Download - Internal Cash Control
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Petty Cashier
Petty Cashier
Operating a Petty Cash Fund
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Petty Cashier
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Stamps Courier
Operating a Petty Cash Fund
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Petty Cashier
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Stamps Courier
Operating a Petty Cash Fund
Receipts
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Petty Cashier
Receipts
Treasurer andAccountant
GENERAL JOURNAL Page 4Date Description PR Debit Credit
May 15 Postage Expense 45
Courier Expense 80
Cash 125
$125
To reimbursepetty cash fund
We use a CashOver and Short
account if needed.
Operating a Petty Cash Fund
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Petty Cash Example
Tension Co. maintains a petty cash fund of $400. Thefollowing summary information was taken from petty
cash vouchers for July:
Travel Expenses $79.30
Customer Business Lunches 93.42
Express Mail Postage 55.00
Miscellaneous Office Supplies 32.48
Lets look at replenishing the fund if the balance on July31 was $137.80.
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Petty Cash Example
What amount of cash will be required toreplenish the petty cash fund?
a. $260.20
b. $262.20
c. $139.80
d. $137.80
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Petty Cash Example
What amount of cash will be required toreplenish the petty cash fund?
a. $260.20
b. $262.20
c. $139.80
d. $137.80
Desired Balance 400.00$
Actual Balance 137.80
Amount Needed 262.20$
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Petty Cash Example
GENERAL JOURNAL Page 8Date Description PR Debit Credit
Jul 31 Travel Expense 79.30
Entertainment Expense 93.42
Postage Expense 55.00
Office Supplies Expense 32.48
Cash Over and Short 2.00
Cash 262.20
Lets make the journal entry to replenish the petty cash fund.
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Bank Reconciliation
A bank reconciliation is prepared periodically to explainthe difference between cash reported on the bank
statement and the cash balance on companys books.
GENERAL LEDGER
Account: Cash Acct. No. 102Balance
Date Item PR Debit Credit DR (CR)
May 31 Balance 2,481.18
Why are thebalances different?*
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Reconciling Items
Bank Statement Balance
Deduct: Outstandingchecks.
Add: Deposits in
transit.Add orDeduct: Bank
errors.
Book Balance
Deduct:Nonsufficient fundscheck (NSF).
Deduct: Bank servicecharge.
Add: Interest earnedon checking account.
Add: Collectionsmade by the bank.
Add orDeduct:Book errors.
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Bank Reconciliation
Two sections:Reconcile bank statement balance to the adjusted
bank balance.
Reconcile book balance to the adjusted book
balance.
The adjusted balances should be equal.
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Bank Reconciliation Example
Lets prepare a July 31 bank reconciliationstatement for the Simmons Company. The
July 31 bank statement indicated a balance of
$9,610, while the cash general ledger accounton that date shows a balance of$7,430.
Additional information necessary for the
reconciliation is shown on the next screen.
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Outstanding checks totaled $2,417.
A $500 check mailed to the bank for deposit had notreached the bank at the statement date.
The bank returned a customers NSF check for $225
received as payment on account receivable.The bank statement showed $30 interest earned
during July.
Check No. 781 for supplies expense cleared the bank
for $268 but was erroneously recorded in our booksas $240.
A $486 deposit by Acme Company was erroneouslycredited to our account by the bank.
Bank Reconciliation Example
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Bank Reconciliation Example
Bank Balance, July 31 9,610$
Add: Deposit in Transit 500
Less: Bank Error 486$
Outstanding Checks 2,417 (2,903)Adjusted Balance, July 31 7,207$
Simmons CompanyBank Reconciliation
July 31, 2002
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Recording Adjusting Entries from
Bank Reconciliation
Only amounts shown on the book portion of thereconciliation require an adjusting entry.
GENERAL JOURNAL Page 8Date Description PR Debit Credit
Jul 31 Cash 30
Interest Revenue 30
To record interest earned in July
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Recording Adjusting Entries from
Bank Reconciliation
GENERAL JOURNAL Page 8Date Description PR Debit Credit
Jul 31 Supplies Expense 28
Accounts Receivable 225
Cash 253
To adjust cash account
Only amounts shown on the book portion of thereconciliation require an adjusting entry.
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Recording Adjusting Entries from
Bank Reconciliation
After posting the reconciling entries the cashaccount looks like this . . .
GENERAL LEDGER
Account: Cash Acct. No. 101
Balance
Date Item PR Debit Credit DR (CR)
Jul 31 Balance 7,430
31 Adjusting entry 30 7,460
31 Adjusting entry 253 7,207
Adjusted balance on July 31.
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Days Sales Uncollected
Days
SalesUncollected
Accounts ReceivableNet Sales 365=
How much time is likely to pass beforewe receive cash receipts from credit sales.
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