Bank Reconciliation and Proof of Cash PDF

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Summary

Bank Reconciliation and Proof of Cash 1🏉Bank Reconciliation and Proof of CashBank Reconciliation Bringing the balance of the bank and the book to an equal balance.It is applicable only for demand deposit and checking accounts. Cash in Bank account and demand deposit account are reciprocal accounts I...

Description

Bank Reconciliation and Proof of Cash Bank Reconciliation Bringing the balance of the bank and the book to an equal balance. It is applicable only for demand deposit and checking accounts. Cash in Bank account and demand deposit account are reciprocal accounts

IF POV DEPOSITOR/ENTITY DEBIT - Increase Cash CREDIT - Decrease Cash

IF POV BANK DEBIT - Decrease Cash CREDIT - Increase Cash

BOOK RECONCILING ITEMS Credit Memo Debit Memo - Auto Debit/Auto Charge -”authorized to deduct” Book error (can be added or deducted, depending on the error)

BANK RECONCILING ITEMS Deposits in Transit - TWO REASONS: cut-off or bukas pa mag reflect. Checks Outstanding (less certified checks) Bank Error (can be added or deducted, depending on the error)

COMPUTATION FOR ADJUSTED BOOK BALANCE EndingBookBalance + CreditMemos − DebitMemos(+−)BookErrors

COMPUTATION FOR ADJUSTED BANK BALANCE EndingBankBalance + DepositsInT ransit − ChecksOutstanding(+−)BankErrors *adjusted book balance and adjusted bank balance must be equal/come into agreement

Proof of Cash

Proof of receipts and disbursements. Similar to bank reconciliation, but includes a reconciliation for the book and bank receipts and disbursements. ASSUMPTION: Reconciling items of the current month will be recorded on the next month. The receipts and disbursements in the proof of cash pertain to the latter month.

Information Needed for Proof of CASH Book and bank debits and credits for the latter/subsequent month Beginning and ending book and bank balance Beginning and ending deposits in transit (Bank reconciling item) Beginning and ending checks outstanding (Bank reconciling item) Debit and credit memos for the former and subsequent month (book reconciling item)

Computations for Proof of Cash Ending Book Balance

EndingBookBalance = Beg.BookBalance + BookDebits − BookCredits Ending Bank Balance

EndingBankBalance = Beg.BankBalance + BankCredits − BankDebits Deposits in Transit (ending balance)

BeginningDIT + CashReceiptsDepositedDuringT heMonth = DepositsT oBeAcknowledgedByBank − Deposi Outstanding Checks (ending balance)

Beg.OC + ChecksDrawnDuringT heMonth = ChecksT oBeP aidByBank − ChecksP aidByBankDuringT heM

Treatment of Book Reconciling Items in the Proof of Cash - Adjusted Balance Method Credit Memos from previous month - deducted from cash receipts Credit Memos for current month - added to cash receipts Debit Memos from previous month - deducted from cash disbursements Debit Memos for current month - added to cash disbursements If bank to book method, follow reversal rule for book reconciling items.

Treatment of Bank Reconciling Items in the Proof of Cash - Adjusted Balance Method Deposits in transit from previous month - deducted from cash receipts Deposits in transit for current month - added to cash receipts Outstanding checks from previous month - deducted from cash disbursements Outstanding checks for current month - added to cash disbursements If book to bank method, follow reversal rule for bank reconciling items...