Proof of Cash
By: Lailane
Problem 9 – 13 Frivolous Company
Provided the following information for the bank reconciliation:
Checks and charges returned by bank in June
including a June service charge of 50,000
8,000,000
Service charge made by bank in May and recorded
on book in June
100,000
Total credits to cash in all journals during June
9,000,000
Customer’s NSF check returned as a bank charge
in June (no entry made on book)
1,000,000
Customer’s NSF check returned in May and redeposited
in June (no entry made in book in either May or June) 500,000
Outstanding checks at May 31
3,000,000
What is the amount of outstanding checks on June 30?
A. 5,450,000
Outstanding Checks, May 31
3,000,000
B. 3,950,000
Add: Checks drawn by depositor during the month:
C. 4,950,000
Book credits
9,000,000
Service charge in May and recorded
D. 4,000,000
in June
(100,000)
8,900,000
Total checks to be paid by bank
11.900,000
Less: Checks paid by bank during the month:
Bank debits
8,000,000
June Service charge
(50,000)
June NSF check
(1,000,000)
6,950,000
Outstanding Checks, June 30
4,950,000
Problem 9 – 16 Cool Company
Prepared the following bank reconciliation for the month of November:
Balance per bank statement, Nov. 30
3,600,000
Add: Deposit in transit
800,000
Total
4,400,000
Less: Outstanding checks
1,200,000
Bank credit recorded in error
200,000 1,400,000
Balance per book, Nov. 30
3,000,000
Data per bank statement for the month of December follow:
December deposits (including note collected of
1,000,000 for Cool Company)
5,500,000
December disbursements (including NSF,
350,000 and service charge, 50,000)
4,400,000
All the items that were outstanding on November 30 cleared through the bank in
December, including the bank credit. In addition, 500,000 in checks were
outstanding and deposits of 700,000 were in transit on December 31.
1. What is the balance of cash per ledger on December 31?
A. 4,100,000
Balance per bank statement, Nov. 30 3,600,000
Add: Deposits
5,500,000
B. 4,900,000
Total
9,100,000
C. 4,700,000
Less: Disbursement
4,400,000
D. 4,300,000
Balance per bank statement, Dec. 31 4,700,000
2. What is the amount of cash receipts per book in December?
Balance per bank statement, Dec. 31 4,700,000
A. 5,400,000
Add: Deposits in transit, Dec. 31
700,000
B. 4,400,000
Total
Bank Receipts in5,400,000
December
5,500,000
C. 5,500,000
Less:
Outstanding
Checks,
Dec. 31(1,000,000)
500,000
Note collected
during
December
D. 6,400,000
Adjusted
balance
4,900,000
Deposit incash
Transit:
November
(800,000)
Cash
per ledger
4,300,000
3. What is the amount of cash disbursements
per book in
December?
December
700,000
Add:
collected
1,000,000 4,400,000
A. 3,700,000
CashNote
Receipts
per book, December
Bank
in December
4, 400,000
Total Disbursements
5,300,000
B. 3,300,000
December
Less: NSF debit
Checkmemos:
350,000
C. 3,100,000
NSF Service
Check Charge
350,000 50,000
400,000
D. 3,500,000
Service cash
Charge
50,000 4,900,000
(400,000)
Adjusted
balance
November bank reconciling items:
Outstanding Checks 1,200,000
Erroneous bank credit
200,000 (1,400,000)
Outstanding Checks, December
500,000
Cash Disbursements per book, December 3,100,000
Problem 9 – 19 Opaque Company
Prepared the following bank reconciliation on March 31:
Balance per bank statement, March 31
4,650,000
Add: Deposit in transit
1,000,000
Total
5,650,000
Less: Outstanding checks
1,200,000
Balance per book, Nov. 30
4,400,000
Data per bank statement for the month of April follow:
Deposits
6,000,000
Disbursements
5,000,000
All reconciliation items on March 31cleared through the bank in April.
Outstanding checks on April 30 totaled 750,000 and deposits in transit
amounted to 1,500,000.
1. What is the balance of cash per ledger on April 30?
A. 6,400,000
Balance per bank statement, March 31 4,650,000
Add: Deposits
6,000,000
B. 5,650,000
Total
10,650,000
C. 4,900,000
Less: Disbursement
5,000,000
D. 4,650,000
Balance per bank statement, April 30 5,650,000
2. What is the amount of cash receipts per book in April?
Balance per bank statement, April 30 5,650,000
A. 5,000,000
Add:
in of
transit,
1,500,000
FromDeposits
the month
April:April 30
B. 6,500,000
Total
7,150,000
C. 7,500,000
Less:
Outstanding Checks,
April 30
750,000
Deposits
6,000,000
D. 5,500,000
Adjusted
balance
6,400,000
Deposit incash
Transit:
March
(1,000,000)
Cash
per ledger
3. What is the amount of cash disbursements
per1,500,000
book in6,400,000
April?
