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These are the transactions that are unique and not recurring in the ordinary course of
government operations. These seldom take place or should not happen at all.
1. Issuances of office supplies, equipment and materials. To be recorded it shall be supported by a
MRSMI prepared by the property custodian regularly. This summarizes all requisitioned and issued
inventory items to various requesitioner. For issued equipment to an employee, a Memorandum Receipt
(MR) must be issued to evidence that the recipient must keep the property with utmost care since it will be
his accountability and responsibility. The MR is renewable every 3 years to update the current ownership
if ever there are transfers made.
2. Depreciation for Property, Plant and Equipment. The cost of property, plant and equipment are
allocated to the periods benefited through the provision of accumulated depreciation. Depreciation is the
systematic and gradual allocation of the depreciable amount of assets over its useful life.
Depreciation as of 9/30/2018:
2015 = 7 mos X 395.83 = P 2,770.81
2016-2017 = 4,750 X 2 yrs = 9,500.00
2018 = 395.83 X 9 mos = 3,562.47 P
Journal Entry:
Depreciation – Machinery and Equipment 50501050 3,562.47
Accumulated Surplus 30101010 12,270.81
Accumulated Depreciation – Office Equipt 10605021 15,833.28
2. On Dec. 31, 2018, the agency transfer the equipment to other region.
Required: 1) JE recording the transferred equipment and JE to be made by the
Receiving agency.
Transferor Book:
Accumulated Surplus 30101010 12,270.81
Accumulated Depreciaiton - OE 10605021 12,729.19
Office Equipment 10605020 25,000.00
( to record the transfer)
Transferee Book
Office Equipment 10605020 12,270.41
Accumulated Surplus 30101010 12,270.41
3. Bad Debts - shall be recorded for uncollectibles from trade/business receivables. the
determination of bad debts expense is derived from percentage and aging of accounts receivables
as follows:
Age of accounts Percentage
1 - 60 days 1%
61- 180 2%
181 – 1 yr 3%
More than 1 year 5%
Example:
A national government agency has a total accounts receivable of P50,000 which remained
outstanding for 3 yrs. And was approved by COA for write off.
1. Record the corresponding allowance for bad debts.
Impairment loss – loans and receivables 50503020 2,500
Allowance for Impairment – Accts Receivable 10301011 2,500
To remit:
Cash-Treasury/Agency Deposit, Reg 10104010 400
Cash – collecting Officer 10101010 400
b. Gain on sale
Cash – collecting officer 10101010 500
Accum dep’n – OE 10605021 4,050
Office Equipment 10605020 4,500
Other Gains 40501990 50
To remit:
Cash-Treasury/Agency Deposit, Reg 10104010 500
Cash – collecting Officer 10101010 500
: 6. Accounting for stale checks. Checks may be cancelled when it become stale. The depository bank
considers a check stale, if it has been outstanding for over six months from date of issue or as prescribed.
A stale check shall be marked cancelled on its face and reported as follows:
1. Unclaimed stale checks which are still with Cashier shall be cancelled and reported
in the List of Unreleased Checks as cancelled. The List of Unreleased Checks is
attached to the RCI.
2. For stale checks which are in the hands of the payees or holders in due course
and requested for replacements, new checks maybe issued upon submission of
stale checks to the accounting unit. A certified copy of the previously paid DVs shall
be attached to the request for replacement. A JEV shall be prepared to take up the
cancellation. The replacement check shall be reported in the RCI.
Stale MDS checks issued in the current year for replacement, P15,000.
Check cancellation:
Cash, MDS, Reg 10104040 15,000
Accts. Payable 20101010 15,000
Adjust obligation. (Check what type of expenditure being paid and the RAOD)
Check Replacement:
Accts. Payable 20101010 15,000
Cash-MDS, Reg. 10104040 15,000
Stale commercial checks issued in the current year and prior years for replacemen, P5,000:t:
Check cancellation:
CIB – LCCA 10102020 5,000
Accts. Payable 20101010 5,000
Check Replacement:
Accts. Payable 20101010 5,000
CIB – LCCA 10102020 5,000
7. Accounting for loss of cash and property. This may be due to malversation, theft, robbery, fortuitous
event or other causes. Cash shortage discovered during cash examination conducted by auditors is
reported through the Report of Cash Examination. The Auditor issues and audit report in case of shortage
in property accountability. As soon as a shortage is definitely established, the auditor shall issue a
memorandum pertaining thereto and the accountant shall draw a JEV to record the shortage as a
receivable from the accountable officer concerned.
In case of loss of property due to other causes like theft, force majeure ,etc., a report thereon
shall be prepared by the accountable Officer concerned for purposes of requesting relief from
accountability. No accounting entry shall be made but the loss shall be disclosed in the notes to financial
statements pending result or request for relief from accountability.
