1、2 Chapter8Cash AfterstudyingthisChapter youshouldbeableto Prepareabankreconciliation 3 Cashconsistsof coinscurrencychecksmoneyordersmoneyonhanddepositsinbank 4 Cashisthemostdesirableasset becauseitisreadilyconvertibleintoanyotherasset 5 Illustration7 5 6 Illustration7 6 7 ElectronicFundsTransfer EFT
2、 Anapproachtotransferfundsamongpartieswithoutpaper deposittickets checks etc EFTuseswire telephone telegraphorcomputertotransferfromonelocationtoanother 8 PettyCashFund isacashfundusedtopayrelativelysmallamounts 9 UseofaBank isgoodinternalcontrol minimizestheamountofcashthatmustbekeptonhand provides
3、adoublerecordofallbanktransactionsonebythebusinessonebythebankhelpsacompanysafeguarditscashbyusingabankasadepositoryandclearinghouseforchecksreceivedandwritten 10 BankStatementshowscheck otherdebitsdeposits othercreditsdailycashbalance BankStatement acopyofthebank srecordssenttothecustomerforperiodi
4、creview Illustration7 7 April30 2001 11 CompanyBalanceandBankBalanceofCashUsuallyDifferBecause Timelagsthatpreventoneofthepartiesfromrecordingthetransactioninthesameperiod Dayspassbetweenthetimeacheckiswrittenanddatedanddateitispaidbythebank Adaymaypassbetweenthetimereceiptsarerecordedbythecompanyan
5、dthetimetheyarerecordedbythebank Atimelagmayoccurwhenthebankmailsadebitorcreditmemotothecompany Errorsbyeitherpartyinrecordingtransactions 12 ReconciliationProcedure reconcilebalanceperbooksandbalanceperbanktotheiradjustedorcorrectbalancesthereconciliationshouldbepreparedbyanemployeewhohasnootherres
6、ponsibilitiespertainingtocash 13 Terms Depositsintransit depositsrecordedbythedepositorthathavenotbeenrecordedbythebank OutstandingChecks checksissuedandrecordedbythecompanythathavenotbeenpaidbythebank NSFCheck acheckthatisnotpaidbythebankbecauseofinsufficientfundsinthecustomer sbankaccount Adjusted
7、balance sameastruecashbalance correctcashbalance Illustration7 8 W A LairdCompanyBankReconciliationApril30 2001 Cashbalanceperbankstatement15 907 45Add Depositsintransit2 201 4018 108 85Less OutstandingchecksNo 4533 000 00No 4571 401 30No 4601 502 705 904 00Adjustedcashbalanceperbank12 204 85Cashbal
8、anceperbooks11 589 45Add CollectionofN Rfor 1000plusinterestearned 50 lesscollectionfee 151 035 00ErroronrecordingcheckNo 44336 001 071 0012 660 45Less NSFcheck425 60Bankservicecharge30 00455 60Adjustedcashbalanceperbank12 204 85 Illustration7 9 16 Eachreconcilingitemindeterminingtheadjustedbalancep
9、erbooksmustbejournalizedandposted ForCashToShowtheCorrectBalance W A LairdCompanyBankReconciliationApril30 2001 Cashbalanceperbankstatement15 907 45Add Depositsintransit2 201 4018 108 85Less OutstandingchecksNo 4533 000 00No 4571 401 30No 4601 502 705 904 00Adjustedcashbalanceperbank12 204 85Cashbal
10、anceperbooks11 589 45Add CollectionofN Rfor 1000plusinterestearned 50 lesscollectionfee 151 035 00ErroronrecordingcheckNo 44336 001 071 0012 660 45Less NSFcheck425 60Bankservicecharge30 00455 60Adjustedcashbalanceperbank12 204 85 Illustration7 9 Apr30Cash1 035 00MiscellaneousExpense15 00NotesReceiva
11、ble1 000 00InterestRevenue50 00Apr30Cash36 00AccountsPayable36 00Apr30AccountsReceivable Baron425 60Cash425 60Apr30MiscellaneousExpense30 00Cash30 00 JOURNAL 19 ReportingCash Cashisrecordedinboththebalancesheetandthestatementofcashflows Thebalancesheetshowstheamountofcashavailableatagivenpointintime
12、 Thestatementofcashflowsshowsthesourcesandusesofcashduringaperiodoftime 20 CashEquivalents ReadilyconvertibletoknownamountofcashSonearmaturitythatmarketvalueisrelativelyinsensitivetochangesininterestratesExamples TreasurybillsCommercialpaperMoneyMarketFunds 21 RestrictedCash Iscashthatisnotavailableforgeneraluse Issetasideforspecialpurpose Ifnottobeusedwithinnextyear reportasnoncurrentasset Illustration7 12 Illustration7 13 24 ReportingCash Cashonhand cashinbanks andpettycashareoftencombinedandreportedascash Cashisthemostliquidassetandlistedfirstinthecurrentassetsectionofthebalancesheet
