Chapter 1: Cash and Cash Equivalents Items NOT CONSIDERED AS CASH

In order for items to qualify as cash it should first 1. Receivables

satisfied the two criteria such as; a) Cash in closed banks or banks
having financial difficulty( kapag
1. It is unrestricted as to withdrawal and use may recoverable amount kapang
2. It is immediately available for use in nakuha sa ganito klaseng banks
current operations yung recoverable or realizable
amount ay considered as cash)
Items considered as Cash b) Customer’s Postdated checks
1. Cash on Hand c) Customer’s Stale Checks
a) Bills and Coins d) IOU
b) Bank Drafts e) Restricted Compensating
c) Postal Money Order balance for short-term loan
d) Different Checks f) Cash advance from employees
- In order for a check to g) Customer’s NSF checks
qualifies as cash it should be I. DAIF checks (Drawn
received on or before the against Insufficient
balance sheet date and dated Funds).
on or before the balance II. DAUD checks (Drawn
sheet date against unclear deposits).
i. Customers Checks 2. Prepaid Assets
ii. Travelers Checks a) Advances for employee travel
iii. Managers Checks b) Postage Stamps
iv. Cashier’s Checks c) Supplies
v. Company’s undelivered 3. Temporary Investments
checks a) Trading securities
vi. Company’s Postdated b) Short-term papers acquired more
Checks than 3 months before its maturity
vii. Company’s Stale Checks date.
2. Cash in Bank 4. Non-Current Assets
a) Unrestricted Savings Account a) Restricted foreign bank accounts
b) Unrestricted Checking Accounts b) Restricted compensating balance
c) Unrestricted Bank Accounts in for long-term loan
Foreign Currency c) Bond Sinking Fund in which the
d) Unrestricted Compensating maturity of related liability is more
Balance than one year (Note: the
3. Working Funds or Cash fund set aside classification of cash fund should
for current purpose be parallel to the classification of
a) Petty Cash Fund its related liability, but if the cash
b) Change Fund fund is for acquisition of non-
c) Payroll Fund current assets, it is non-current by
d) Dividend Fund default).
e) Tax Fund d) Plant expansion/Acquisition Fund
f) Interest Fund e) Preferred Redemption fund which
is redeemable more than 3
Items considered as Cash Equivalents months from the date of
acquisition
- *It should be acquired 3 months or less f) Retirement Fund
before its maturity date (irregardless of g) Pension Fund
360 days,180 days at the beginning) h) Insurance Fund
i) Contingent Funds
- **It should be redeemable 3 months or 5. Current Liability
less before its maturity date
a) Bank Overdraft
- *It has atleast 90 days below at the 6. Expenses
beginning a.) Unreplenished expense
vouchers
Cash Equivalents
Concept of Bank Overdraft
a) Short Term commercial papers*
b) Money Market Instruments * - Generally Offsetting is not allowed in the
Philippines but there is an exception to
c) Trust Funds*
the rule;
d) Treasury Bills*
e) Time Deposits*
f) Redeemable Preference
Shares**
Rules in offsetting bank overdrafts Accounting for Petty Cash
(negative bank accounts) against positive
bank balance Entities uses different cash controls and one of
those cash control is the IMPREST SYSTEM.
1) The Positive and Negative(Overdraft)
bank accounts must be in one and same Imprest System
bank and it has a stipulation in the
agreement or condition that the bank - requires that all cash receipts should be
permit offsetting of overdrafts. deposited in the reporting entities bank
2) If the amount of overdraft is immaterial it accounts and all cash disbursements
can be offset against other positive bank should be made by means of checks
accounts. This system is sometimes impractical in situation
3) Under IFRS, Bank overdraft can be offset in which small expenses should be paid by
against the other bank account when it is means of cash and not by checks these are
payable on demand and it often
fluctuates from positive to negative as an • Fare cost of messenger boys
integral part of cash management. • Photocopying of documents
• E-load for delivery boys
• Refreshments (Food) for unexpected
visitors.

Dahil mura lang ang mga expenses na ito, mas

mainam na cash mismo ang ibigay instead of
checks. In order to meet the need of cash in the
daily operation of business the exception to the
rule of imprest system is the establishment of
Petty Cash Fund.

Petty Cash Fund- isang halimbawa ng working

funds. Ito ay maituturing na Cash for reporting
purposes. Ito ay ginagamit ng reporting entity
upang pambayad sa maliliit na gastusin ng
kompanya mas convenient to’ kaysa sa pag
gamit ng check in terms of paying small
expenses.

Petty Cash Drawer- pinaglalagyan ng petty

cash fund like coins and bills.

Petty Cash Custodian- responsible sa pag-

manage at pangagalaga ng petty cash fund. Siya
rin ang nagpapencash sa bangko upang
madagdagan ang laman nito.

2 Methods of Accounting for Petty Cash

1. Imprest Fund System

2. Fluctuating Fund System

Imprest Fund System

-usually followed in handling petty cash fund.

