A detailed discussion and illustration of the bank reconciliation is presented, along with appropriate accounting adjustments.
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Items like postdated checks, certificates of deposit, IOUs, stamps, and travel advances are not classified as cash.
It is very important to ensure that sufficient cash is available to meet obligations and that idle cash is appropriately invested. Although cash shortages may seem to be a sign of weakness or mismangement, this is not always the case. As a business looks to improve cash management or add to the available cash supply, a number of options are available. Issuing additional shares of stock -- This solution allows a company to obtain cash without a fixed obligation to repay.
Borrowing additional funds -- This solution brings no shareholder dilution, but borrowed funds must be repaid along with interest. Accelerate cash collections -- If customers pay more quickly, a significant source of cash is found. Control of receipts from cash sales should begin at the point of sale and continue through to deposit at the bank. Controls over cash disbursements include procedures that allow only authorized payments and maintenance of proper separation of duties. There are many different formats for the reconciliation process, but they all accomplish the same objective. Differences are caused by items reflected on company records but not yet recorded by the bank. The EFT (electronic funds transfer) on July 11 relates to the monthly utility bill; the Tackle Shop has authorized the utility to draft its account directly each month.
The Tackle Shop is optimistic that they will recover the full amount, including the service charge, on the NSF check that was given to them during the month. The Tackle Shop's credit card clearing company remitted funds on July 25; the Tackle Shop received an email notification of this posting and simultaneously journalized this cash receipt in the accounting records. Be aware that conducting a successful bank reconciliation requires careful attention to every detail. Below is the July reconciliation of the balance per bank statement to the correct cash balance. The reconciliation of the balance per company records to the correct cash balance is presented below. This reconciliation example demonstrates the importance of the process, without which accounting records would soon become unreliable. Petty cash, also known as imprest cash, is a fund established for making small payments that are impractical to pay by check. Policies should be established regarding appropriate expenditures that can be paid from petty cash.
The journal entry for this action involves debits to appropriate expense accounts as represented by the receipts, and a credit to Cash for the amount of the replenishment. The journal entry to record full replenishment may require an additional debit (for shortages) or credit (for overages) to Cash Short (Over). Assume that Webster Company's management was seeing a pickup in their business activity and believed that a similar uptick was occurring for its competitors as well. Notice that the three journal entries now have the trading securities valued at $60,000 ($50,000 - $5,000 + $15,000). As an alternative to directly adjusting the Trading Securities account, some companies may maintain a separate Valuation Adjustment account that is added to or subtracted from the Trading Securities account. Since trading securities are turned over rather quickly, the amount of interest and dividends received on those investments is probably not very significant.
The presence or absence of dividends or interest on trading securities does not change the basic fair value approach for the Trading Securities account. Beyond the rather straight-forward investments in trading securities are an endless array of more exotic investment options.
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For a closer look at the PerkStreet Financial Checking Account, here’s where to check it out. These financial instruments are usually very marketable in the event the company has an immediate need for cash.
Successful companies may need cash for new business locations, added inventory levels, growing receivables, and so forth.
Unfortunately, the existing shareholders do incur a detriment, because the added share count dilutes the ownership proportions.
Simple tools include electronic payment, credit cards, and cash discounts for prompt payment. Specifically, point-of-sale terminals should be used, actual cash on hand at the end of the day should be compared to register reports, and daily bank deposits should be made. They should prepare a listing of checks received and forward the list to the accounting department.
Control features include making disbursements by check, performance of periodic bank reconciliations, proper utilization of petty cash systems, and verification of supporting documentation before disbursing funds.
In business, every bank statement should be promptly reconciled by a person not otherwise involved in the cash receipts and disbursements functions.
The reconciliation compares the amount of cash shown on the monthly bank statement (the document received from a bank which summarizes deposits and other credits, and checks and other debits) with the amount of cash reported in the general ledger. Examples include deposits in transit (a receipt entered on company records but not processed by the bank) and outstanding checks (checks written which have not cleared the bank). After examining the bank statement, check register, and additional information, proceed to verify each component within (1) the balance per bank statement to the correct cash balance and (2) the balance per company records to the correct cash balance.
This reconciliation will trigger various adjustments to the Cash account in the company ledger. Note that the $462.06 debit to Accounts Receivable indicates that The Tackle Shop is going to attempt to collect on the NSF check and related charge. Examples include postage due, reimbursement to employees for small purchases of office supplies, and numerous similar items.
When a disbursement is made from the fund, a receipt should be placed in the petty cash box.
Notice that the Petty Cash account is not impacted -- it was originally established as a base amount, and its balance has not been changed by virtue of this activity. In the following entry, $635 is placed back into the fund, even though receipts amount to only $615. The entry to increase the fund would be identical to the first entry illustrated; that is, the amount added to the base amount of the fund would be debited to Petty Cash and credited to Cash.
But, when the investments are acquired with the simple intent of generating profits by reselling the investment in the very near future, such investments are classified as current assets (following cash on the balance sheet). One of its competitors, Merriam Corporation, was a public company, and its stock was trading at $10 per share. Despite Webster's plans for a quick profit, the stock declined to $9 per share by March 31. However, the treatment would be the same even if the trading securities consisted of a portfolio of many investments. The rationale is that the market value for trading securities is readily determinable, and the periodic fluctuations have a definite economic impact that should be reported. The results are the same; the reason for using the alternative approach is to provide additional information that may be needed for more complex accounting and tax purposes.
Among these are commodity futures, interest rate swap agreements, options related agreements, and so on.
These are standard fees you’ll find assessed for most financial accounts, so watch out for these.
Many companies will pay a fee to establish a standing line of credit that enables them to borrow as needed. However, one needs to know that it is illegal to issue a check when there are insufficient funds in the bank to cover that item. The reconciliation is needed to identify errors, irregularities, and adjustments for the Cash account.

