PROOF OF CASH

POINTERS:

BANK STATEMENT RECORDED IN BOOKS

UNADJ BANK STATEMENT, JAN UNADJUSTED BAL PER BOOK, JAN
+ BANK DEPOSITS, FEB. (includes *cleared dit, + BOOK RECEIPTS, FEB (includes reconciling items
jan & similar (+) recon items) in january like.. notes collected by bank & other similar
- BANK DISBURSEMENT, FEB (includes *cleared (+) items)
oc, jan & similar (-) recon items) - BOOK DISBURSEMENT, FEB (includes
+ COLLECTION BY BANK, FEB reconciling items in january like.. nsf, auto debit memo,
- NSF, FEB bsc & other similar (-) items)
- BANK SERVICE CHARGE, FEB = UNADJUSTED BOOK BAL, FEB
- AUTO DEBIT MEMO, FEB
= UNADJUSTED BANK BALANCE, FEB + COLLECTION BY BANK, FEB
-NSF, FEB
+ DIT, FEB - BSC, FEB
- OC, FEB -AUTO DEBIT MEMO, FEB
+- Other bank recon items. (In reality, papasok to +- Other book recon items. (In reality papasok to
ng march) ng march)
= ADJUSTED BANK BALANCE, FEB = ADJUSTED BOOK BALANCE, FEB

BANK RECONCILIATION
DIT, FEB.
DIT, JAN
+ BOOK PURE CASH RECEIPTS
- BANK PURE CASH RECEIPTS
= DEPOSIT IN TRANSIT, FEB
OC, FEB.
OUTSTANDING CHECK, JAN
+ BOOK PURE CASH DISB
- BANK PURE CASH DISB
= OUTSTANDING CHECK, FEB

*PURE = REMOVE RECONCILING ITEMS KASI ANG RECEIPTS FOR THE MONTH
INCLUDES RECONCILING ITEMS

DIT, FEB. OC, FEB.

BOOK DEPOSIT, FEB
- BANK DEPOSIT, FEB – DIT, JAN
(and other similar (+) reconciling
items of jan)
= DEPOSIT IN TRANSIT, FEB
BOOK DISBURSEMENT, FEB
- BANK DISBURSEMENT – OC, jan.
(and other similar (-) reconciling
items of jan)
= OUTSTANDING CHECK, FEB
BOOK CASH DISBURSMENT, FEB.
BANK DISBURSEMENT, FEB (book disbursement, jan + *cleared recon items like OC, jan, bank credit
error + NSF, feb + BSC, feb)
- OC, JAN (cause it aint feb)
- BANK CREDIT ERROR, JAN (Inadd ng mali nung jan, cinorrect ng feb kaya pumasok sa bank disb,
tatanggalin ngayon kasi di siya feb disb)
+OC, FEB (nasa record ni book, but wala sa bank disbursement, feb)
- NSF, FEB
- BSC, FEB (nasa bank disbursement in feb, pero di alam ni book)

= BOOK DISBURSEMENT, FEBRUARY

BOOK CASH RECEIPTS, FEB.

BANK RECEIPT, FEB (book deposit, feb + *cleared recon items like DIT, jan, bank debit error + note
collection, feb)
- DIT, JAN (cause it aint feb)
- BANK DEBIT ERROR, JAN (Mininus siya ng mali nung jan, cinorrect ng feb kaya pumasok sa bank cash
receipts, tatanggalin ngayon kasi di siya feb receipt)
+DIT, FEB (nasa record ni book, pero sa bank receipts wala)
- NOTE COLLECTION, FEB (kasi si bank nagcollect, di alam ni book)

= BOOK RECEIPTS, FEBRUARY

“A 120 NSF CHECK WAS
CASH IN DEPOSIT
REDEPOSITED DURING
BANK FROM JCD CO.
JANUARY. NO ENTRY MADE ON
+ - - +
THE BOOKS FOR THE RETURN GIVEN 500 40 40 500
OR REDEPOSIT.” RECEIVED CHECK FROM 120 120
CUSTOMER BUT UPON
DEPOSIT, TUMALBOG SA
BANK
BINALIK NI BANK BUT DI - 120
INENTRYAHN NI BOOK.
SO NAGPADALA NEW - 120
CHECK SI CUSTOMER, DI
NA IENTRYAHN NI BOOK
RECEIPT. SINEND ULI
CHECK SA BANK.
2 WAYS TO ADJUST:

X + - BAL X + - BAL

BANK 740 160 580 BOOK 620 40 580

BOOK 620 40 580 BANK 740 160 580

120 120 (120) (120)

ADJ BAL 740 160 580 620 40 580

DISCOUNTING NOTES RECEIVABLE

 MATURITY VALUE = PRINCIPAL + INTEREST X TOTAL DAYS/360

 DISCOUNT = MV x DISCOUNT RATE x DISCOUNT PERIOD (unexpired days/360)
 NET PROCEEDS = MV – DISCOUNT
 SILENT: DISCOUNT RATE IS GIVEN BY BANKS, IF NOT USE INTREREST RATE.
 SILENT: ASSUME WITH RECOURSE