1. Establishment of Petty Cash Fund

JE:

Petty Cash Fund xxx

Cash in Bank xxx

- Nakadepende sa higher level of

management kung magkano ang initial
amount ng petty cash fund na i-establish
nila. Gagawa sila ng cheke at ibibgay sa
petty cash custodian para ipalit sa
- bangko at maging petty cash fund.
 b.after the recording of the expenses
magbibigay na ng go-signal si accountant kay
2. Payment of expenses out of the fund treasurer na bigyan na ng replenishment check
si petty cash custodian para mapunan muli ang
Under Imprest fund system there is NO petrty cash fund. Ang replenishment check ay
FORMAL JOURNAL ENTRIES yet. ipapa-encash ni petty cash custodian sa bangko.
- Sa every day operation ng company ay JE:
gumagamit sila ng petty cash, ito ang
proseso ng pag kuha at paggamit ng Petty Cash Fund xxx
petty cash.
a) Kung sinong employee ang Cash in Bank xxx
nangagailangan ng fund for use
in business pupunta siya sa petty In order to simplify the recording since na oofset
cash custodian at hihingi ng petty naman ang petty cash fund account pwedeng ito
cash voucher. ang maging ENTRY FOR REPLENISHMENT
b) Ang petty cash voucher ay OF PETTY CASH FUND
papapirmahan niya sa higher
level of management at siya ay JE:
babalik muli sa petty cash Operating Expenses xxx
custodian.
c) Bago siya bigyan ng cash Cash in Bank xxx
kailangan niya rin pumirma sa
petty cash voucher bilang -pwede tong’ entry since mareflect din ang total
patunay na natanggap niya yung expenses out of the fund and the cash in bank
cash. deduction dahil sa replenishment.
d) Pag nabili na niya yung
kailangang bilhin ibibigay niya NOTE: Under Imprest Fund System, Total
ang mga official receipts nito sa amount of replenishment is equal to total
petty cash custodian at ibabalik amount of disbursements.
niya rin kung may sukli pa.
4. Adjustment for unreplenished expenses
e) Si petty cash custodian naman ay
iaatach ang mga receipts sa petty Kadalasan at the end of the year may mga
cash voucher para pag hiningi na sumusulpot na expenses na hindi naman ganon
ng kanilang accountant for kalaki ang bawas sa ating petty cash fund. At ito
recording purposes may ipe- ay di agad-agad nangagailangan ng
present siya. replenishment.
Under Imprest fund system ang dahilan kung JE:
bakit hindi agad nirerecord ng accountant ang
mga expenses sa petty cash ay dahil para hindi Operating Expenses xxx
hassle at hindi redundant ang recording at para
makatipid din ng space sa journal. Petty Cash Fund xxx

Normally, the petty cash custodian generally This adjustment is to be reversed at the
requires signed petty cash voucher for such beginning of the next accounting period in order
payments and simply prepares memorandum to follow the normal replenishment procedures
entries in the petty cash journals. by simply debiting expenses and crediting cash
in bank without distinguishing whether the
3. Replenishment of Petty Cash Fund expenses pertain to the current period or prior
period.
- kapag napansin ni petty cash custodian na
paubos na o hindi na kayang i-cover ng petty Minsan may pagkakataon na gusto ng entity na
cash fund ang mga next day expenditures itaas at babaan ang kanilang petty cash fund
kailangan na niyang magrequest for amount.
replenishment o punan ang petty cash fund.
5. Increasing the Fund
a. Ibibigay niya sa accountant ang mga source
documents bilang patunay at upang magamit sa JE:
recording purposes at mareflect ang talagang
nabawas sa petty cash fund; Petty Cash Fund xxx

JE: Cash in Bank xxx

Operating Expenses xxx 6. Decreasing the Fund

Petty Cash Fund xxx JE:

Cash in Bank xxx

Petty Cash Fund xxx

Fluctuating Fund System Example:

- Under fluctuating fund system, the Petty Cash recorded in the books- 10,000
amount of replenishment does not
Actual Petty cash counted- 9500
necessarily equal with the total amount of
petty cash disbursements. Shortage- 500
- Replenishment checks are simply drawn
upon the request of petty cash custodian. a. To recognize cash shortage and to reconcile
- Unlike the imprest fund system kung the actual count with the entities books.
saan hindi agad-agad nirerecord ang
payment of expenses out of the fund. Iba JE:
ang Fluctuating fund system under this
petty cash disbursements are Cash short or over 500
immediately recorded resulting in a
Petty Cash Fund 500
fluctuating petty cash balance per book
from time to time. Next is alamin ang naging dahilan nang shortage
kapag ang dahilan ay alam na, pwede na natin i-
1. Establishment of the fund
close ang cash short or over account.
Petty Cash Fund xxx
The following are the possible reasons of cash
Cash in bank xxx shortage;

2. Payment of expenses out of the fund b.1. Petty Cash Custodian is responsible for the
shortage
Operating expenses xxx
JE:
Petty Cash Fund xxx
Receivable from custodian 500
3. Replenishment or increase in fund
Cash short or over 500
Petty Cash Fund xxx
b.2 Other Personnel is responsible (Cashier,
Cash in bank xxx other employees)