April
A. 5,000,000
Cash Receipts per book, April
6,500,000
From
the
month
of
April:
B. 5,500,000
C. 4,500,000
D. 5,750,000
Disbursements
5,000,000
Outstanding Checks:
March
(1,250,000)
April
750,000
Cash Disbursements per book, April 4,500,000
Proof of Cash
- An expanded reconciliation in that it includes proof of receipts and
disbursements.
- Also called four-column ortwo date bank reconciliation
Objectives
To discover or identify cash receipts and cash disbursements:
• Recorded in the accounting records but not on the bank statement.
• Recorded on the bank statement, but not on the accounting records.
• Recorded at different amounts by the bank than in the accounting
records.
Recap
Book reconciling items:
- Credit Memos
- Debit Memos
- Errors
Bank reconciling items:
- Deposits in transit
- Outstanding Checks
- Errors
Problem 9 – 3 Beehive Company
Provided the following information:
Balance per book October 31
600,000
Receipts per book for November (collection from customer,
100,000 recorded as 10,000)
2,200,000
Disbursements per book for November (check for 300,000
in payment of account recorded as 30,000)
1,800,000
Balance per bank statement November 30
930,000
Deposit in transit, October 31
300,000
Outstanding Checks, November 30
400,000
Bank receipts for November including an erroneous credit of
100,000 which should have been credited to Beeline Company 2,500,000
Bank disbursements for November including check of Beeline
Company, 200,000
1,970,000
REQUIRED:
• Prepare bank reconciliation on October 31 and November 30.
• Adjusting Entries on November 30.
Beehive Company
Bank Reconciliation
October 31
Adjusted book balance
600,000
Beehive Company
Bank Reconciliation
November 30
Balance per book
1,000,000
Add: Understated cash receipt
Balance
per
book:
Balance per bank
400,000
Correct
100,000
October
31
600,000
Add: Deposit
in transit
300,000
Recorded as
10,000
90,000
Receipts
or Book debits
2,200,000
Total
700,000
1,090,000
BankTotal
statement balance:
Disbursements
Less: Outstanding
Checksor Book
100,000
Less: Understated
cash
disbursement
October
31
400,000
credits
(1,800,000)
Adjusted bank
balance
600,000
Correct
300,0002,500,
Receipts
or Bank credits
November 30
1,000,000
Recorded as
30,000 270,000
000
Adjusted book
820,000
Disbursements
or balance
Bank
debits
(1,970,000)
Outstanding Checks, May 31
100,000
Balance30
per bank 930,000
930,000
November
Add: Checks drawn by depositor during the month:
Add: Deposit in transit 190,000
Book credits
1,800,000
Erroneous bank
Understated Cash disbursement
270,000
2,070,000
charge
200,000 390,000
Total checks to be paid by bank
2,170,000
Total
1,320,000
Deposit in transit, May 31
300,000
Less: Checks paid by bank during the month:
Less: Outstanding Checks 400,000
Add: Cash receipts deposited during the month:
Bank debits
1,970,000
Erroneous bank
Book debits
2,200,000
Erroneous bank charge
(200,000) 1,770,000
credit
100,000
500,000
Understated Cash receipt
90,000
2,290,000
Outstanding Checks, November 30
400,000 Adjusted bank balance
820,000
Total deposits to be acknowledge by bank
2,590,000
Less: Deposits credited by bank during the month:
Bank credits
2,500,000
Erroneous bank credit
(100,000) 2,400,000
Deposit in transit, November 30
190,000
Adjusting entry:
2015
Nov. 30 Cash in Bank
90,000
Accounts Receivable
90,000
#
Collected from customer
Recorded as
100,000
10,000
Understated Cash Receipts
Accounts Payable
Cash in Bank
90,000
270,000
270,000
#
Check written in payment of account 300,000
Recorded as
30,000
Understated Cash Disbursement
270,000
Forms of Proof of Cash
Bank to
Book
Method
Adjusted
Balance
Method
Book receipts and
disbursements, and bank
receipts and disbursements for
the current month are adjusted
to equal the correct receipts
and disbursements of the
current month
Book to
Bank
Method
Bank receipts and
disbursements for the current
month are adjusted to equal
the bank receipts and
disbursements for the current
month
Book receipts and
disbursements are adjusted to
equal the bank receipts and
disbursements for the current
month
Pro-forma Proof of Cash for ADJUSTED BALANCE METHOD
xxx Company
Proof of Cash
For the month of February
January
31
Receipts
Cash in bank account balance
50,000
200,000
Note collected
January
February
15,000
(15,000)
20,000
NSF Check
January
February
Disbursements
180,000
February
28
70,000
20,000
Book
(5,000)
Debits
(5,000)
10,000
Service Charge
January
(1,000)
(1,000)
ADJUSTED BOOK BALANCE
59,000
205,000
184,000
80,000
Bank statement balance
84,000
170,000
130,000
124,000
40,000
(40,000)
75,000
ADJUSTED BOOK
Deposit
in transit:
BALANCE
January
should
be
February
equal to
ADJUSTED
OutstandingBANK
Checks
BALANCE
January
February
ADJUSTED BANK BALANCE
Bank
(65,000)
Credits
59,000
205,000
Book
Credits
(10,000)
75,000
(65,000)
119,000
Bank
Debits
(119,000)
184,000
80,000
Problem 9 – 8 Bedlam Company
The following data are for the month of December:
November 30
December 31
Cash in bank account balance
2,032,000
Bank statement balance
Bank debits
1,890,000
2,900,000
1,080,000
Bank credits
?
