Transcript Chapter 5 PowerPoint.ppt

Chapter 5--Cash Control Systems
Objectives:
• Define accounting terms related to using a checking
account and a petty cash fund
• Identify accounting concepts and practices related to using
a checking account
• Prepare business papers related to using a checking
account
• Reconcile a bank statement
• Journalize dishonored checks and electronic banking
transactions
• Establish and replenish a petty cash fund
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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Chapter 5 Vocabulary
 code of conduct
 checking account
 endorsement
 blank endorsement
 special
endorsement
 restrictive
endorsement
 postdated check
page 123
 bank statement
 dishonored check
 electronic funds
transfer
 debit card
 petty cash
 petty cash slip
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
LESSON 5-1: Checking Accounts
Cash transactions occur more frequently
than other types of transactions, and cash is
easy to transfer from one person to another.
Because of this companies have a…
Code of conduct—a statement that guides
the ethical behavior of a company and its
employees
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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DEPOSITING CASH
page 119
A bank account from which payments can be ordered by a
depositor is called a checking account.
It is so important to be accurate when recording additions to and
subtractions from a bank account.
When a checking account is opened, the bank customer must
provide a signature on a signature card for the bank records. Each
person’s signature must be on the signature card.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
5
DEPOSITING CASH
A bank customer prepares a deposit slip each time cash or checks
are placed in a bank account. All deposit slips contain the same
information. Checks are listed on a deposit slip according to the
bank routing number on each check. When a deposit slip is made, a
bank gives the depositor a receipt.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
6
DEPOSIT RECORDED ON A
CHECK STUB
page 119
After the deposit is recorded on the
check stub, a checkbook subtotal is
calculated.
Cash receipts are journalized at the
time cash is received. Later, the
cash receipts are deposited in the
checking account.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
7
ENDORSEMENTS
page 120
A signature or stamp on the
back of a check
transferring ownership is
called an endorsement.
Endorsements should be
Special
written in ink exactly as it
Endorsement
appears on the front of the
check and that there are
space limitations on the
Restrictive
back of a check for an
Endorsement
endorsement.
Blank Endorsement
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
COMPLETED CHECK STUB AND
CHECK
TIPS
• The check stub should always be completed before writing out
the check.
• Writing the purpose of the check on the stub is good record
keeping practice.
• Numbers should be written very close on a check so no one can
change the amount.
• If the amounts in words and figures are not the same, a bank
may pay only the amount in words.
• The check should be signed as the signature appears on the
signature card. It is important to write the signature the same
each time.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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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.
5
6. Calculate the new checking
account balance.
6
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
10
COMPLETED CHECK
page 121
7
8
9
10
11
7. Write the date.
8. Write to whom the check is to
be paid.
9. Write the amount in figures.
12
10. Write the amount in words.
11. Write the purpose of the check.
12. Sign the check.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
11
RECORDING A VOIDED CHECK
page 122
• Banks usually refuse to accept an altered check.
• A check on which an error has been made should not be destroyed.
• The person voiding the check should write “VOID” on the stub and
check and file the check.
• Because checks are prenumbered, all checks not used should be
retained for the records. This practice helps account for all checks
and assures that no checks have been lost or stolen.
• An entry is necessary for a voided check so that the Doc. No.
column of the journal will list all of the checks of the company.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1
12
RECORDING A VOIDED CHECK
1
3
2
1.
2.
3.
4.
5.
page 122
4
Record the date in the Date column.
Write the word VOID in the Account Title column
Write the check number in the Doc. No. column.
Place a check mark in the Post. Ref. column.
Place a dash in both the Debit and Credit columns.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
5
LESSON 5-1
LESSON 5-1
Log on to Aplia and let’s complete
Work Together 5-1 on textbook
page 123 and On Your Own 5-1
on textbook page 123.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-2: Bank Reconciliation
• A report of deposits,
withdrawals, and bank
balances sent to a
depositor by a bank is
called a bank
statement.
• It is important to analyze
the bank statement each
time it is received.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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BANK STATEMENT
page 124
A bank’s records and a depositor’s records may differ for several
reasons:
1. A service charge may not have been recorded in the depositor’s
business records.
2. Outstanding deposits may be recorded in the depositor’s records
but not on a bank statement.
3. Outstanding checks may be recorded in the depositor’s records
but not on a bank statement.
4. A depositor may have made math or recording errors.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-2
16
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
page 125
1
2
5
6
7
4
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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9
10
LESSON 5-2
Bank Statement Reconciliation
• A bank statement is reconciled by verifying that information
on a bank statement and a checkbook are in agreement.
Reconciling immediately is an important aspect of cash
control.
• When a bank statement is received, canceled checks may
accompany it. Canceled checks should be compared with
check stubs and a check mark should be placed on each
stub for canceled checks.
• The bank has already taken the service charge out of the
account.
• When the reconciliation is completed, the two adjusted
balances should be the same.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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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 © 2009 South-Western, Cengage Learning
LESSON 5-2
19
JOURNALIZING A BANK SERVICE
CHARGE
page 127
August 31. Received bank statement showing August bank service
charge, $8.00. Memorandum No. 3.