NOTE: The amount of the replenishment JE:

does not necessarily equals with the total
disbursement and the replenishment or Receivable from (name of personnel) 500
increase is directly to petty cash fund since
Cash short or over 500
we already recorded the payment of
expenses out of the fund. b.3 if hindi talaga alam ang dahilan ng cash
shortage;
NOTE: At the end of the reporting period, no
adjustment is necessary because the petty JE:
cash expenses are recorded outright.
Loss from Cash Shortage* 500
4. Decrease of the Fund is reverted to
general cash. Cash Short or Over 500

JE: *pwede din miscellaneous expense

Cash in bank xxx CASH OVERAGE- occurs when the per count of
cash is greater than the cash balance recorded
Petty Cash Fund xxx in the books( Kung mas malaki yung per-count
ng cash kaysa dun sa nai-record sa books ito ay
cash overage. Ang cash overage ay inilalagay
Accounting Treatment for Cash shortage or muna sa bank habang iniimbestigahan ang
overage dahilan ng cash overage.)

Cash short or over- is a temporary account that Example:

is used in handling the shortage or overage in
Petty Cash recorded in the books- 10,000
the entities cash. This account is closed when
the real reason for such shortage or overage is Actual Petty cash counted- 11000
found out.
Overage- 1000
CASH SHORTAGE- occurs when the per count
in the entity’s cash is smaller than in the cash a. To recognize cash overage
balance in the record. (Kung mas maliit yung
actual counting may shortage, dapat bawasan Cash in bank 1000
natin yung cash na narecord natin sa books para
maging pareho nung sa actual counting). Cash Short or over 1000
Next is alamin ang naging dahilan nang overage Total Per Count 8600
kapag ang dahilan ay alam na, pwede na natin i-
close ang cash short or over account. Accountability: amount ng imprest fund o fund
na pinapamanage sa petty cash custodian
b.1 the overage represents late payment of
customers Imprest Fund balance 10000

JE: Compare the per-count vs. accountability

Cash short or over 1000 Cash shortage- the amount of per count is
smaller than per accountability.
Accounts Receivable 1000
Cash overage- the amount of per count is
b.2. Pera pala ni petty cash custodian naihalo greater than per accountability.
lang sa petty cash items.
In this case there is a cash shortage of 1,400
JE: because the per count is smaller than per
accountability.
Cash short or over 1000
2. if the resulting cash is shortage these are the
Payable to Custodian 1000 alternative ways to get the updated petty cash
balance.
b.3. sa Other Personnel (Cashier, other
employees) pala yung cash overage. a. the petty cash balance is all the cash items
JE: Bills + Coins= 5400
Cash short or over 1000 b. the petty cash balance is derived using these
formula’s
Payable to (name of personnel) 1000
Imprest Balance xxx
b.4 if hindi talaga alam ang dahilan ng cash
overage; Less: Expenses xxx
Cash short or over 1000 Shortage xxx
Miscellaneous Income 1000 Petty Cash Balance xxx

Techniques in solving petty cash problems Imprest Balance 10,000

(Problems with detailed solution) Less: E-Load Voucher 2500
Problem 1: Transpo Voucher 700
The petty cash fund of J Company has an Cash shortage 1400
imprest balance of 10,000. The following items
are found in the petty cash drawer. Petty Cash Balance 5400

Bills 5000 E-Load Voucher 2500 Note: either ways will give same answer.
Coins 400 Transpo Voucher 700
How much is the petty cash fund balance? And The operating expenses and cash short is being
what is the amount of cash shortage or overage? deducted on the petty cash fund based on
previous entries.
Techniques:
Problem 2:
In dealing with petty cash problems the following
are the techniques; The petty cash fund of J Company has an
imprest balance of 10,000. The following items
1. In this basic problem first find the shortage or are found in the petty cash drawer.
overage using the ‘’Per count versus
Accountability’’ Bills 7000 E-Load Voucher 2500
Coins 400 Transpo Voucher 700
Per-count: Add all the items in the drawer How much is the petty cash fund balance? And
what is the amount of cash shortage or overage?
Bills 5000
1. Find first the shortage or overage using the
Coins 400 ‘’Per count versus Accountability’’
E-Load Voucher 2500 Per- Count= Add all the items in the drawer
Transpo Voucher 700 10,600
Accountability: Imprest Fund balance 10,000 2. if the resulting cash is shortage these are the
alternative ways to get the updated petty cash
Compare the per-count vs. accountability balance.
In this case there is a cash overage of 600, a. add all the cash items
because the per count is greater than the per
accountability. the following are considered cash items