8. Grant of Relief from Accountability. When a request for relief from accountability for shortage or
loss of funds is granted, a copy of the decision shall be forwarded to the Chief Accountant who shall draw
a JEV to record the transaction. The loss shall be debited to the Loss of Assets account and credited to
the appropriate receivable account. In case the request for relief is denied, immediate payment of the
shortage shall be demanded from the AO. Restitution shall be acknowledged by the issuance of an
official receipt.
In case the request for relief from accountability for loss of property caused by fire, theft,
etc, is granted a copy of the decision shall likewise be forwarded to the Chief Accountant for the
preparation of the JEV. The loss shall be debited to the Loss of Assets account and credited to the
appropriate asset account. If request for relief is denied, the loss shall be taken as receivable from the
accountable officer and shall be credited to the appropriate asset account.
9. Accounting for Disallowance. Disallowances shall be taken up in the books of accounts only when
they become final and executory. The accountant shall prepare the JEV to take up the Receivable-
Disallowance/Charges and credit the appropriate expense account for the current year or Prior Year’s
Adjustment account if pertaining to expenses of previous years.
Cash settlement for disallowances shall be acknowledged through the issuance of an official receipt and
reported by the cashier in the RCD.
BANK RECONCILIATION STATEMENT - the preparation of the bank reconciliation statements
for “Cash in Bank” and “Cash-Modified Disbursement System (MDS)” accounts including the
proposed adjusting entries.
Definition of Terms:
Bank Charges –charges imposed by the bank for various services rendered excluding interest
charges.
This also includes cost of checkbooks, penalties and surcharges on overdrafts.
Bank Reconciliation – settlement of differences contained in the bank statement and the cash
account in the agency’s/entity’s books of accounts.
Bank Statement – reflects the transactions in the agency’s/entity’s (depositor’s) bank account
for a period such as deposits made to the account as well as checks/ADAs drawn on the
account, bank charges, returned items, etc.
Canceled Check/ADA – checks/ADAs issued and chargeable to the agency bank account but
was later voided due to expiration of validity, and other valid reasons.
Credit Memorandum – document issued by the bank informing an increase in the depositor’s
(Agency’s/Entity’s) account, such as previous bank debit errors and collection
directly deposited to the agency’s/entity’s bank account.
Debit Memorandum – document issued by the bank informing a decrease in the account, such as
previous bank credit errors or service charges and fees.
Deposits-in-Transit – are amounts of agency/entity deposits in the bank but which are yet to be recorded
by the bank until the next period. These usually pertain to late deposits in the last day of business for a
period.
Lapsed NCAs – NCAs which are no longer valid or its validity has expired but remain unadjusted by
the bank or the agency/entity.
Notice of Cash Allocation – authority issued by the DBM to central, regional and provincial offices and
operating units to cover the cash requirements of the agency/entity.
Outstanding Checks – checks the agency/entity has issued and recognized but which have not been
presented to the bank for payment.
Returned Check – a check returned by the bank due to errors or deficiencies in the maker’s or
agency’s/entity’s account.
Unrecorded Deposits – are collections of the agency/entity which are directly deposited by the
debtor/client to the bank account of the agency/entity but remain unrecorded by the agency/entity as at the
period under reconciliation.
Objectives. The Bank Reconciliation Statement (BRS) shall be prepared in order to:
a. check correctness of both the bank’s and agency’s/entity’s records,
b. serve as a deterrent to fraud, and
c. enable the agency/entity or bank to take up charges or credits recognized by the bank
or agency/entity but not yet known to the agency/entity or bank.
This shall be used in the reconciliation of bank and treasury accounts maintained with
Government Servicing Bank (GSB).
Method of Bank Reconciliation. The monthly BRS shall be prepared by the Chief Accountant
/designated staff for each of the bank accounts maintained by the agency/entity using the
Adjusted Balance Method. Under this method, the book balance and the bank balance are
brought to an adjusted cash balance that must appear on the Statement of Financial
Position.
Illustrative Accounting Entries for Adjustments in the Bank Reconciliation Statement for
“Cash-Modified Disbursement System (MDS)” accounts.
The illustrative accounting entries for the adjustments are as follows:
a. Unrecognized/Understatement of NCA for regular and special account with allotment release
order
Account Title Account Code Debit Credit
Cash- MDS, Regular 10104040 xxx
or Cash- MDS, Special Account 10104050 xxx
or Cash- MDS, Trust 10104060 xxx
Subsidy from National Government 40301010 xxx
For special account without allotment release order and trust account
Cash-Treasury/Agency Deposit, Special Account 10104020 xxx
Or Cash-Treasury/Agency Deposit, Trust 10104030 xxx
Cash- MDS, Regular 10104040 xxx
Or Cash- MDS, Special Account 10104050 xxx
h. Bank Charges
Bank Charges or any appropriate Account xxxxxxxx xxx
Cash- MDS, Regular 10104040 xxx
or Cash- MDS, Special Account 10104050 xxx
or Cash- MDS, Trust 10104060 xxx