Workshop Week 10 Bank Rec SV

8/10/2019 Workshop Week 10 Bank Rec SV

1/18

Workshop week 10

Accounting for cash

Bank ReconciliationsPetty Cash


2/18

Accounting for Cash

What is Cash?

Money (ie notes and coins)

Duplicates of credit card & EFTPOS sales

Negotiable instruments accepted by financialinstitutions

cheques

postal notes / money orders


3/18

CONTROL OF CASH

Cash is the asset most subject to theft

Need a good internal control system forhandling cash and recording cash

transactions 3 important principles

Separation of responsibility for handling andcustodianship of cash from maintaining records

for cash Banking intact each days cash receipts

Making all payments by electronic transfer or bycheque

3


4/18

BANK ACCOUNTS AND

RECONCILIATION

Cheque accounts

Essential element of internal control

Source documents

Use of Electronic Funds Transfer

Reduces processing costs

The Bank Statement

Record of transactions from the bank

4


5/18

Shown in the

Banks records(ie on the bank statement)

Shown in the

Business records(ie GL Cash at Banka/c )

Reconciliation of the cash account

A report known as a Bank Reconciliation is used to compare (orreconcile) the balances of cash:

This is necessary because they rarely agree,due to:Timing differences

Outstanding deposits, unpresented cheques

Direct deposits eg interest, direct charges eg bankfees

Errors(made by either the business or the bank)

to


6/18

Reconciliation Procedure

To prepare a bank reconciliation you require:

1. Last bank reconciliation

2. Cash receipts and cash payments journals3. Cash at bank ledger accounting

4. Bank statement for the period since last

reconciliation

6


7/18


Step 1: Check all items and errors from last

reconciliation have cleared

Any items still not cleared include in current

reconciliation

Step2: Compare

Cash receipts journal with creditsin bank statement

Cash payments journal withdebits in bank statement Marking entries that appear in both and identifying

differences

7


8/18


Step 3: Update cash journals for items

captured by bank statement.

Step 4: Deal with errors

Adjust cash journals for any errors in them

Notify bank of any errors in statement

Note these errors on reconciliation until corrected.

Step 5: Total cash journals and post to ledgers

Step 6: Prepare bank reconciliation

8


9/18

9

Bank rec format

Balance as per bank statement Cr (or Dr) $ 000Add outstanding deposits 000

000

Deduct unpresented cheques 00

00

00 000Balance as per Cash at Bank account Dr or (Cr) $ 000

Cathys ConsultingBank Reconciliation Statement

as at 30/6/ 2013


10/18

EXAMPLE OF

A BANK RECONCILIATION

R.ROBSON AND SON

Bank Reconciliation Statement

As at 31 July 2013

Balance as per bank statement 399.10 Cr

Add: Outstanding Deposit 219.40

618.50

Less: Unpresented cheques

1922 $10.00

1923 77.401924 22.05

1925 82.56 192.01

Balance as per Cash at Bank account 426.49 Dr

10


11/18

EXAMPLE OF

A BANK RECONCILIATION with bank

errorR.ROBSON AND SONBank Reconciliation Statement

As at 31 July 2013

Balance as per bank statement 5,923.55 Cr


6,566.45


248 $406.50

257 174.00 (781.90)

Less: Bank error Chq 251, $77

shown as $7

(70.00)

Balance as per Cash at Bank account $5714.55 Dr

11

Anyerror by

the

bank

appears

here


12/18

EXAMPLE OF

A BANK RECONCILIATION with Debit

opening balanceR.ROBSON AND SONBank Reconciliation Statement

As at 31 July 2013

Balance as per bank statement (5923.55) Dr


(5280.65)


248 $406.50

257 174.00 (781.90)

Balance as per Cash at Bank

account

($6062.55) Cr

12


13/18

13

Now try Exercise 11.9

Balance as per bank statement Cr (or Dr) $ 000Add outstanding deposits 000

000

Deduct unpresented cheques 00

00

00 000Balance as per Cash at Bank account Dr or (Cr) $ 000

Cathys ConsultingBank Reconciliation Statement

as at 30/6/ 2013


14/18

Second part of Reconciliation process

- Postings to CRJ and CPJCRJ Debit CreditDat

e

Account Post Bank Disc

all

GST

Coll

Sales Acc Rec Other GST Coll

31/

7

Bill Rec 125 3,000 3,000

31/

7

Interest Rev 415 50.00 50.00

31/

7

Dish Chq-

R.Song

120 (456.00) (456.00)

2,594 (456.00) 3,050

14

CPJ Debit Credit

Date Account Chq

No

Post Purch Acc Pay Other GST

Out

Bank Disc

Rec

GST

Out

31/7 Bank Fees 520 40.00 40.00

31/7 Our Error

adj

9.00 9.00

9.00 40.00 49.00


15/18

THE PETTY CASH FUND

To avoid the expense and inconvenience of

writing many cheques to cover minor

expenses many entities have a petty cash

fund

Establishing the fund

15

CPJ Debit Credit

Date Account Chq

No

Post Purch Acc

Pay

Other GST

Out

Bank Disc

Rec

GST Out

2/1 Petty

Cash

123 111 100.00 100.00


16/18

THE PETTY CASH FUND

Making payments from the fund

Use a petty cash voucher or receipt

Reimbursing the fund

Cash Payments Journal

16

Date Chq No Post Purch Acc

Pay

Other GST

Out

Bank Disc

Rec

GST

Out

2/1 Petty Cash 123 111 100.00 100.00

31/1 Stationery

Exp

516 15.22 1.52

Office

Supplies Exp

517 12.30 1.23

Postage Exp 521 56.47 5.65

Petty Cash 145 111 92.39


17/18

17

Account Cheque

No.

Post

Ref.

Accts

Pay

GST

Outlays

Other Disc

Rec

Cash at

Bank

A. Petty Cash 432 300.00 300.00

B. Stationery Exp.

5.00 50.00Office Supplies Exp. 9.00 90.00

Advertising Exp. 4.00 40.00

Sundry Exp. 5.00 50.00

883 23.00 230.00 253.00

C. Petty Cash 894 100.00 100.00

Solution

Cash Payments Journal


18/18

CASH MANAGEMENT

Principles of cash management

Revenue collection time for accounts receivable

Postpone payments to accounts payable

Keep inventory levels to a minimum Invest surplus cash

Plan for capital expenditures

Analysing adequacy of cash flows Short-term cash flow adequacy ratio

Cash flow adequacy ratio

18

Workshop Week 10 Bank Rec SV

Documents

Transcript of Workshop Week 10 Bank Rec SV