2. If the resulting cash is overage the following Bills and Coins- these are the present cash in
are the ways to get the balance of petty cash the petty cash drawer.
fund;
Replenishment check- this are the check given
a. all the cash items less overage by the treasurer to the petty cash custodian in
order for this check to be encash in the bank.
Total Cash Items xxx Bills and Coins 7400 This check is considered cash because it is
available to be converted into cash.
Less: Cash Overage xxx less: Overage 600
Salary Check- at some point may mga
Petty Cash Balance xxx Petty Cash Bal. 6800 employees ang kompanya na hindi na umabot
b. Total amount of imprest fund balance less sa bangko upang ma-encash ang kanilang
expenses salary check kaya sa petty cash custodian
nalang nila ito pinapalitan. Since salary check
Imprest Balance 10,000 has a sure balance at ito ay readily available for
encashment ito ay ma-coconsider as cash.
Less: E-Load Voucher 2500
Certified Check- ito ay 100% certified o
Transpo Voucher 700 siguradong may laman at ready na rin ito for
encashment that’s why it is considered as cash.
Petty Cash Balance 6800
Bills 1200
In the 2nd formula we didn’t deduct cash overage
from imprest balance of petty cash since the Coins 400
entry for cash overage is debiting cash in bank
not petty cash fund and crediting cash short or Replenishment check 2000
over.
Salary Check 1500
Note: always first find the shortage or overage.
Certified Check 1000
Problem 3: The petty cash fund of J Company
has an imprest balance of 10,000. The following Petty Cash balance 6100
items are found in the petty cash drawer. b. Amount of imprest fund balance less
Bills 1200 E-Load voucher 2500 expenses and shortage
Coins 400 Transpo Voucher Imprest Balance 10,000
700
Replenishment Check Salary Check 1500 Less: E-Load Voucher 2500
2000
Certified check from Transpo Voucher 700
Mr. x 1000
How much is the petty cash fund balance? And Cash shortage 700
what is the amount of cash shortage or overage? Petty Cash Balance 6100
1. Find first the shortage or overage using the Problem 4: The petty cash fund of J Company
‘’Per count versus Accountability’’ has an imprest balance of 10,000. The following
Per-count: add all the items in the drawer items are found in the petty cash drawer.

9,300 Bills 1,200 E-Load voucher 2500

Coins 400 Transpo Voucher 700
Per-Accountability: bagay na pinapamanage Postdated check from NSF Check from
sayo, in this case is the imprest balance of Employee 1,500 employee 1,700
10,000 IOU from employee Cash Advance from
400 employee 500
Compare the per-count vs. accountability 1. Find first the shortage or overage using the
‘’Per count versus Accountability’’
In this case there is a cash shortage of 700,
because the per count is smaller than per Per-count: add all items in the drawer 8,900
accountability.
Per-Accountability: bagay na pinapamanage
sayo, in this case is the imprest balance of
10,000
Compare the per-count vs. accountability IOU from employee 400

In this case there is a cash shortage of 1,100. NSF Check from employee 1700
because the per-count is smaller than per-
accountability. Cash advance from employee 500

2. if the resulting cash is shortage these are the Petty Cash Balance 1600
alternative ways to get the updated petty cash
balance. Problem 5: The petty cash fund of J Company
has an imprest balance of 10,000. The following
a. add all the cash items items are found in the petty cash drawer.

Bills 1200 Bills 1,200 Supplies Voucher

2500
Coins 400 Coins 400 Stamps Voucher 700
Undeposited Unused Supplies 100
Petty Cash Fund 1600 Collection 5000
The following are non-cash items and not Envelope from B-Day Unused stamps 300
considered as cash; Party 1000
Envelope for Envelope for Lotto
Post-dated checks from Donation 300 100
employees/customers- patunay lamang to na Note: All envelopes and collections has
wala pang pondo ang kanilang bank account at complete amount the time it was open.
tayo ay maghihintay pa ng date para I –pa
encash ito. Since ngayon tayo nagko-compute How much is the petty cash fund balance? And
ng balance ng petty cash fund since postdated what is the amount of cash shortage or overage?
siya sa ibang araw pato mapapakinabangan.
Undeposited Collections – ito ay mga late
NOTE: Ang may custody pa din ng postdated
payments ng customer’s. may designated na tao
checks ay ang may-ari nito. Kaya hindi pa natin
talaga na magkokolekta nito at dahil sa
siya ma-coconsider as cash. Pero ito ay
circumstances na wala o nakauwi na ang tao na
considered as receivable ng entity.
ito, sa petty cash custodian muna ito pinatabi.
NSF Checks from employees- ang tsekeng ito
Different envelopes that has the
ay talbog o kulang sa laman, kapag natatakan
contributions of employees for a specific
ang tseke bilang NSF o No Sufficient Fund hindi
purpose- nakisuyo muna sila sa petty cash
natin mapapencash ang tseke. Since wala tayo
custodian na itago muna ito sa petty cash
nakuhang cash, receivable natin ito sa
drawer.
employee.
Supplies Voucher at Stamps Voucher – ito
IOU of employees and Cash advance from
ang total na pinamiling supplies at stamps ng
employee- pareho lamang itong nagpapakita na
kompanya.
may utang sa atin ang ating employee.
Receivable natin ito sa kanila. • Ang nakalagay na Unused supplies at
stamps ay ang mga tira mula sa total na
Ang entry para i-record ang utang ng employee
pinamili ng kompanya. Ang Unused
sa entity dahil sa pag-gamit ng petty cash fund
supplies at stamps ay walang effect sa
at pagbibigay ng cheke na hindi convertible sa
computation ng petty cash fund,shortage
cash ay;
or overage pero kasama to sa
Receivable from employees xxx accountability ng petty cash custodian
since sa kanya pinatabi. Pero mahalaga
Petty Cash Fund xxx ang information nato sa adjusting
entries.
Dahil galing sa Petty cash fund ang kinuha nila
ibabawas ito sa petty cash fund. Para makuha ang sagot sa problem 5;

b.Amount per imprest fund balance less 1. Find first the shortage or overage using the
expenses,shortage and debt of employee ‘’Per count versus Accountability’’
with substitution of non-convertible checks
or papers. Per-count: Add all items in the drawer= 11,600

