เงินสดและเงินลงทุน (Cash and Investment) Chapter 6 2

Cash is defined as any deposit banks will accept. Coins and paper money Checks Cash is defined as any deposit banks will accept. Bank credit card sales Money orders Travelers’ checks 4

Reporting Cash in the Balance Sheet Combined with cash on balance sheet Cash Equivalents Matures within 90 days of acquisition Liquid short-term investments Stable market values 4

Reporting Cash in the Balance Sheet Not available for paying current liabilities “Restricted” Cash Not a current asset Listed as an investment 4

Cash Management Accurately account for cash. Prevent theft and fraud. Assure the availability of adequate amounts of cash. Avoid unnecessarily large amounts of idle cash. 4

Internal Control Over Cash Segregate authorization, custody and recording of cash. Prepare a cash budget. Prepare a control listing of cash receipts. Require daily deposits. Make all payments by check. Verify every expenditure before payment. Promptly reconcile bank statements.

SEGREGATION OF DUTES VS. INDEPENDENT INTERNAL VERIFICATION Segregation of Duties Assistant Cashier B Maintains custody of cash on hand Accounting Employee A Maintains cash balance per books Independent Internal Verification Assistant Treasurer C Makes monthly comparisons. Reports differences to treasurer.

Bank Statements Shows the beginning bank balance, deposits made, checks paid, other debits and credits during the month, and the ending bank balance. Bank Statement 9 9 90 90

RECONCILING THE BANK ACCOUNT Reconciliation is necessary because the balance per bank and balance per books are seldom in agreement due to time lags and errors. Reconciliation should be prepared by an employee who has no other responsibilities pertaining to cash.

Reconciling the Bank Statement Balance per Bank Balance per Depositor + Deposits by Bank (credit memos) + Deposits in Transit - Service Charge - NSF Checks - Outstanding Checks ± Bank Errors ± Book Errors = Adjusted Balance = Adjusted Balance 10 10 91 91

Reconciling the Bank Statement All reconciling items on the book side require an adjusting entry to the cash account. Balance per Depositor + Deposits by Bank (credit memos) - Service Charge - NSF Checks ± Book Errors = Adjusted Balance 10 10 91 91

Reconciling the Bank Statement Example Prepare a July 31 bank reconciliation statement and the resulting journal entries for the Simmons Company. The July 31 bank statement indicated a cash balance of $9,610, while the cash ledger account on that date shows a balance of $7,430. Additional information necessary for the reconciliation is shown on the next page. 14 14 95 95

Outstanding checks totaled $2,417. A $500 check mailed to the bank for deposit had not reached the bank at the statement date. The bank returned a customer’s NSF check for $225 received as payment of an account receivable. The bank statement showed $30 interest earned on the bank balance for the month of July. Check 781 for supplies cleared the bank for $268 but was erroneously recorded in our books as $240. A $486 deposit by Acme Company was erroneously credited to our account by the bank. 15 15 96 96

Reconciling the Bank Statement Example 17 17 98 98

Reconciling the Bank Statement Example 18 18 99 99

Used for minor expenditures. Replenished periodically. Petty Cash Funds Used for minor expenditures. Petty Cash Funds Has one custodian. Replenished periodically. 4

PETTY CASH FUNDS An IMPREST SYSTEM involves: 1 establishing the fund 2 making payments from the fund 3 replenishing the fund Accounting entries are required when: 1 the fund is established 2 the fund is replenished 3 the amount of the fund is changed

The check is written to the custodian. ESTABLISHING THE FUND Two steps to establish a petty cash fund 1 appoint a responsible custodian who will be responsible 2 determine the size of the fund (to cover 3-4 weeks) 100 The check is written to the custodian.

REPLENISHING THE FUND Custodian initiates request for reimbursement. Custodian prepares a schedule of payments with documentation Treasurer approves replenishment. GENERAL JOURNAL Date Account Titles and Explanation Debit Credit Mar. 15 Postage Expense 44 38 5 87 Freight-out Miscellaneous Expense Cash (To replenish petty cash fund) On March 15 the petty cash custodian requests a check for $87. The fund contains $13 cash and petty cash receipts for postage $44, freight-out $38, and miscellaneous expenses, $5.

Cash Over and Short On May 5, XBAR, Inc.’s cash drawer was counted and found to be $10 over. Cash Over and Short is debited for shortages and credited for overages. 4

Cash Over and Short On May 5, XBAR, Inc.’s cash drawer was counted and found to be $20 short. Cash Over and Short is debited for shortages and credited for overages. 4

Understanding the Business A company may invest in the securities of another company to: Earn a return on idle funds. (Passive investments) Influence the other company’s policies and activities. Control the other company.

