Don’t include in cash and cash equivalents
Cash in bond sinking funds (restricted cash)
Post dated check from customer dated one month from B’s date (dated after BS date)
Certificate of deposit with 6 month of maturity s/b 3 months within purchase date
Marketable equity security
Marketable debt security
NSF checks
Incline back to cash
Check to vendors not mailed until next year
Simple bank reconciliation:
Both Book balance (-NSF,+ banks collections, service charges) and Bank balance (+Dep in transit, - Outstanding checks) reconciled to True balance
If only Bank statement balance given, reconcile on Bank side + deposits in transit, minus outstanding checks
Reconciliation on BANK side:
+ Deposits in Transit ( send but not recorded by the bank, add to bank)
- Minus Outstanding checks
Reconciliation per BOOKS:
- Minus from books Service charge, NSF
+Bank Collections (notes collected by bank)
+ Plus interest income
+Plus mistake made by company if check for vendor was (actually was paid less) booked in QB in greater amount than it has cleared the bank
-Minus mistake if check amount booked in QB in amount less than it has actually cleared the bank
Bank Rec
Pay attention what balance provided. If:
Only BANK statement balance provided: Only ADD DEPOSIT IN TRANSIT MINUS OUTSTANDING CHECKS
Only balance PER BOOKS OR GL: minus bank charges, NSF checks, customer collection, interest income)
If there is a negative balance on one of bank accounts dont sum up with positive balance on other bank account
Negative balance, overdraft is not reported as cash, it’s CURRENT LIABILITY
How to calculate the amount of cash disbursement per books:
Total cash disbursement ber bank rec MINUS outstanding checks from prior bank rec ( were included in disbursement next month), PLUS outstanding checks at the end of the current month.
Partnership. Admission of a new partner
- Exact. Finger math
- Bonus. Total NEW Balance control it, compare what new partner paid vs total balance after his payment *his %
- Good will. Money in control it. Make proportion. Goodwill/Bonus to partners’s stake. Goodwill added to end balance
Ending balance after partner withdrawal GOODWILL
initial balance+asset revaluation+goodwill portion
Ending balance after partner withdrawal BONUS:
Initial balance- bonus to other partner+revaluation of assets
Uncollectible accounts expense:
Ending balance allowance for uncollectible accounts (AR gross minus - AR Net) - minus beginning balance plus - minus recovered AR + write offs
Uncollectible accounts expense:
Allowance for uncollectible accounts ending balance (AR gross minus AR Net) - minus AR beginning balance + plus AR written off -minus recovered AR
How much was written off
Ending balance - minus beginning balance - minus bad debt expense
JE to restore written off AR if it was all if the sudden paid:
AR - no effect
Allowance - increased
- Restore AR:
DR AR XX
CR Allowance - Record Cash
DR Cash
CR AR XX
N very reduce AR or Sakes amount for JEc
Use allowance and bad debt expense
To calculate bad debt expense for a year:
Beg Bal +BDE- write offs + recovery= End Allowance
Bad debt expense=difference ending balance minus - beginning balance.
To write off uncollectible AR:
DR Allowance
CR AR
Lower of cost and net reliazable value (market ceiling):
IFRS - All
US GAAP- FIFO/WA 2
Lower of cost or Market (US GAAP only)
LIFO/retail 4
- Cost
TAKE MIDDLE OF 3 (среднее) и сравни с COST
2. Replacement cost 3. Ceiling=NRV Selling Price- cost of completion 4. Floor Ceiling minus profit
Market value is middle value of:
Replacement cost -to purchase item at valuation date
Market Ceiling=NRV (Net selling price minus cost to complete)
Market floor=NRV - Profit
FIFO
COGS & ENDING INVENTORY ARE THE SAME UNDER PERPETUAL AND PERIODIOC!
FIFO RISING PRICES
High value of assets (expensive unsold new inventory), lowest COGS, HIGHEST NET INCOME
PERIODIC INVENTORY SYSTEM FORMULA
Beginning inventory \+Purchases -------------------------------- COG AFS -Ending inventory -------------------------------- COGS
LIFO we sell our NEW inventory 1st, our ending inventory is our OLD inventory
FIFO we sell our OLD first, ending inventory is our new inventory
COGS and ENDING INVENTORY ARE THE SANE for FIFO
For both PERPETUAL and PERIODIOC systems
How to calculate Fifo and Lifo inventory
Perioduc and perpetual FIFO COGS and EI are the same
- Calculate COGAFS
- CALCULATE ending inventory
- Perpetual - Lifo sell by batches starting from newest
- Periodic - Lifo набирай cogs, все подряд, не зависимо от даты закупки, под количество, вычитай из COGSAFS
False statements regarding dollar value LIFO
$ value LIFO ending inventory amount must be greater than the ending inventory amount at base year cost
Reported inventory amounts will be higher than regular LIFO method in falling price environment
$ value LIFO
Base Year Cost * Price Index = $ Value LIFO current year