WITHOUT RECOURSE WITH RECOURSE

GRANT CASH (net proceeds)
LOSS(net proceeds-CA)
N/R (principal)
INT INCOME (earned)
CONDITIONAL SECURED BORROWING
CASH (net proceeds) CASH
LOSS (net proceeds-CA) INTEREST EXPENSE (quasi-loss)
N/R DISCOUNTED (principal) LIAB FROM N/R DISC (P)
INT INCOME (earned) INT. INCOME (earned)

*net proceeds=MV-discount *NR discounted – deducted from *borrowing = no gain/loss only

*CA= principal + accrued int total N/R interest expense
(expired) *disclosed as contingent liab *int income and expense can be offset

HONORED N/R DISC (principal) LIAB FROM N/R DISC

NOTES REC NOTES REC

DISHONORED A/R (MV + Protest fee + Bank A/R ((MV + Protest fee + Bank charge)
charge) CASH
CASH
LIAB FROM N/R DISC (P)
N/R DISCOUNTED (P) N/R RECEIVABLE
N/R RECEIVABLE
PLEDGE ASSIGNMENT FACTORING

Disclose 1. Reclass a/r to a/r- CASH POV FACTOR:

only assigned FACTOR’S HOLDBACK A/R (PRINCIPAL)
2. Record interest expense
LOSS (NSP-CA) CASH (SAME AS CASH RECEIVED
based on notes payable
ABD BY OTHER)
outstanding
3. Pay notes payable + A/R (PRINCIPAL) COMMISSION INC (ABD+LOSS)
interest expense upon CLITENT’SRETAINER(FHB)
collection (depends) A/R has defective items:
Sales returns and allow
 Non notif – assignor Factor’s HB
pays asignee
 Notif basis – customer **If sobra sa FHB ung
pays asignee defective items???

At year end:
A/R – ASSIGNED BAL If customer paid 100%
– N/P BAL Cash
= EQUITY IN ASSIGNED Factor’s HB
ACCOUNTS

Expense items = finance

charge, commission, interest
expense
NSP = A/R - all expense
items
Cash received = GROSS
A/R - Factor’s HB – all other
expense items
LOANS RECEIVABLE
Origination fees on creation of the loan: The bank usually charges these fees to cover its costs for evaluating the borrower’s
financial condition, for assessment of guarantees or collateral, negotiating the terms of the loan, preparing the loan contract,
application, underwriting fees. In other words, origination fees cover the activities that result in creating the loan.
EXCLUDE Loan servicing fees (throughout expense)
Cash Unearned Origin fee received 350.0 dr. cash cr. Unearned inc
Int income int.income Less:Direct origin cost (61.5) dr. unearned inc cr. Int inc
Int. inc Unearned int. income 288.5
**next step is to find the effective interest that would discount the
principal amount and future interest payment to 3,711.5
Date Face Principal x Interest Amortization Carrying
amount stated income (ER of unearned value
of Loan interest x CV)** interest
granted (10%) (total income
income)

01/1/18 4,000.00 - - (288.50) 3,711.50 Loans receivable 4000

Unearned int 288.5
Cash 3,711.5

12/31/18 4,000.00 400.00 445.38 45.38 3,756.88 Cash 400

Unearned interest 45.38
Interest income 445.38

12/31/19 4,000.00 400.00 450.83 50.83 3,807.71 Cash 400

Unearned interest 50.38
Interest income 450.83
12/31/20 4,000.00 400.00 456.92 56.92 3,864.63 Cash 400
Unearned interest 56.92
Interest income 456.92
12/31/21 4,000.00 400.00 463.76 63.76 3,928.39 Cash 400
Unearned interest 63.76
Interest income 463.76
12/31/22 4,000.00 400.00 471.41 71.41 4,000.00 Cash 400
Unearned interest 71.41
Interest income 471.41
LOAN IMPAIRMENT LOSS
PURCHASE COMMITMENT

Recognition of loss on purchase commitment is an adaptation of the measurement at the lower of cost or NRV

CONTRACT PRICE>MARKET PRICE = LOSS

Contract purchase price of 500,000 and replacement cost at year-end of 450,000

Loss on purchase commitment 50,000

(cl) Estimated liability for purchase commitment 50,000

Purchase 420,000

Loss on purchase commitment 30,000

Est. liab for purchase commitment 50,000

Accounts payable 500,000

If replacement cost is 600,000:

Purchases 500,000

Estimated liability 50,000

Accounts payable 500,000

Gain on PC 50,000

Gain on PC was recognized to offset the previously recorded loss.

If replacement cost is 480,000: loss is only 20,000

Purchases 480,000

*EPL 50,000

Accounts payable 500,000

Gain on purchase commitment 30,000