LESSON 5 1 Checking Accounts CENTURY 21 ACCOUNTING

LESSON 5 -1 Checking Accounts CENTURY 21 ACCOUNTING © Thomson/South-Western

2 DEPOSITING CASH CENTURY 21 ACCOUNTING © Thomson/South-Western page 119 LESSON 5 -1

3 DEPOSIT RECORDED ON A CHECK STUB CENTURY 21 ACCOUNTING © Thomson/South-Western page 119 LESSON 5 -1

4 ENDORSEMENTS page 120 Blank Endorsement Special Endorsement Restrictive Endorsement CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -1

5 COMPLETED CHECK STUB 1 2 page 121 1. Write the amount of the check. 3 2. Write the date of the check. 4 3. Write to whom the check is to be paid. 4. Record the purpose of the check. 5. Write the amount of the check. 6 5 CENTURY 21 ACCOUNTING © Thomson/South-Western 6. Calculate the new checking account balance. LESSON 5 -1

6 COMPLETED CHECK page 121 7 8 9 10 11 12 7. Write the date. 8. Write to whom the check is to be paid. 9. Write the amount in figures. CENTURY 21 ACCOUNTING © Thomson/South-Western 10. Write the amount in words. 11. Write the purpose of the check. 12. Sign the check. LESSON 5 -1

7 RECORDING A VOIDED CHECK 2 1 1. 2. 3. 4. 5. page 122 4 3 5 Record the date. Write the word VOID in the Account Title column Write the check number. Place a check mark in the Post. Ref. column. Place a dash in the Cash Credit column. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -1

8 TERMS REVIEW n n n n page 123 code of conduct checking account endorsement blank endorsement special endorsement restrictive endorsement postdated check CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -1

LESSON 5 -2 Bank Reconciliation CENTURY 21 ACCOUNTING © Thomson/South-Western

10 BANK STATEMENT CENTURY 21 ACCOUNTING © Thomson/South-Western page 124 LESSON 5 -2

11 BANK STATEMENT RECONCILIATION 1. Date 2. Check Stub Balance 3. Service Charge 4. Adjusted Check Stub Balance 3 5. Bank Statement Balance 6. Outstanding Deposits 7. Subtotal 8. Outstanding Checks 9. Adjusted Bank Balance 10. Compare Adjusted Balances CENTURY 21 ACCOUNTING © Thomson/South-Western page 125 1 2 5 6 7 4 8 9 10 LESSON 5 -2

12 RECORDING A BANK SERVICE CHARGE ON A CHECK STUB 1 2 page 126 1. Write Service Charge $8. 00 on the check stub under the heading “Other. ” 2. Write the amount of the service charge in the amount column. 3. Calculate and record the new subtotal on the Subtotal line. 3 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -2

13 JOURNALIZING A BANK SERVICE CHARGE page 127 August 31. Received bank statement showing August bank service charge, $8. 00. Memorandum No. 3. 4 1 2 3 1. Date. Write the date. 2. Debit. Write the title of the account to be debited. Record the amount debited. 3. Credit. Record the amount credited. 4. Source document. Write the source document number. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -2

14 TERM REVIEW page 128 n bank statement CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -2

LESSON 5 -3 Dishonored Checks and Electronic Banking CENTURY 21 ACCOUNTING © Thomson/South-Western

16 REASONS TO DISHONOR A CHECK page 129 n n Insufficient funds (illegal) Check appears to be altered (also illegal if forged) The signature does not match signature card The amounts written in figures and words do not agree n The check is postdated n The person who wrote the check has stopped payment on the check CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -1

17 RECORDING A DISHONORED CHECK ON page 129 A CHECK STUB 1 2 3 CENTURY 21 ACCOUNTING © Thomson/South-Western 1. Write Dishonored check $105. 00 on the line under the heading “Other. ” 2. Write the total of the dishonored check in the amount column. 3. Calculate and record the new subtotal on the Subtotal line. LESSON 5 -3

18 JOURNALIZING A DISHONORED CHECK page 130 November 29. Received notice from the bank of a dishonored check from Campus Internet Café, $70. 00, plus $35. 00 fee; total, $105. 00. Memorandum No. 55. 1 4 2 1. Date. Write the date. 2. Debit. Write the title of the account to be debited. 3. Credit. Write the amount credited. 4. Source document. Write the source document number. CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 5 -3

19 ELECTRONIC FUNDS TRANSFER page 131 n A computerized cash payments system that transfers funds without the use of checks. n Many businesses use EFT to pay vendors. n Must be recorded in check register and journalized. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -1

20 JOURNALIZING AN ELECTRONIC FUNDS TRANSFER page 131 September 2. Paid cash on account to Kelson Enterprises, $350. 00, using EFT. Memorandum No. 10. 4 1 2 3 1. Date. Write the date. 2. Debit. Write the title of the account to be debited. Record the amount debited. 3. Credit. Record the amount credited. 4. Source document. Write the source document number. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -3

21 DEBIT CARD TRANSACTIONS page 132 n A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder. n NOT the same as a credit card! n Remember to record these in your check register. n Also requires a journal entry. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -1

22 JOURNALIZING A DEBIT CARD TRANSACTION page 132 September 5. Purchased supplies, $24. 00, using debit card. Memorandum No. 12. 4 1 2 3 1. Date. Write the date. 2. Debit. Write the title of the account to be debited. Record the amount debited. 3. Credit. Record the amount credited. 4. Source document. Write the source document number. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -3

23 TERMS REVIEW page 133 n dishonored check n electronic funds transfer n debit card CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -3

LESSON 5 -4 n Petty Cash – an amount of cash kept on hand used for making small payments. n Check writing is not cost effective n Asset account with normal debit balance CENTURY 21 ACCOUNTING © Thomson/South-Western page 134

25 ESTABLISHING A PETTY CASH FUND page 134 August 17. Paid cash to establish a petty cash fund, $100. Check No. 8. 4 1 2 3 1. Date. Write the date. 2. Debit. Write the title of the account to be debited. Record the amount debited. 3. Credit. Record the amount credited. 4. Source document. Write the source document number. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -4

26 MAKING PAYMENTS FROM A PETTY CASH page 135 FUND WITH A PETTY CASH SLIP CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -4

27 REPLENISHING PETTY CASH page 136 n Petty cash must be replenished by recording the petty cash slips and refilling with cash. n Fund is replenished when amount of petty cash gets too low n Fund is always replenished at the end of the month so expenses get recorded in the month they are incurred. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -4

28 REPLENISHING PETTY CASH page 136 August 31. Paid cash to replenish the petty cash fund, $30. 00: miscellaneous expense, $20. 00; advertising, $10. 00. Check No. 12. 4 1 3 2 1. Date. Write the date. 2. Debit. Write the title of the first account to be debited. Write the amount to be debited. Write the title of the second account to be debited. Record the amount to be debited. 3. Credit. Record the amount credited. 4. Source document. Write the source document number. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -4

29 TERMS REVIEW page 138 n petty cash slip CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5 -4