7 - Chapter 7 p.1 C H A P T E R C H A P T E R 7 7 CASH AND RECEIVABLES CASH AND RECEIVABLES Intermediate Accounting 13th Edition Kieso Weygandt and

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Unformatted text preview: Chapter 7 p.1 C H A P T E R C H A P T E R 7 7 CASH AND RECEIVABLES CASH AND RECEIVABLES Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield Chapter 7 p.2 Cash and Receivables Cash and Receivables What constitutes cash What constitutes cash and cash equivalents and cash equivalents Petty cash fund Petty cash fund Bank reconciliations Bank reconciliations Cash Cash Receivables Receivables Accounting for bad Accounting for bad debts debts Notes receivable Notes receivable Sale (factoring) of Sale (factoring) of accounts receivable accounts receivable Chapter 7 p.3 Companies segregate legally restricted cash for reporting purposes. Examples , restricted for: (1) plant expansion, (2) retirement of long-term debt, and (3) compensating balances. Reporting Cash Reporting Cash Restricted Cash Illustration 7-1 Illustration 7-1 Chapter 7 p.4 Reporting Cash Reporting Cash Bank Overdrafts Generally reported as a current liability. Offset against cash account only when cash account is at the same bank. Chapter 7 p.5 Short-term, highly liquid investments that are both Reporting Cash Reporting Cash Cash Equivalents (a) readily convertible to cash, and (b) will be converted to cash within 3 months. Examples: Treasury bills, Commercial paper, and Money market funds. Chapter 7 p.6 Summary of Cash-Related Items Summary of Cash-Related Items Illustration 7-2 Chapter 7 p.7 Petty Cash Fund Petty Cash Fund Used for small miscellaneous expenses. Used for small miscellaneous expenses. To establish a PC fund: To establish a PC fund: Petty Cash Petty Cash X X (netted with Cash) (netted with Cash) Cash Cash X X To replenish the fund To replenish the fund at the end of the period at the end of the period : : Entertainment Exp. Entertainment Exp. X X Office Supplies Office Supplies X X Postage Exp. Postage Exp. X X Cash Cash X X Cash over and Short Cash over and Short X (either dr or cr) X (either dr or cr) Chapter 7 p.8 Two Column Bank Reconciliation Two Column Bank Reconciliation Balance per Bank Balance per Bank Balance per Books Balance per Books + Deposits in transit + Deposits in transit + Auto deposits + Auto deposits- Checks outstanding- Checks outstanding- Auto payments- Auto payments Correction of Bank errors Correction of Bank errors- Bank Charges- Bank Charges Cor. of Book errors Cor. of Book errors Correct Balance of Cash = Correct Balance of Cash = Correct Bal. of Cash Correct Bal. of Cash Adjustments to the Bal. per Books column will Adjustments to the Bal. per Books column will require journal entries. require journal entries. Chapter 7 p.9 Receivables Receivables Written promises to pay a sum of money on a specified future date. Claims held against customers and others for money, goods, or services....
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This note was uploaded on 10/02/2010 for the course ACCT 5457 taught by Professor Polm during the Spring '10 term at Rensselaer Polytechnic Institute.

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7 - Chapter 7 p.1 C H A P T E R C H A P T E R 7 7 CASH AND RECEIVABLES CASH AND RECEIVABLES Intermediate Accounting 13th Edition Kieso Weygandt and

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