Book debits
?
Book credits
3,160,000
1,440,000
Outstanding Checks
180,000
Deposit in transit
80,000
592,000
498,000
Check erroneously charged by the bank against
entity’s account (corrected in subsequent month)
Bank service charge
40,000
2,000
4,000
Note recorded as cash receipt by the entity when
placed with bank for collection
(Note is actually collected by bank in subsequent
month and credited by bank to entity’s account
in same month)
200,000
300,000
50,000
REQUIRED:
• Prepare four - column reconciliation showing adjusted
balances.
• Prepare one adjusting entry only on December 31.
Bedlam Company
Proof of Cash
For the month of December
November
30
Cash in bank account balance
Receipts
2, 032,000
2,568,000
Bank service charge:
Cash in bank account balance:
November
(2,000)
November 30
2,032,000
December
Receipts or Book debits
2,568,000
Disbursements
December 31
1,440,000
3,160,000
(2,000)
4,000
(4,000)
Disbursements
Note recorded as cash
receipt by or Book
1,440,000
entity when placed withcredits
bank for
December 31
2,900,000
collection
November
(200,000)
December
200,000
(300,000)
ADJUSTED BOOK BALANCE
1,830,000
2,468,000
1,442,000
2,856,000
Bank statement balance
1,890,000
2,090,000
1,080,000
2,900,000
Deposit in transit:
November
December
80,000
(80,000)
498,000
Erroneous bank charge
November
December
40,000
Outstanding Checks
November
December
(180,000)
ADJUSTED BANK BALANCE
1,830,000
(300,000)
Bank statement balance:
November 30
1,890,000
Receipts or Bank credits 498,000
2,090,000
Disbursements or Bank
debits
1,080,000
(40,000)
December 31
(50,000) 2,900,000
50,000
2,468,000
(180,000)
592,000
(592,000)
1,442,000
2,856,000
Adjusting entry:
2015
Dec. 31 Bank Service Charge
Note Receivable
Cash in Bank
#
300,000
304,000
4,000
Pro-forma Proof of Cash for BOOK TO BANK METHOD
xxx Company
Proof of Cash
For the month of February
January
31
Receipts
Disbursements
Cash in bank account balance
50,000
200,000
Note collected
January
February
15,000
(15,000)
20,000
NSF Check
January
February
(5,000)
(5,000)
10,000
(1,000)
(1,000)
Service Charge
January
Deposit in transit:
January
February
(40,000)
Outstanding Checks
January
February
65,000
BALANCE PER BANK STATEMENT
84,000
180,000
70,000
20,000
40,000
(75,000)
170,000
February
28
(10,000)
(75,000)
65,000
(119,000)
119,000
130,000
124,000
Pro-forma Proof of Cash for BANK TO BOOK METHOD
xxx Company
Proof of Cash
For the month of February
January
31
Receipts
Balance per bank statement
84,000
170,000
Deposit in transit:
January
February
40,000
(40,000)
75,000
Outstanding Checks
January
February
(65,000)
Note collected
January
February
(15,000)
NSF Check
January
February
Service Charge
January
BALANCE PER BOOK
Disbursements
130,000
(65,000)
119,000
15,000
(20,000)
(119,000)
(20,000)
5,000
(10.000)
1,000
1,000
200,000
124,000
75,000
5,000
50,000
February
28
180,000
10,000
70,000