Imprest Balance 10,000 Accountability: ang amount ng accountability

ay ang mga bagay na pinasuyo sayong itabi o
Less: E-Load Voucher 2500 obligation mung imanage (maliban sa bills and
coins and vouchers). And they are;
Transpo Voucher 700
Imprest Balance- 10,000 (Mina-manage mo)
Cash shortage 1100
Undeposited collection 5,000 (Pinatabi)
Postdated check from employee 1500
Envelope-B-Day Party 1000 (Pinatabi)
Envelope for Donation 300 (Pinatabi) Stamps Voucher 700

Envelope for Lotto 100 (Pinatabi) Total Per Count 8,800

Unused Supplies 100 (Pinatabi) Per-Accountability: ito ay ang bagay na

accountable ang petty cash custodian ito ay
Unused Stamps 300 (Pinatabi) maaring imprest fund balance na pinapa-
manage sa kanya o envelope or other items na
Total Accountability 16800 pinapasuyo sa kanya na itabi dahil nag-agree
Compare the per-count vs. accountability siya na itabi ito sa pangagalaga niya siya ay
accountable. May laman man o wala ang
In this problem there is a cash shortage of pinatabi sa kanya accountability pa rin niya ang
5,200 because the per count is smaller than per total amount na pinatabi sa kanya. Kaya natin
total accountability. isasama yung nawalan ng laman na envelope
dahil ang assumption ay napahalo lamang ang
2. if the resulting cash is shortage these are the laman nito sa ibang cash items ng petty cash.
alternative ways to get the updated petty cash
balance. Imprest balance 10,000

a. add all the cash items na pag-mamayari ng Envelope for B-DAY Party 500 (pinatabi)
petty cash fund.
Total Accountability 10,500
Bills and Coins= 1600
Sinama sa accountability yung envelope na
(kahit may cash ang mga envelopes at walang laman dahil pinatabi ito sa kanya at yung
undeposited collection hindi yun pagmamay-ari alam niyang amount na nandun ay accountable
ng petty cash fund kasi pinasuyo lang yun ipatabi siya.
sa petty cash custodian at any time maari yung
kunin ng talaga nag mamay-ari sa kanya) Sa per-count ilalagay talaga yung actual na
laman (0) pero sa per accountability may laman
To verify the answer b. Total amount of man o wala basta tinaggap niyang itabi yung
imprest fund balance less expenses on isang item accountable siya sa amount na yun
vouchers and shortage kahit pa walang laman. ang assumption ay
napahalo lamang ang laman nito sa ibang cash
10,000- 2500 – 700 -5200 = 1,600 items ng petty cash.

Compare the per-count vs. accountability

Comprehensive Problems In this problem there is a cash shortage of 1700
because the per count is smaller than per total
Problem 6: The petty cash fund of J Company accountability.
has an imprest balance of 10,000. The following
items in the petty cash drawer as per record. 2. if the resulting cash is shortage these are the
alternative ways to get the updated petty cash
Bills 5,200 Supplies Voucher balance.
2500
Coins 400 Stamps Voucher 700 a. add all the cash items na pag-mamayari ng
Envelope for B-day petty cash fund less yung nawala sa
Party 500 envelope na pag-aari ng iba (dahil may ibang
• When the envelope for birthday party nagmamay-ari ng laman ng envelope hindi ito
was open it found out that it has nothing kasama sa cash items ng petty cash fund
on it (walang laman) although it is cash at kung mawalan to nang
laman ang assumption ay napahalo ito sa ibang
1. Find first the shortage or overage using the petty cash items kaya naman babawas natin sa
‘’Per count versus Accountability’’ petty cash items ang nawala sa envelope)

