40,000
February -75,000 -75,000
Outstanding checks:
January 65,000 65,000
February 0 0 -119,000 119,000
Book to bank method Balance per bank 84,000 170,000 130,000 124,000
 Comments:
36
COMPANY X
PROOF OF CASH a) The book reconciling items – note
For the month of February collected, NSF check and service charge
– are treated in the same manner
January following the adjusted balance method.
Receipts Disburse February 28
31
ments
Balance per book 50,000 200,000 180,000 70,000 b) The bank reconciling items – deposited in
Note collected: transit and outstanding check – are treated
January 15,000 -15,000 in the “reverse”.
February 20,000 20,000
NSF check:
January -5,000 -5,000 c) The book to bank proof of cash means
February 10,000 -10,000 that the book receipts and disbursements
Service charge: are adjusted to equal the bank receipts and
January -1,000 0 -1,000 0
disbursements.
Deposits in transit:
January -40,000 40,000
February -75,000 -75,000
Outstanding checks:
January 65,000 65,000
February 0 0 -119,000 119,000
Balance per bank 84,000 170,000 130,000 124,000

Book to bank method

 37
COMPANY X Comments:
PROOF OF CASH
For the month of February
d) Deposit in transit of previous month do not
January
affect the book receipts for the current month
Receipts Disburse February 28
31
ments
but increased the bank receipts for the current
Balance per book 50,000 200,000 180,000 70,000 month.
Note collected:
January 15,000 -15,000
February 20,000 20,000 Consequently, the book receipts for the current
NSF check:
January -5,000 -5,000
month are understated in relation to the bank
February 10,000 -10,000 receipts for the current month.
Service charge:
January -1,000 0 -1,000 0
Deposits in transit: Hence, deposits in transit of the previous
January -40,000 40,000
February -75,000 -75,000
month are added to the book receipts for the
Outstanding checks: current month.
January 65,000 65,000
February 0 0 -119,000 119,000
Balance per bank 84,000 170,000 130,000 124,000 Thus, the January deposit in transit of P40,000
is added to the February book receipts.
Book to bank method
 Comments:
38
COMPANY X
PROOF OF CASH
For the month of February
e) Deposits in transit of the current month
increased the book receipts for the current
January
Receipts Disburse February 28
month but have no effect on the bank receipts
31
ments for the current month.
Balance per book 50,000 200,000 180,000 70,000
Note collected:
January 15,000 -15,000 Consequently, the book receipts for the current
February 20,000 20,000
NSF check: month are overstated in relation to the bank
January -5,000 -5,000 receipts for the current month.
February 10,000 -10,000
Service charge:
January -1,000 0 -1,000 0 Hence, deposits in transit of the current month
Deposits in transit:
January -40,000 40,000 are deducted from the book receipts for the
February -75,000 -75,000 current month.
Outstanding checks:
January 65,000 65,000
February 0 0 -119,000 119,000 Thus, the February deposit in transit of P75,000
Balance per bank 84,000 170,000 130,000 124,000
is deducted from the February book receipts

Book to bank method

 39
COMPANY X
PROOF OF CASH
For the month of February Comments:

January f) Outstanding checks of the previous month

Receipts Disburse February 28
31 do not affect the book disbursements for the
ments
Balance per book 50,000 200,000 180,000 70,000 current month but increased the bank
Note collected: disbursements for the current month.
January 15,000 -15,000
February 20,000 20,000
NSF check:
Consequently, the book disbursements for the
January -5,000 -5,000 current month in relation to the bank
February 10,000 -10,000 disbursements for are understated the current
Service charge: month.
January -1,000 0 -1,000 0
Deposits in transit:
January -40,000 40,000 Hence, outstanding checks of the previous
February -75,000 -75,000 month are added to the book disbursements
Outstanding checks: for the current month.
January 65,000 65,000
February 0 0 -119,000 119,000
Balance per bank 84,000 170,000 130,000 124,000
Thus, the January outstanding check of
P65,000 is added to the February book of
disbursement
Book to bank method
 Comments: 40
COMPANY X
PROOF OF CASH
For the month of February g) Outstanding checks of the current month
increased the book disbursements for the
January current month but have no effect yet on the
Receipts Disburse February 28
31
ments bank disbursements for the current month
Balance per book 50,000 200,000 180,000 70,000
Note collected:
January 15,000 -15,000
February
Consequently, the book disbursements for the
20,000 20,000
NSF check: current month are overstated in relation to the
January -5,000 -5,000
February 10,000 -10,000
bank disbursements for the current month.
Service charge:
January -1,000 0 -1,000 0
Deposits in transit:
Hence, outstanding checks of the current
January -40,000 40,000 month are deducted from the book
February -75,000 -75,000
Outstanding checks:
disbursements for the current month.
January 65,000 65,000
February 0 0 -119,000 119,000
Balance per bank 84,000 170,000 130,000 124,000
Thus, the February outstanding check of
P119,000 is deducted from the February book
disbursements.
Book to bank method
 Bank to book method
41

