Cash Control Systems Accounting I Chapter 5 Learning

Cash Control Systems Accounting I Chapter 5

Learning objectives 1. 2. 3. 4. 5. 6. 7. 8. 9. Record a deposit on a check stub Endorse checks Prepare a check stub and a check Complete a bank statement reconciliation Record and journalize bank service charge Journalize an electronic funds transfer Journalize a debit card transaction Establish petty cash fund Replenish petty cash fund

Checking Accounts / key terms � Checking account-bank account from which payments can be ordered by a depositor � Deposit Slip-a bank form which lists the checks, currency, and coins an account holder is adding to a bank account � Endorsement-signature or stamp on the back of a check transferring ownership ◦ Blank endorsement-endorsement consisting of only the endorser’s signature ◦ Special endorsement-endorsement indicating a new owner of a check

◦ Restrictive endorsement-endorsement restricting further transfer of a check’s ownership � Postdated check-check with a future date on it � Voided check – a check that cannot be processed because the maker has made it invalid.

Depositing Cash � Deposit slip ◦ Checks are listed on deposit slips according to bank routing number on each check For Example: The routing number is 22 -1508 The printed verification is Jan 2, 20 --- and is printed on the top left edge

Check Stub � After the deposit is recorded on the check stub, a checkbook subtotal is calculated. The balance brought forward on Check Stub No. 1 is zero because the checking account has just been opened. The deposit is the first transaction for this newly opened checking account. The previous balance, , plus the deposit, , equals the subtotal, .

Preparing completed check and check stub

Preparing check stub 1. 2. 3. 4. 5. Write the amount of the check Write the date of the check Write to whom the check is to be paid Record the purpose of check Write the amount of the check

Preparing check � 7. write the date � 8. write to whom the check is to be paid � 9. write the amount in figures � 10. write the amount in words � 11. write the purpose of the check � 12. sign the check

Endorsement � There are 3 types of endorsements: ◦ Blank endorsements indicates that the subsequent owner is whoever has the check

Special endorsement � Endorsements in full � When you are signing your check over to someone else.

Restrictive Endorsement � It restrict further transfer of check’s ownership

Recording a voided check � Invalid check for several reasons has to be voided in the general journal. 1. 2. 3. 4. 5. Record the date Write the word void Write the check number Place a check mark in the post ref. column Place a dash in both the debit and credit columns

Instructions � Do the OWP 5: 1 end of lesson review ◦ Work together and on your own

Bank Reconciliation � Bank statement-report of deposits, withdrawals, and bank balances sent to a depositor by a bank � Reconciliation-getting the check stub balance to equal the bank statement balance � Canceled Check- a check which has been paid by the bank

Bank Statement

Bank Statement Reconciliation � This the act of verifying that the information is correct between the bank statement and checkbook.

Steps to reconciling a bank statement 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Write the date In the left amount column, list the balance brought forward on Check Stub No 14, the next unused check stub In the space for bank charges, list any charges Write the adjusted check stab balance in the space provided at the bottom of the left amount column Write the ending balance shown on the bank statement. Write the date Add the ending bank statement balance to the total outstanding deposits List the outstanding checks and their amounts Calculate the adjusted bank balance and write it down Compare adjusted balances

Recording a bank service charge on a check stub 1. 2. 3. Write service charge Write the amount of service charge Calculate and record the new subtotal

Journalizing a bank service charge 1. 2. 3. 4. Write the date Debit misc. expense Credit cash Source document

Assignment � 5 -2 work together and on your own

Review � Without looking at your notes or book answer the following questions: � 1. Describe a restrictive endorsement. � 2. Describe a blank endorsement. � 3. Describe a special endorsement. � 4. What does reconciling a bank account do? � 5. What is the journal entry for recording bank service charges (debit and credit)?

Dishonored Checks and Electronic Banking � Dishonored check-check that a bank refuses to pay � Electronic funds transfer (EFT)-computerized cash payments system that transfers funds without currency or paper documents � Debit card-bank card that automatically deducts the amount of a purchase from the checking account of the cardholder

Recording a Dishonored check on a check stub 1. 2. 3. Write DISHONORED CHECK under the heading Write the total of the dishonored check Calculate and record the new subtotal

Journalizing a dishonored check 1. 2. 3. 4. Write the date Debit the proper account Credit the proper account Right in source document

Journalizing EFT 1. 2. 3. 4. Write date Debit – is the account we are paying to payable acct Credit cash Document source document

Journalizing Debit Card Transaction 1. 2. 3. 4. Write Date Debit the proper account Credit the proper account Document Source document

assignment � Animated activity video 1, 2 � Animated activity quiz 1 and 2 � OWP 5 -3 end of lesson activity ◦ Work together and ◦ On your own

Petty Cash � Petty cash-amount of cash kept on hand used for making small payments � Petty cash slip-form showing proof of a petty cash payment ◦ Petty Cash journals the same as Cash

Establishing a Petty Cash Fund � We use petty cash to make small payments

Petty Cash Slip/ Report

Replenishing Petty Cash

Replenishing Petty Cash 1. 2. 3. 4. 5. Write the date Debit account titles Write the account cash short or cash over Credit Source document

Assignment � Animated Activity Video � Animated Activity Quiz � OWP 5 -4 end of lesson Review ◦ Work together and ◦ On your own