Chapter 5 Outline Cash Control Systems

Part I Checks
A. Signature Card contains authorized signatures
B. ABA Number American Banking Association- Identification number that identify where the check is coming from
C. Three types of endorsements:
a. Blank signature only
b. Special transfer check to third party after receiving check first
c. Restrictive (stamp) the deposit of amount of company with signature
D. Preparing a check stub:
a. Amount of check ($)
b. Date
c. To Whom
d. Purpose
e. Amount of check
f. New Balance
E. Preparing a check:
a. Date
b. To Whom
c. Number Amount
d. Written Amount (prevails over numeric amount within $10)
e. Purpose
f. Signature
Part II Bank Reconciliation
A. Difference between bank record and checkbook:
a. service charge or interest
b. outstanding checks
c. outstanding deposit
d. common errors
B. Reconciling a bank statement:
a. Left side:
1. Checkbook balance
2. Deduct bank charges
3. Add interest
4. Figure out new balance
b. Right side:
1. Bank statement balance
2. Add outstanding deposits
3. Deduct outstanding checks (checks that the bank has not yet received)
4. Figure out new balance
**Canceled checks have not effect on the bank rec form they have already been received by the bank and returned to the customer**
C. Recording a service charge on a check stub:
1. service charge
2. write amount
3. calculate new check book balance
D. Journalizing a service charge:
1. date
2. debit miscellaneous expense
3. credit cash
4. source document M
**No check is written for the service charge the bank automatically deducts it from the account**
Part III Dishonored Check and Electronic Banking
A. Reasons for a dishonored check: (a check the bank refuses to cash)
1. Post dated check
2. Check appears to be altered or changed
3. Written amounts and number amounts dont agree
4. No authorized signature
5. Stop payment
6. Insufficient funds
B. Recording a dishonored check on a check stub:
1. Date
2. Write dishonored check
3. Amount of check is subtracted from old balance to get new balance
C. Journalizing a dishonored check:
1. Date
2. Debit account receivable (amount originally sent)
3. Credit cash
4. Source document (Memorandum)
D. Journalizing a Electronic Fund Transfer (EFT) or debit card purchase:
1. Date
2. Debit account affected
3. Credit cash
4. Source document (Memorandum)
Part IV Petty Cash
A. Petty Cash - Asset
DR CR
+ --
BAL
B. Establish Petty Cash Fund:
1. Date
2. Debit petty cash
3. Credit cash
4. Source document (Check)
C. Petty Cash Slip:
1. Petty cash slip number
2. Date
3. Who is taking the number?
4. Why is the money being taking out?
5. The amount being taken out
6. Amount affected
7. Signature
D. Petty Cash Proof:
1. Cash remaining in the petty cash
2. Add petty slips
3. Equal original accounts
E. Replenish Petty Cash: (End of month or when becomes low)
1. Date
2. Debit all the accounts that there are receipts for
3. Credit cash
4. Source document (Check)
B. ABA Number American Banking Association- Identification number that identify where the check is coming from
3. Deduct outstanding checks (checks that the bank has not yet received)
**Canceled checks have not effect on the bank rec form they have already been received by the bank and returned to the customer**
**No check is written for the service charge the bank automatically deducts it from the account**
Chapter 5 Vocab
Code of conduct a statement that guides the ethical behavior of a company and its employees
Checking account- a bank account from which payments can be ordered by a depositor
Endorsement- a signature or stamp on the back of a check transferring ownership
Blank endorsement- an endorsement consisting only of the endorsers signature
Special endorsement- an endorsement indicating a new owner of a check
Restrictive endorsement- an endorsement restricting further transfer of a checks ownership
Postdated check- a check with a future date on it
Bank statement- a report of deposits, withdrawals, and bank balances sent to a depositor by a bank
Dishonored check- a check that the bank refuses to pay
Electronic funds transfer- a computerized cash payments systems that uses electronic impulses to transfer funds
Debit card- a bank card that, when making purchases, automatically deducts the amount of the purchase from the checking account of the cardholder
Petty cash- an amount of cash kept on hand and used for making small payments
Petty cash slip- a form showing proof of a petty cash payment
Bank statement- a report of deposits, withdrawals, and bank balances sent to a depositor by a bank
Electronic funds transfer- a computerized cash payments systems that uses electronic impulses to transfer funds
Debit card- a bank card that, when making purchases, automatically deducts the amount of the purchase from the checking account of the cardholder
BANK RECONCILIATION
CLIENT NAME: MONTH OF:
BANK: TD Bank ACCOUNT NO. : 1111111
CHECKING
ACCOUNT BALANCE...............................650.00
ADD:
Interest 12.75
Errors
TOTAL ADDITION: 12.75
TOTAL............................................. 662.75
LESS:
Auto Withdrawals
Bank Fees 5.60
Errors 65.00
TOTAL SUBTRACTION: 70.60
Adjusted Checkbook Balance 592.15
CHECKS:
NUMBER AMOUNT NUMBER
145 65.00
146 25.30
TOTAL 90.30 TOTAL
BANK RECONCILIATION
ACCOUNT NO. : 1111111
BALANCE PER BANK STATEMENT
AS OF: June 27, 2014 532.45
ADD DEPOSITS IN TRANSIT:
26-Jun 150.00
TOTAL IN TRANSIT 150.00
TOTAL................................................... 682.45
LESS CHECKS OUTSTANDING:
(SEE LIST BELOW)
TOTAL.................. 90.30
Adjusted Bank Balance 592.15
AMOUNT NUMBER AMOUNT
TOTAL 0.00
0.00 GRAND TOTAL 90.30