COMPANY X
PROOF OF CASH
For the month of February

January 31 Receipts Disbursements February 28

Balance per bank 84,000 170,000 130,000 124,000
Deposits 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 0 1,000 0
Balance per book 50,000 200,000 180,000 70,000
 Comments: 42
COMPANY X
PROOF OF CASH
For the month of February a) The bank reconciling items – deposit in
transit and outstanding check – are treated
January 31 Receipts February 28 in the same manner following the adjusted
Disbursements balance method.
Balance per bank 84,000 170,000 130,000 124,000
Deposits In transit:
January 40,000 -40,000 b) The book reconciling items – note
February 75,000 75,000 collected, NSF and service charge – are
Outstanding checks: treated in the “reverse”.
January -65,000 -65,000
February 119,000 -119,000
Note collected: c) The bank to book proof of cash means that
January -15,000 15,000 the bank receipts and disbursements for the
February -20,000 -20,000 current month are adjusted to equal the book
NSF check:
receipts and disbursements for the current
January 5,000 5,000
February -10,000 10,000 month.
Service charge:
January 1,000 0 1,000 0
Balance per book 50,000 200,000 180,000 70,000

Bank to book method

 Comments: 43
COMPANY X
PROOF OF CASH
For the month of February d) Credit memos of previous month do not
affect the bank receipts for the current month
January 31 Receipts February 28
but increased the book receipts for the current
Disbursements month.
Balance per bank 84,000 170,000 130,000 124,000
Deposits In transit:
January 40,000 -40,000 Consequently, the bank receipts for the
February 75,000 75,000 current month are understated in relation to the
Outstanding checks: book receipts for the current month.
January -65,000 -65,000
February 119,000 -119,000
Note collected: Hence, the credit memos of the previous month
January -15,000 15,000 are added to the bank receipts for the current
February -20,000 -20,000 month.
NSF check:
January 5,000 5,000
February -10,000 10,000 Thus, the January note collected of P15,000 is
Service charge: added to the February bank receipts.
January 1,000 0 1,000 0
Balance per book 50,000 200,000 180,000 70,000

Bank to book method

 Comments: 44
COMPANY X
PROOF OF CASH
For the month of February e) Credit memos of the current month increased
the bank receipts for the current month but
January 31 Receipts February 28
have no effect yet on the book receipts for the
Disbursements current month. Consequently, the bank receipts
Balance per bank 84,000 170,000 130,000 124,000
Deposits In transit:
of the current month are overstated in relation
January 40,000 -40,000 to the book receipts of the current month.
February 75,000 75,000
Outstanding checks: Hence, the credit memos of the current month
January -65,000 -65,000
February 119,000 -119,000
are deducted from the bank receipts for the
Note collected: current month.
January -15,000 15,000
February -20,000 -20,000 Thus, the February note collected of P20,000 is
NSF check:
deducted from the February bank receipts.
January 5,000 5,000
February -10,000 10,000
Service charge:
January 1,000 0 1,000 0
Balance per book 50,000 200,000 180,000 70,000

Bank to book method

 Comments: 45
COMPANY X
PROOF OF CASH
For the month of February f) Debit memos of previous month do not affect
the bank disbursements for the current month
January 31 Receipts February 28
but increased the book disbursements for the
Disbursements current month.
Balance per bank 84,000 170,000 130,000 124,000
Deposits In transit:
January 40,000 -40,000 Consequently, the bank disbursement for the
February 75,000 75,000 current month are understated in the relation to
Outstanding checks: the book disbursements for the current month.
January -65,000 -65,000
February 119,000 -119,000
Note collected: Hence, the debit memos of previous month are
January -15,000 15,000 added to the bank disbursements for the current
February -20,000 -20,000 month.
NSF check:
January 5,000 5,000
February -10,000 10,000 Thus, the January NSF of P5,000 and the January
Service charge: service charge of P1,000 are added to the
January 1,000 0 1,000 0 February bank disbursements
Balance per book 50,000 200,000 180,000 70,000

Bank to book method

 Comments: 46
COMPANY X
PROOF OF CASH
For the month of February g) Debit memos of current month increased the
bank disbursements for the current month but
January 31 Receipts February 28
have no effect yet on the book disbursements
Disbursements for the current month.
Balance per bank 84,000 170,000 130,000 124,000
Deposits In transit:
January 40,000 -40,000 Consequently, the bank disbursements for the
February 75,000 75,000 current month are overstated in relation to the
Outstanding checks: book disbursements for the current month.
January -65,000 -65,000
February 119,000 -119,000
Note collected: Hence, the debit memos of current month are
January -15,000 15,000 deducted from the bank disbursements for the
February -20,000 -20,000 current month.
NSF check:
January 5,000 5,000
February -10,000 10,000 Thus, the February NSF of P10,000 is deducted
Service charge: from the February bank disbursements for the
January 1,000 0 1,000 0 current month
Balance per book 50,000 200,000 180,000 70,000

Bank to book method

 47

REFERENCE
2017 Edition Financial Accounting
Volume One by Conrado T. Valix,
Jose F. Peralta and Christian Aris M.
Valix
THANK YOU
Judith Kay A. Cañares