Cash and Cash Controls Cash includes coins, paper currency, checks, money orders, and money deposited with a financial institution that the company can withdraw at any time. The key to classification of an amount as cash is that it be readily available to pay debts. Cash is a reported on the . Cash also includes items properly classified as cash equivalents. These are limited to investments that are readily convertible to known amounts of cash and have an original maturity to the investor of three months or less. Bank Reconciliation A bank reconciliation explains the causes for any differences between a company's cash balance on its bank statement and its cash balance on the books (that is, in the ledger.) Allez Company's monthly bank statement shows an account balance of $6361.11. The cash balance in its ledger is $5551.12. A thorough bank reconciliation investigation yields the following information: The bank erroneously deducted $378.82 from the company's account when the actual amount of a check written by the company was $338.82. The company erroneously recorded a check it wrote for $356.31 as $565.83. The company recently made a $698.92 deposit that has not yet been reflected on the bank statement. The bank collected a $540.00 note receivable, plus $11.00 in interest, which has not been recorded in the company's records. Bank service charges of $14.00 have been assessed to the company's account. There are two checks outstanding (not yet appearing on the bank statement) that were written for $837.89 and $452.42. A $487.92 check from one of the company's customers, Phil Conners, was returned by the bank because of insufficient funds (NSF) in the customer's account. Prepare the bank reconciliation for Allez Co. Enter amounts to the nearest cent. Allez Co. Bank Reconciliation January 31, 2014 Cash balance per bank statement Adjusted balance Add: Bank error in charging check Add: Outstanding checks Add: Bank service charge Deduct: Proceeds of note collected by bank, including interest Deduct: Error in recording check Deduct: Bank service charge Cash balance per company records Adjusted balance Cash management and Control Effective cash management and control over cash includes which of the following? 1. Delaying payment of liabilities as long as possible Yes 2. Speeding up collection of receivables No 3. Investing idle cash to earn the greatest possible return while still being able to meet cash needs 4. With the exception of a petty cash fund, making all disbursements by check. 5. Paying suppliers earlier than payment terms require 6. Preparing bank reconciliations 7. Purchasing excess inventory with excess cash 8. Deploying procedures to safeguard cash 9. Depositing cash receipts when the amount reaches a predetermined level 10. Use of petty cash funds for minor disbursements 11. Approving suppliers before purchasing from them 12. Segregating cash duties Cash and Cash Controls Cash includes coins, paper currency, checks, money orders, and money deposited with a financial institution that the company can withdraw at any time. The key to classification of an amount as cash is that it be readily available to pay debts. Cash is a reported on the . Cash also includes items properly classified as cash equivalents. These are limited to investments that are readily convertible to known amounts of cash and have an original maturity to the investor of three months or less. Bank Reconciliation A bank reconciliation explains the causes for any differences between a company's cash balance on its bank statement and its cash balance on the books (that is, in the ledger.) Allez Company's monthly bank statement shows an account balance of $6361.11. The cash balance in its ledger is $5551.12. A thorough bank reconciliation investigation yields the following information: The bank erroneously deducted $378.82 from the company's account when the actual amount of a check written by the company was $338.82. The company erroneously recorded a check it wrote for $356.31 as $565.83. The company recently made a $698.92 deposit that has not yet been reflected on the bank statement. The bank collected a $540.00 note receivable, plus $11.00 in interest, which has not been recorded in the company's records. Bank service charges of $14.00 have been assessed to the company's account. There are two checks outstanding (not yet appearing on the bank statement) that were written for $837.89 and $452.42. A $487.92 check from one of the company's customers, Phil Conners, was returned by the bank because of insufficient funds (NSF) in the customer's account. Prepare the bank reconciliation for Allez Co. Enter amounts to the nearest cent. Allez Co. Bank Reconciliation January 31, 2014 Cash balance per bank statement Adjusted balance Add: Bank error in charging check Add: Outstanding checks Add: Bank service charge Deduct: Proceeds of note collected by bank, including interest Deduct: Error in recording check Deduct: Bank service charge Cash balance per company records Adjusted balance Cash management and Control Effective cash management and control over cash includes which of the following? 1. Delaying payment of liabilities as long as possible Yes 2. Speeding up collection of receivables No 3. Investing idle cash to earn the greatest possible return while still being able to meet cash needs 4. With the exception of a petty cash fund, making all disbursements by check. 5. Paying suppliers earlier than payment terms require 6. Preparing bank reconciliations 7. Purchasing excess inventory with excess cash 8. Deploying procedures to safeguard cash 9. Depositing cash receipts when the amount reaches a predetermined level 10. Use of petty cash funds for minor disbursements 11. Approving suppliers before purchasing from them 12. Segregating cash duties