(Intermediate Accounting 1A)

LECTURE AID

2020

ZEUS VERNON B. MILLAN

Chapter 3 BANK RECONCILIATION

Learning Objectives
• Define cash and identify the items that can be
included in the “Cash and Cash Equivalents”
classification.
• Understand the accounting for petty cash
funds and cash shortages/overages.
• Understand the basic internal controls for
cash.
• Prepare a bank reconciliation.
• Prepare a proof of cash.
INTERMEDIATE ACCTG 1A (by:
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Bank reconciliation

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Proof of cash - Per books

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General guidelines
The proof of cash is similar to a T-account.
PROOF OF CASH T – ACCOUNT

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General guidelines:
The “Nov. 30” and “Dec. 31” columns follow the regular
bank reconciliation format.

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General guidelines:
The “Receipts” and “Disbursements” columns pertain to the
current month only - in this illustration, the month of December.

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General guidelines:
CREDIT MEMO: LAST MONTH (November)
• The November credit memo is a collection last month. However,
it is only recorded this month (i.e., December).
• Therefore, it is deducted from the “Receipts” column because
only the receipts in December should be included in this column.

Notice that
EQUILIBRIUM
is maintained.

INTERMEDIATE ACCTG 1A (by:

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General guidelines:
CREDIT MEMO: THIS MONTH (December)
• The December credit memo is a collection this month. However,
it is not yet recorded this month (it will only be recorded next
month).
• Therefore, it is added in the “Receipts” column because it is an
unrecorded receipt in December.

INTERMEDIATE ACCTG 1A (by:

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General guidelines:
• The proof of cash is completed as follows:

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 APPLICATION OF CONCEPTS
 

PROBLEM 6: FOR CLASSROOM DISCUSSION

INTERMEDIATE ACCTG 1A (by: MILLAN)

 OPEN FORUM
�QUESTIONS????
�REACTIONS!!!!!

INTERMEDIATE ACCTG 1A (by: MILLAN)

 END
INTERMEDIATE ACCTG 1A (by: MILLAN)