Other differences relate to items noted on the bank statement but not recorded by the company. What if the bank statement included a $5,000 check to an employee near the beginning of the month, and a $5,000 deposit by that employee near the end of the month (and these amounts were not recorded on the company records)?
This journal entry, in essence, subdivides the petty cash portion of available funds into a separate account. This might be the result of simple mistakes, such as math errors in making change, or perhaps someone failed to provide a receipt for an appropriate expenditure.
For example, a retailer will compare daily cash sales to the actual cash found in the cash register drawers.
Otherwise, take note that the only entry to the Petty Cash account occurred when the fund was established. Subsequent to initial acquisition, trading securities are to be reported at their fair value. Webster had excess cash earning very low rates of interest and decided to invest in Merriam with the intent of selling the investment in the very near future for a quick profit. The income statement for March includes a loss of $5,000, but April shows a gain of $15,000. Given the intent to dispose of the investments in the near future, the belief is that the changes in value likely have a corresponding effect on the ultimate cash flows of the company. The cash budget is a major component of a cash planning system and represents the overall plan that depicts cash inflows and outflows for a stated period of time. The accounting department enters the information from the listing of checks into the accounting records and compares the listing to a copy of the deposit slip prepared by the cashier. Having an independent person prepare the reconciliation helps establish separation of duties and deters fraud by requiring collusion for unauthorized actions. Once the correct adjusted cash balance is satisfactorily calculated, journal entries must be prepared for all items identified in the reconciliation of the ending balance per company records to the correct cash balance. Information found on that spreadsheet would correlate precisely to activity in the company's Cash account within the general ledger. If a surplus or shortage is discovered, the difference will be recorded in Cash Short (Over); a debit balance indicates a shortage (expense), while a credit represents an overage (revenue).
If these investments were acquired for long-term purposes, or perhaps to establish some form of control over another entity, the investments are classified as noncurrent assets. Cumulatively, the income statements show a total gain of $10,000 ($5,000 loss + $15,000 gain). Tax rules generally require comparing the sales price to the original cost (tax rules sometimes differ from accounting rules, and the fair value approach used for accounting is normally not acceptable for tax purposes). The reconciliation would not reveal this unauthorized activity because the ending balances are correct and in agreement. At the same time, receipts are removed from the petty cash box and formally recorded as expenses. This cumulative gain corresponds to the total increase in value of the original $50,000 investment. That is, such instruments are initially measured at fair value, and changes in fair value are recorded in income as they happen. For instance, I have the habit of accumulating credit card rewards and using cash back credit cards, which may offer better deals than PerkStreet’s debit card rewards. Cash typically includes coins, currency, funds on deposit with a bank, checks, and money orders. To overcome this deficiency, some companies will reconcile not only the beginning and ending balances, but also the total checks per the bank statement to the total disbursements per the company records, and the total deposits per the bank statement to the total receipts on the company accounts. That is why one will often see bank notices that deposited funds cannot be withdrawn for several days. Fair value is defined as the price that would be received from the sale of an asset in an orderly transaction between market participants.
If a problem exists, the totals on the bank statement will exceed the totals per the company records for both receipts and disbursements. Such restrictions are intended to make sure that a deposit clears the bank on which it is drawn before releasing those funds. It is highly recommended where the volume of transactions and amount of money involved is very large.
Enhanced electronic clearing procedures adopted by banks have made kiting far more difficult to accomplish.

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Comments to Check balance at&t prepaid cell phone


27.12.2015 at 16:36:37

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27.12.2015 at 23:59:36

Officers assigned to such records would usually.