Per-count or Actual Count: add all the items in Bills and Coins 5,600
the drawer with monetary presence ( since dito,
actual tayo nagbibilang, malamang ang Less: amounts missing on envelope 500
mabibilang natin ay yun talagang andun lang na
may laman at kung walang laman ay di natin yun Petty Cash Balance 5,100
maka-count, bibilangin mo kung ano lang talaga To verify our answer b. imprest balance less
ang laman ng petty cash drawer.) expense voucher and shortage (since di para
Bills 5200 sa petty cash fund yung envelope expect mo di
yun kasama sa ledger nya.)
Coins 400
Petty Cash Fund
Envelope for B-Day 0 (walang laman) Debit Credit
Supplies Voucher 2500
 Imprest 10,000 Compare the per-count vs. accountability
balance
2500 Supplies In this case, we have cash overage of 1,320
700 Stamps because the per-count is greater than per-
1700 Shortage accountability.
Ending 5,100 2. If the resulting cash is overage these are the
bal. alternative ways to get the updated petty cash
balance.
Problem 7: The petty cash fund of J Company a. add all the cash items na pag-mamayari ng
has an imprest balance of 10,000. The following petty cash fund less cash overage and
items in the petty cash drawer as per record. amount missing on envelopes (yung amount
sa envelope ay hindi pagmamay-ari ng petty
Bills 8,200 Supplies Voucher
cash fund kaya ito ay hindi isasama at kung may
2500
nagkulang man dito ito ay kailangang punan
Coins 400 Stamps Voucher 700 since ang assumption ay napahalo lamang ito sa
Envelope for B-day ibang items ng petty cash , since overage
Party 500 kailangan itong ibawas sa cash items sa petty
Additional information: cash dahil ang overage ay inilalagay sa cash in
bank)
When the envelope was open it was revealed
that the amount on it was 20 pesos though Coins and bills 8600
yesterday it is 500.
Less: Cash overage 1320
1. Find first the shortage or overage using the
‘’Per count versus Accountability’’ Amount missing on envelope 480
Per-count or Actual Count: add all the items in Petty Cash balance 6800
the drawer with monetary presence ( since dito,
actual tayo nagbibilang, malamang ang To verify our answer b. imprest balance less
mabibilang ay yun talagang andun lang na may expense voucher (since di para sa petty cash
laman at kung walang laman ay di yun maka- fund yung envelope expect mo di yun kasama
count, bibilangin mo kung ano lang talaga ang sa ledger nya .)
laman ng petty cash drawer.)
Imprest balance less expense voucher

10,000-2500-700= 6800

Summary: Tandaan kapag sasagot ng

Per-count or Actual Count: problems

Bills 8200 1.Alamin mo ang shortage or overage gamit ang

per-count vs. accountability.
Coins 400
Per-Count: Add all the items in the petty cash
Envelope for B-Day 20 (natirang amount) drawer kung ano yung actual na laman sa
pagbilang mo yun ang bibilangin mo
Supplies Voucher 2500
Per-Accountability:lahat ng mga bagay na
Stamps Voucher 700 pinasuyo sa iyong itabi o pinapamanage sayo in
which accountable ang petty cash custodian.
Total Per Count 11,820
Kapag tinanggap mo ang mga bagay na ito ikaw
Per-Accountability: ito ay ang bagay na ay accountable sa full amount nito mawala man
accountable ang petty cash custodian ito ay ang amount nito yung full amount pa rin ang
maaring imprest fund balance na pinapa- accountability mo example imprest balance ng
manage sa kanya o envelope or other items na petty cash, unused supplies and stamps, and
pinapasuyo sa kanya na itabi dahil nag-agree envelope na naglalaman ng contribution ng
siya na itabi ito sa pangagalaga niya siya ay employee for specific purpose, undeposited
accountable. May laman man o wala ang collection ni late customer na di na inabutan ang
pinatabi sa kanya accountability pa rin niya ang tamang taong taga-kolekta nito kaya pinasuyo
total amount na pinatabi sa kanya. Kaya natin sa petty cash custodian itabi.
isasama yung nawalan ng laman na envelope
2.a.If the resulting amount is Cash Shortage;
dahil ang assumption ay napahalo lamang ang
laman nito sa ibang cash items ng petty cash. A.add all the cash items and checks ready for
encashment na pagmamay-ari ng petty cash
Imprest balance 10,000
fund less amount missing on envelope and
Envelope for B-DAY Party 500 (pinatabi) other accountable items

Total Accountability 10,500

Cash Items (Bills and Coins and checks owned
by petty cash fund)

Cash Items owned by petty cash fund xxx

Less: Amount missing on envelope

Or missing on accountable items xxx

Petty Cash Balance xxx

To verify our answer use this formula;

B.Amount per imprest fund balance less

expenses, shortage and debt of employee
out of the fund *with substitution of non-
convertible checks or papers.

Amount per imprest balance xxx

Less: Expense Voucher xxx

Shortage xxx

Debt of employee out of the fund* xxx

Petty Cash Balance xx

2.b.If the resulting amount is Cash Overage;

A.add all the cash items and checks ready for

encashment na pagmamay-ari ng petty cash
fund less amount ng overage and amount
missing on envelope and other accountable
items

Cash Items owned by petty cash fund xxx

Less: Cash Overage xxx

Amount missing on envelope

Or missing on accountable items xxx

Petty Cash Balance xxx

To verify our answer use this formula;

B.Amount per imprest fund balance less

expense voucher and debt of employee out
of the fund *with substitution of non-
convertible checks or papers.