2
1
4
3
1.
2.
3.
4.
Write the date.
Write the title of the account debited. Record the debit amount.
Write the title of the account credited. Record the credit amount.
Write the source document number in the Doc. No. column.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-2
LESSON 5-2
Log on to Aplia and let’s complete
Work Together 5-2 on textbook page
128 and On Your Own 5-2 on
textbook page 128.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Lesson 5-3: Dishonored Checks and
Electronic Banking
• A check that a bank refuses to pay is called a dishonored
check. Banks dishonor a check when the account of the
person who wrote the check has insufficient funds to pay the
check.
• Issuing a check on an account with insufficient funds is
illegal. Altering or forging a check is also illegal.
• When the check was first received, it was deposited and the
amount was added to the bank account. Now, when it is
dishonored, the amount must be subtracted from the bank
account.
• Most banks charge a fee for handling dishonored checks.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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RECORDING A DISHONORED CHECK
ON A CHECK STUB
1
2
page 129
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.
3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-3
23
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.
2
4
1
3
1.
2.
3.
4.
Write the date.
Write the title of the account debited. Write the debit amount.
Write the title of the account credited. Write the amount credited.
Write the source document number in the Doc. No. column.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-3
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JOURNALIZING AN ELECTRONIC FUNDS
TRANSFER
page 131
• A computerized cash payments system that transfers funds
without the use of checks, currency, or other paper documents is
called electronic funds transfer (EFT).
• EFT means that the business does not have to write a check for
this amount. Therefore, there is no check stub for the source
document.
• A memorandum is often used as a source doc for EFT payments.
• A cash payment made by EFT is recorded on the check stub as
“other”
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-3
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JOURNALIZING AN ELECTRONIC FUNDS
TRANSFER
page 131
September 2. Paid cash on account to Kelson Enterprises,
$350.00, using EFT. Memorandum No. 10.
2
1
4
3
1.
2.
3.
4.
Write the date.
Write the title of the account debited. Record the amount debited.
Write the title of the account credited. Record the amount credited.
Write the source document number in the Doc. No. column.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-3
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JOURNALIZING A DEBIT CARD
TRANSACTION
page 132
A bank card that automatically deducts the amount of a purchase
from the checking account of the cardholder is called a debit card.
When a purchase is made with a debit card, cash is immediately
deducted from the account.
When using a debit card, it is important to remember to record the
withdrawal both in the journal and on a check stub.
A cash payment made with a debit card is recorded on the check stub
as “other”
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-3
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JOURNALIZING A DEBIT CARD
TRANSACTION
page 132
September 5. Purchased supplies, $24.00, using debit card.
Memorandum No. 12.
2
1
4
3
1.
2.
3.
4.
Write the date.
Write the title of the account debited. Record the amount debited.
Write the title of the account credited. Record the amount credited.
Write the source document number in the Doc. No. column.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-3
LESSON 5-3
Log on to Aplia and let’s complete
Work Together 5-3 on textbook
page 133 and On Your Own 5-3 on
textbook page 133.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-4: Petty Cash
• An amount of cash kept on hand and used for making small
payments is called petty cash. A business usually has
some small payments for which writing a check is not time
or cost effective. Therefore, a business may maintain a
separate cash fund for making small cash payments.
• Very large businesses may have several petty cash funds.
• The petty cash account is an asset account with a normal
debit balance.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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ESTABLISHING A PETTY CASH FUND
page 134
August 19. Paid cash to establish a petty cash fund, $100.00.
Check No. 8.
2
1
4
3
1.
2.
3.
4.
Write the date.
Write the title of the account debited. Record the amount debited.
Write the title of the account credited. Record the amount credited.
Write the source document number in the Doc. No. column.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-4
31
MAKING PAYMENTS FROM A PETTY CASH
page 135
FUND WITH A PETTY CASH SLIP
A form showing proof of a petty cash
payment is called a petty cash slip.
When cash is paid from a petty cash
fund, no formal entry is recorded in a
journal. Only a petty cash slip is
prepared. The entry will be made at a
later date.
The petty cash slip must be approved
before cash can be paid out.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-4
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REPLENISHING PETTY CASH
page 136
The petty cash fund is replenished when the amount in the fund is low
or at the end of a fiscal period. Some companies replenish the petty
cash fund at the end of the month so that all expenses are recorded in
the month they incurred.
Before petty cash is replenished, a proof of the fund must be
completed.
The petty cash slips are now used to summarize payments from the
fund and to record payments in the journal. To replenish the fund,
debit accounts for which petty cash was used and credit the cash
account.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-4
33
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.
2
1
4
3
1. Write the date.
2. Write the title of the first account debited. Write the debit amount.
Write the title of the second account. Record the debit amount.
3. Write the title of the account credited. Record the credit amount.
4. Write the source document number in the Doc. No. column.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-4
Lesson 5-4
Log on to Aplia and let’s complete
Work Together 5-4 on textbook
page 138 and On Your Own 5-4 on
textbook page 138.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
35
Chapter 5 Assignments
 Study Guide
 Problems:
5-1
5-2
5-3
5-4
5-5
5-6
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 5-1