เงินลงทุนชั่วคราว(ระยะสั้น) เงินลงทุนระยะยาว TYPE OF INVESTMENTS เงินลงทุนชั่วคราว(ระยะสั้น) เงินลงทุนระยะยาว ทั้งประเภทเงินลงทุนชั่วคราวและเงินลงทุนระยะยาวแล้ว ยังแบ่งประเภทตามวัตถุประสงค์การถือครองเป็น เงินลงทุนในตราสารหนี้ (Debt Investment) เงินลงทุนในตราสารทุน (Stock Investment)

Short-Term Investments Bond Investments Capital Stock Investments Marketable Securities are . . . Readily Marketable Current Assets Almost As Liquid As Cash 4

RECORDING STOCK INVESTMENTS Record investment at cost. Recognize revenue when cash dividends are received. On July 1, 20x6, Sanchez Corporation acquires 1,000 shares (10%) of Beal Corporation common stock for $40 per share plus brokerage fees of $500. The entry for the purchase is: Date Account Titles and Explanation Debit Credit 40,500 July 1 Stock Investments Cash (To record purchase of 1,000 shares of Beal Corporation common stock)

RECORDING DIVIDENDS On December 31, Sanchez Corporation receives a $2 per share cash dividend. Date Account Titles and Explanation Debit Credit 2,000 Dec. 31 Cash (1,000 x $2) Dividend Revenue (To record receipt of a cash dividend) Dividend revenue is reported on the income statement under “Other revenues and gains.” 9

RECORDING A SALE PROCEEDS – COST = GAIN or LOSS On February 10, 20x7, Sanchez Corporation receives net proceeds of $39,500 on the sale of its Beal stock. The cost of the Beal stock was $40,500 on July 1, 20x6. The entry to record the sale and loss is: PROCEEDS – COST = GAIN or LOSS Date Account Titles and Explanation Debit Credit Feb. 10 Cash 39,500 1,000 40,500 Loss on Sale of Stock Investments Stock Investments (To record sale of Beal common stock) 17

ACCOUNTING FOR DEBT INVESTMENTS Entries required for acquisition, interest revenue, and sale. Kuhl Corporation acquires 50 Doan Inc. 8%, 10-year, $1,000 bonds on January 1, 20x6, for $54,000, including brokerage fees of $1,000. The entry to record the investment is: Cost includes all expenditures to acquire investment. Date Account Titles and Explanation Debit Credit Jan. 1 Debt Investments 54,000 Cash (To record purchase of 50 Doan Inc. bonds) 4

RECORDING BOND INTEREST The bonds pay $2,000 interest on July 1 and January 1 ($50,000 x 8% x ½). The July 1 entry is: Date Account Titles and Explanation Debit Credit July 1 Cash 2,000 Interest Revenue (To record receipt of interest on Doan Inc. bonds) It is necessary to accrue $2,000 interest earned since July 1 at year-end. The December 31 entry is: Date Account Titles and Explanation Debit Credit Dec. 31 Interest Receivable 2,000 Interest Revenue (To accrue interest on Doan Inc. bonds) 5

RECORDING BOND INTEREST When the interest is received on January 1, the entry is: Date Account Titles and Explanation Debit Credit Jan. 1 Cash 2,000 Interest Receivable (To record receipt of accrued interest)

RECORDING SALE OF INVESTMENTS On January 1, 20x7, Kuhl Corporation receives net proceeds of $58,000 on the sale of the Doan Inc. bonds. The entry to record the sale and recognize the gain is: PROCEEDS – COST = GAIN or LOSS Date Account Titles and Explanation Debit Credit Jan. 1 Cash 58,000 54,000 4,000 Debt Investments Gain on Sale of Debt Investments (To record sale of Doan Inc. bonds) 6

การซื้อ-ขายเงินลงทุนในระหว่างงวดดอกเบี้ย ผู้ขายต้องขายดอกเบี้ยไปด้วย และบันทึกดอกเบี้ยที่ขายไปเป็นรายได้หรือดอกเบี้ยรับ เดบิต เงินสด xx เครดิต เงินลงทุน xx ดอกเบี้ยรับ xx ผู้ซื้อต้องซื้อดอกเบี้ยมาด้วย และบันทึกไว้รอหักเมื่อได้รับดอกเบี้ยตามงวดดอกเบี้ย เดบิต เงินลงทุน xx ดอกเบี้ยรับ xx เครดิต เงินสด xx

REPORTING CASH Cash reported on the Balance Sheet includes: 1 Cash on hand (includes petty cash) 2 Cash in banks Cash is the most liquid asset Cash is listed first in the balance sheet. Cash equivalents are investments with maturities of 3 months or less, such as money market funds, CD’s, and treasury bills and notes.

การแสดงรายการในงบการเงิน สินทรัพย์ สินทรัพย์หมุนเวียน เงินสดและเงินฝากธนาคาร xx เงินลงทุน xx

End of Chapter 6 4