Amount per imprest balance xxx

Less: Expense Voucher xxx

Debt of employee out of the fund* xxx

Petty Cash Balance xxx

Chapter 2: Bank Reconciliation There are JE2:
three kinds of Bank Deposits namely;
Cash in Bank 100,000
1. Demand Deposit
Cash on Hand 100,000
2. Saving Deposit
3. Time Deposit Since the collection on account is immediately
deposited to the bank, we can simplify the
Demand Deposit- is the current account or
recording of JE1 and JE2 by journalizing;
commercial deposits or checking account it is a
non-bearing interest deposit. Every time the JE1/2:
depositors deposit a sum of money it is
accompanied by a deposit slip. Ang demand Cash in Bank 100,000
deposit ay pwedeng ma-withdraw sa bangko any
time kapag nangailangan ang entity Accounts Receivable 100,000

Saving Deposit- ito ang nagrerepresent ng This will happen on company’s cash in bank
savings ng isang entity sa bangko at ito ay isang ledger
interest-bearing deposit. Ang deposit at
withdrawal ng isang savings account ay Cash in bank
nangagailangan ng passbook. Ang passbook Debit Credit
na ito ang siyang magmomonitor sa balance ng 100,000
ating savings deposit. Ang savings deposit ay
pwedeng ma-withdraw any time, sometimes
nirerequire ng bank na dapat meron munang On the bank’s point of view the journal entry for
notice of withdrawal bago mag withdraw. the deposit of 100,000 will be;

Time Deposit- it is an interest bearing bank JE:

account that has a pre-set date of maturity either Cash 100,000
on demand or after a certain period of time
agreed upon. A time deposit is evidenced by a Company A 100,000
formal agreement embodied in an instrument
called certificate of deposit. Time deposits pay Since nag deposit ang company sa bank
a slightly higher rate of interest than a regular nakatanggap ang bank ng cash kaya natin
savings account. The Longer the time to inilagay sa debit side ang cash. On the other
maturity, the higher the interest payment will be. hand kaya naman natin nilagay sa credit ang
Deposit from Company A ay para madagdagan
Bank reconciliation is necessary only for a ang balance ng bank account ni company A. in
demand deposit or checking account. the simpliest explanation ang dineposit natin sa
bank ay liability ng bank sa atin base sa kanilang
Kapag tayo ay nagbukas ng account sa isang point of view. Sa pagdeposit natin may utang si
bangko. Ang bangko ay humihingi ng authorized bank sa atin kaya nasa credit side ang bank
signature upang ito ang maging official account natin. Ang kini-credit ng bank sa point
signatures sa bawat checke na iwi-withdrawn nato ay ang demand deposit account.
natin. Karaniwang ang cheke ay pinambabayad
sa creditors o sa isang payee, magsisilbing This will happen on the company’s account in the
verifier ang ating signatures kapag magpapa- bank;
encash si payee sa bangko at ito ang
magpapatunay na tunay at duly signed ng Demand Deposit- Company A
authorized person ang checking iyon. Debit Credit
(Withdrawal) (Deposits)
In case of a corporation humihingi ang bank ng 100,000
resolution sa directors nito kung sino ang
magiging authorized person o signatories sa
bawat checke na ilalabas ng bangko. Illustration 2: A Company issue checks to the
supplier for 50,000 as a payment on previous
Some of the fundamental transactions affecting liability. The supplier presented this check to the
the depositor and the bank; bank and receives the encashment.
Illustration 1: A Company collected 100,000 from JE on Company’s books
customers on account. This collection is
immediately deposited to the bank. Accounts Payable 50,000
A company’s record Cash in bank 50,000
JE1: Ledger effect;
Cash on hand 100,000 Cash in bank
Debit Credit
Accounts Receivable 100,000 50,000
The Journal entry on the books of the bank; 3) The checks drawn by the depositor and
paid by the bank
Company A 50,000 4) The daily cash balance per bank during
the month.
Cash 50,000
The bank statement is an exact copy of the
Ledger effect; depositor’s ledger in the records of the bank.
Demand Deposit- Company A When the bank statement is received, attached
Debit Credit thereto are the depositors cancelled checks
(Withdrawal) (Deposits) and any debit or credit memoranda that have
50,000 affected the depositors account.
Since naglabas ng pera ang bangko for
encashment ng cheke ni supplier(payee) nilagay Canceled checks- checks na nai-issue ng
natin sa credit ang cash, at debit naman ang depositor sa payee at binayaran ng bank.
ating bank account. Pag na entry sa debit side
ang ating bank account nangagahulugan These are called cancelled checks because they
lamang nito na nabawasan ang ating bank are literally canceled by stamping or punching to
account. show that they have been paid.

