Handout Bank-Recon Proof-of-Cash PDF

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FINANCIAL ACCOUNTING AND REPORTING 0 Bank Reconciliation – is a statement which brings into agreement the cash balance per book (depositor’s record) and cash balance per bank as reflected in the bank statement. Reconciling Items 1. Book Reconciling Items a. Timing Difference i. Credit memos – items not representing deposits credited by the bank to the account of the depositor but are not yet recorded by the depositor as cash receipts as at cut-off date. ii. Debit memos - - items not representing checks paid by the bank which are charged or debited by the bank to the account of the depositor but are not yet recorded by the latter as cash disbursements as at cut-off date. b. Book errors (errors committed, in good faith, by the depositor) 2.

Bank Reconciling Items a. Timing Difference i. Deposits in transit – collections already recorded by the depositor as cash receipts but are not yet reflected on the bank statement. ii. Outstanding checks – checks already recorded by the depositor as cash disbursements but are not yet reflected on the bank statement. b. Bank errors (errors committed, in good faith, by the bank)

Forms of Bank Reconciliation: Adjusted Balance Method Book balance, unadjusted xx Bank balance, unadjusted Add: Credit memos (CM) xx Add: Deposits in transit (DIT) Total xx Total Less: Debit memos (DM) xx Less: Outstanding checks (OC) Book balance, adjusted xx Bank balance, adjusted

xx xx xx xx xx

Book to Bank Method Book balance, unadjusted Add: CM and OC Total Less: DM and DIT Bank balance, unadjusted

xx xx xx xx xx

Bank to Book Method Bank balance, unadjusted Add: DIT and DM Total Less: OC and CM Book balance, unadjusted

xx xx xx xx xx

*Errors should be corrected by the same party which committed the same. The adjustment (added or deducted)shall depend on the nature of the error and the form of bank reconciliation adopted by the Company. Two – Date Bank Reconciliation: This reconciliation attempts to reconcile the beginning and ending balances of the Company’s cash in bank account. Guide computations for the following balances: Ending Book and Bank Balances Book balance, beginning xx Bank balance, beginning Add: Book debits (R) xx Add: Bank credits (R) Total xx Total Less: Book credits (D) xx Less: Bank debits (D) Book balance, ending xx Bank balance, adjusted

Deposits in transit, end DIT, beginning Add: Current deposits per book Total Less: Current deposits per bank DIT, ending

xx xx xx xx xx

xx xx xx xx xx

Outstanding checks, end OC, beginning Add: Checks issued per book Total Less: Checks paid per bank OC, ending

xx xx xx xx xx

Proof of Cash A proof of cash is an expanded reconciliation which attempts to reconcile the beginning cash in bank balance, current period receipts, current period disbursements and cash in bank ending balance. Guide computations for the following balances: Adjusted Balance Method (Book) Particulars BB R Book balance, unadjusted Xx xx Credit memos: Last month Xx (xx) Current month xx Debit memos: Last month (xx) Current month Book balance, adjusted Xx xx Adjusted Balance Method (Book) Particulars BB R Bank balance, unadjusted Xx xx Deposits in transit: Last month Xx (xx) Current month xx Outstanding checks: Last month (xx) Current month Bank balance, adjusted Xx xx

D xx

EB xx

xx (xx) xx xx

(xx) xx

D xx

EB xx

Book to Bank Method (Book) Particulars BB R Book balance, unadjusted xx xx Credit memos: Last month xx (xx) Current month xx Debit memos: Last month (xx) Current month Deposits in transit: Last month (xx) xx Current month Outstanding checks: Last month xx Current month Bank balance, unadjusted xx xx

D xx

EB xx

xx (xx) xx

(xx)

(xx)

xx

xx (xx) xx

xx xx

xx (xx) xx xx

(xx) xx

Bank to Book Method (Book) *Bank reconciling items – same treatment as under adjusted balance method *Book reconciling items – reverse treatment

*Errors should be corrected by the same party which committed the same. The adjustment (added or deducted) shall depend on the nature of the error and the form of bank reconciliation adopted by the Company. Important notes on the preparation of Proof of Cash: 1. Book debits and bank credits pertain to cash receipts while book credits and bank debits refer to cash disbursements. 2. Proof of cash intends to cancel the effects of timing differences in the recording of cash in bank transactions. 3. Receipts and disbursements related to cash in bank must be recorded in the month where the actual collection or payment of cash has taken place....