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Petty Cash
- *exception to the rule that all disembursments should be made check
- * small disbursments-check not appropriate
- *set up as imprest basis-fixed amount
- *one person in charge
- * locked up
- *requires receipt
- *replenish on regular basis
- *journalize when replenish
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If you forget to replenish petty cash, what will happen?
- expenses too low
- net income too high
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Journalizing petty cash
- Add up all like receipts
- Travel expense $
- postage expense $
- supplies expense $
- Cash $
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If cash is over money, what do you do?
- Put the wrong replenish amount(credit cash) and credit cash over/short by difference
- Cash $
- Cash over/short $
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If the petty cash is short, what do you do?
- Credit cash by the correct amount and debit cash over/short by difference
- Cash over/short $
- Cash $
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what is on the balance per bank side of the bank reconcilation?
- Add: deposit in transit
- Less: outstanding check
this is what i know but the bank does not know about
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What goes on the balance per book side
- Add:interest earned
- less:nsf check
- less: fees from bank
- less:service charge
- add:collection of not receivable
- add:eft in(electronic fund transfer)
- less:eft out
- less: check printing
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what do you do with errors?
who ever is responsible for the error, the adjustment goes on their side of the bank reconcilation.
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What do you do with bad debt expense and uncollected account expense
matching principle-match the expense relating to a sale in the same time period that the sale is.
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what is the allowance method?
only acceptable way to estimate the bad debt expense
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what is the recording entry of a bed debt expense?
- Bad debt expense $
- allowance for uncollectable accts $
- this is to record an expense in the same time period as a sale
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What goes on the balance sheet?
- cash
- accts receivable
- less:allowance for uncollectable accts
- this gives you the net realizable
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what is the one way to estimate bad debt expense
income statement apporach-% of the credit sales to the estimate the bad debt expense
- credit sales 200,000
- amt to go bad 4%
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what is the other way to estimate the amt of bad debt
- balance sheet approach-aging of the accts receivable
- calculate the balance that should be in the allowance acct
- older the debt, the higher the %
- 0-30 days, 30-60 days, 60-90 days
you need to look at whatever is already there and make an appropriate entry
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What are notes receivable
- *longer term
- *always in writting
- *always call for interest
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if the not will be collected before the end of year, how do you journalize?
- on oct 1 lend an emplyee 10,000 for 90 days at 12%
- oct 1 notes receivable 10,000
- cash 10,000
- 90 days later collect note
- principle x rate x time
- 10,000 x .12 x 90/360
- you will collect 10,300
- cash 10,300
- notes receivable 10,000
- interest revenue 300
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if the note will be collected after the end of the year, how do you journalize?
- nov 1 note receivable 10,000
- cash 10,000
- dec 31 interest receivable 200
- interest revenue 200
- jan 31 cash 10,300
- note receivable 10,000
- interest revenue 100
- interest receivable 200
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the book keeper recorder a check for 340 instead of correct amt of 430, what do you do?
subtract from book
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the bank subtracted 1200 for a check that was 1000, what do you do?
add to the bank side
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cash/over short becomes what on the balance sheet or income statement
rename it to misc. expense
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