Company’s book Bank books Reconciling Items

Collections 100,000 Deposits 100,000
Less: Disbursments Less:Encashment 50,000 At the end of every month, comparison between
50000 the cash records of the depositor and the bank
Balance: 50,000 (dr.) Balance 50,000 (cr.) statement received from the bank will yield the
The accounts have equal or the same balances following reconciling items
because they are reciprocal accounts. This
means when one account is debited, the other 1. Book Reconciling items
account is credited or vice versa. The reason for a) Credit Memos
this is that the two accounts cover or reflect the b) Debit Memos
same items or transactions. Thus if no errors are c) Errors
committed in recording, and the same
information has been recorded by both accounts, 2. Bank Reconciling items
the two should have equal or the same balances.
a) Deposits in Transit
But not all times the book balance equals to the b) Outstanding Checks
bank books because there are circumstances c) Errors
that makes them different in terms of balance
thus not reconciling with each other. This Credit Memos – items na na-credit o nadagdag
problem is solved by one internal control ng bank sa depositor’s account ngunit hindi pa
features which is the Bank Reconciliation. ito nadadagdag sa companys book balance. The
credit memos have the effect of increasing the
Possible reasons why book balance does not bank balance. So in order to reconcile the book
reconcile with bank balance; balance to bank balance; add this to book
balance since di pa siya narerecognize sa book
1. Timing differences ng company. Bank muna ang nakaka-alam if
➢ Deposit in Transit may credit memo para sa company.
➢ Outstanding Checks
➢ Debit Memos Examples of credit memos;
➢ Credit Memos
2. Errors a) Notes Receivable collected by bank in
➢ Bank Errors favor of the depositor and credited to
➢ Book Errors the account of the depositor- minsan
nagseserve as collecting agent ang bank
A bank reconciliation is a statement which at ang customer ay dumidiretso sa bank
brings into agreement the cash balance per book upang bayadan ang notes na utang nito
and the cash balance per bank. sa kompanya. Ang bayad na ito ay
directly ina-add ni bank sa depositors
The reconciliation is usually prepared monthly account as deposit para madagdagan
on a periodic basis because the bank provides ang balance nito.
the depositor with bank statement at the end of b) Proceeds of bank loan credited to the
every month. account of the depositor- minsan ang
A Bank statement is a monthly report of the company ay nag-aaply ng loan para sa
bank for certain purpose, ang bank ay
bank to the depositor showing;
naman ay nagsasgawa ng credit
1) The cash balance per bank at the investigation if iga-grant ba nila yung loan
beginning sa company. Minsan ay di nag-aalam
2) The deposits made by the depositor and ang company na ginrant na pala sa
acknowledge by the bank kanila ang loan at ang proceeds ng loan
na ito ay diretsong dagdag sa balance ng
 company’s deposit account. Since Debit memos continuation….
nadadagdagan ang balance ng
company’s deposit account kailangan i- c) Bank service charges- these include
add din ng book balance ng company charges for interest bank charge, collection bank
ang ganito klaseng credit memo. charge, cost of checkbook for use of company
c) Matured Time deposits transferred by and penalty charge.
the bank to the current account of the
depositor- time deposits ay may pre- d.) Reduction of loan- ito ay amount na
determined time na ito ay magiging ibabawas sa current account ng depositor bilang
readily available for withdrawal, kapag payment on depositor’s loan already matured.
ang time deposits ay nagmature na ito ay Deposits in Transit- collections na naidagdag
dinadagdag sa balance ng current na ng company as cash receipts pero di pa
account ng depositor. Since ang current nadadag-dag sa bank account nito o di pa
account ay mas kilala din sa tawag na narerecord ng bank. Ito ay ia-add sa balance per
demand deposit ito ay dagdag sa bank.
depositors account. Since nadagdag na
ng bank sa depositors account ang credit Deposit in transits include;
memo na ito. Kailangan ay i-add din ito
sa company’s book balance. a. Collections already forwarded to the
d) Interest income earned on checking bank for deposit but too late to appear
account if any; in bank statement
b. Undeposited collections or those still
Debit Memos- items na na-debit o nai- in the hands of the depositor. In effect
bawas na ng bank sa depositors account
these are cash on hand awaiting
ngunit hindi padin ito nababawas sa balance
ng book ng company. Since ito ay nacharge delivery to the bank for deposit. ito ay
na sa bank dapat ay icharged din ito sa mga collections na minsan ay di nai-
companys book sa pamamagitan ng deposit sa bangko dahil kung minsan ay
pagdeduct ng debit memos sa companys nasarhan na nito.
book. Ang bank ang unang nakaka-alam if
may debit memos ang company. Outstanding checks- ito ay item na naibawas
na ng company as cash disbursements pero di
Typical examples of debit memos are: pa nababawas ng bank sa kanilang bank
account. Ito ay ibabawas sa balance per bank.
a) Customer’s NSF or no sufficient
fund checks- these are checks Outstanding checks include;
deposited but returned by the bank
because of insufficiency of the fund. a) Checks drawn and already given to
The other name for NSF is DAIF or payees but not yet presented for
‘’drawn against insufficient fund’’ or payment. Naibigay na ng kompanya sa
DAUD or Drawn against uncleared payee yung check pero si payee di pa
deposits. Ito yung binayad sa atin napapa-encash sa bank
tapos na record natin ay collection
yun pala talbog yung check since
talbog yung check ibabawas natin
ang debit memo nato sa balance per
book. Since wala tayong napala sa
bayad nato ni customer ibabalik natin
yung utang niya; may receivables pa
din tayo sa kanya.
b) Technically defective checks –
.these are checks deposited but
returned by bank because of
technical defects such as;
➢ Absence of signature or
countersignature
➢ Erasures not countersigned
➢ Mutilated checks
➢ Conflict between amounts in
words and amount in figures
Diyan po sa notes, Yung treatment po sa over
and understatement error is same po yung effect
either bank or book, yung July po pertains to
beginning or previous month, yung august
naman po pertains to ending or current month

Prepared by: John Leo A. Grino BSAIII-B