CH 6 Cash Control Systems Pg

H OW B USINESSES U SE C ASH In accounting ______________ = __________ Major cash payments made by ___________ but small cash payments may be made from a _______________________. As a safety measure good to keep most of your money in the _________________.

C HECKING A CCOUNTS Depositing Cash _______________: a business form ordering a bank to pay cash from a bank account. ________________________: a bank account from which payments can be ordered by a depositor. When a checking account is opened a _______________ card is required for records.

C HECKING A CCOUNTS ( CONT ….) A bank customer prepares a _________________ each time cash or checks are placed in a bank account. Checks are listed on a ___________________ according to the bank number on each check. When a deposit is made, the bank gives the depositor a ____________________.

D EPOSIT R ECORDED ON A C HECK S TUB After the deposit is recorded on the ______________ a checkbook subtotal is calculated. Cash receipts are journalized at the time cash is ______________________. Later the cash receipts are deposited in the checking account. (Deposits NOT journalized)

_________________: A SIGNATURE / STAMP ON THE BACK OF A CHECK TRANSFERRING OWNERSHIP Ownership of a check can be _____________. Pay to the order of: is written in on the front of the check Transfer ownership to another person by signing the ___________ of the check.

E NDORSEMENTS ( CONT …) An endorsement should be signed __________ as the person’s name appears on the front of the check. (Bode M. Weidemann) Ownership may be transferred several times – each endorser guarantees payment & is _________________ to the bank for payment.

3 T YPES OF E NDORSEMENTS 1. __________________________ an endorsement consisting only of the endorser’s signature (owner is who ever has the check) If check is lost with blank endorsement ______________ can cash the check Blank endorsement should only be used if at the ___________ ready to cash/deposit.

2. ____________________________: an endorsement indicating a new owner of a check. (Endorsements in _____________) Include the words ________________________ and the name of the _________ check owner. 3. ____________________________: an endorsement restricting further transfer of a check’s ownership. “for deposit only” 4. Many businesses have a ________________ with a restrictive endorsement.

C OMPLETED C HECK S TUB & C HECK A ___________________ is a business’s record of each check written for a cash payment transaction. Preparing a check stub: 1. Write the amount of the ___________ 2. Write the _________ of the check 3. Write to _____________ check is to be paid 4. Record ______________ of the check “supplies” 5. Write the amount of check on line “Amt this check” 6. Calculate the new checking account ___________.

P REPARING C HECKS 7. Write the _______________. A check with a future date is called a ________________________. 8. Write to ___________ the check is to be paid. 9. Write the _____________ in figures following the $ sign. 10. Write the amount in _________________. 11. Write the ________________ of the check 12. ____________ the check.

V OIDED C HECK If an error is made on a check – a new check should be written. Write the word _________________ in big letters across the check and retain it for your records. Journalizing a voided check The date the check was voided VOID written in the account title Document reference (C20) _________________ in Post Ref column Place a in the __________ credit column

B ANK R ECONCILIATION ______________________________: a report of deposits, withdrawals, and bank balances sent to a depositor by a bank. (periodically sent) How a check cycles once it arrives at the bank: 1. Bank receives the check. 2. The amount of the check is _____________________ from the depositor’s account.

H OW A CHECK CYCLES ONCE IT ARRIVES AT THE BANK ( CONT …) 3. Bank _________________ the checks to indicate that the checks are _________________ and not transferred further. 4. ____________________ checks are returned to the depositor with the bank statement.

How a check cycles once it arrives at the bank (cont…) 5. ____________________________ checks are those issued by the depositor but not reported at bank yet. 6. Outstanding deposits are those deposits not reported on bank statement yet. 7. Account ___________________________ will also be listed on a bank statement.

V ERIFYING B ANK S TATEMENTS As the depositor you should verify the _______________ of all of your bank statements. Differences may exist between your records and the bank statement due to: 1. A service charge was not recorded by depositor.

DIFFERENCES BETWEEN STATEMENT & CHECKBOOK (CONT…) 2. Outstanding _______________ were recorded by depositor but not on bank statement. 3. Outstanding _______________ were recorded by depositor but not on bank statement. 4. Depositor may have made a ____________ or recording errors.

B ANK STATEMENT RECONCILIATION A bank statement is reconciled by ______________ that information on a bank statement and a __________________ are in agreement. ____________________ checks are returned with the bank statement. For each canceled check, a ____________________ is placed on the corresponding ________________. A check stub with no check mark indicates an ______________________________ check.

S TEPS FOR R ECONCILING A BANK STATEMENT 1. Write the __________ on which the reconciliation is prepared. 2. In left amount column, list the ________________ balance brought forward. 3. In the space for bank _____________________, list any charges. ( ________ = service charge). 4. Write the _____________________ check stub balance in the bottom left amount column.

Steps for Reconciling a bank statement (cont…) 5. Write the _______________ balance shown on the bank statement 6. Write the date and the amount of any outstanding _____________________ and add the outstanding deposits. 7. __________ the ending bank statement balance to the total outstanding deposits.

S TEPS FOR R ECONCILING A BANK STATEMENT ( CONT …) 8. List the _________________________________ checks and add the amounts into the subtotal box. 9. Calculate the adjusted bank balance (Subtotal _________ total outstanding checks. 10. __________________________ adjusted balances.

R ECORDING A BANK SERVICE CHARGE The bank automatically _________________the service charge amount so depositor must document on a check stub. 1. Write ____________________________ on the check stub under the heading ______________. 2. Write the _____________ of the service charge. 3. Calculate and record the new subtotal. (A new balance carried forward isn’t calculated until check is written.)

J OURNALIZING A BANK SERVICE CHARGE Bank service charge is a ________________ payment but no check is written. You would need to create a ____________________. Journalize as follows: Write the _________________. Debit into _________________. Credit into _________________. Record source document.

D ISHONORED C HECK Dishonored check is a check that a bank _______________________ to pay. May dishonor for a number of reasons: Check appears ___________________ Signatures do not match ___________ written in figures and words do not match Check is _______________________ Person who wrote the check has stopped payment Person who wrote the check has insufficient _____________ Recorded on the check stub as: “Dis. Check” and in Cash credit put the amount of the check + most banks will charge a ______________ for handling dishonored checks.

J OURNALIZING D ISHONORED C HECK A memorandum is prepared because our company did not write the check. 1. Write the date 2. _______________________ - Learn N Play 3. Doc. Ref. = Memo… 4. General Debit 5. Cash ____________________

J OURNALIZE E LECTRONIC F UNDS T RANSFER Electronic funds transfer: a computerized cash payments system that uses electronic impulse to transfer funds. When using EFT a _______________________ should be set up with the bank. (used to pay vendors) 1. Date 2. Accts. Pay. – Kelson Company 3. Cash _________________ 4. Document Ref. is a memorandum Cash payment made by EFT is recorded on check stub as “Other”

J OURNALIZE D EBIT CARD TRANSACTION Debit card: a bank card that makes _______________________ deductions from checking account. (Unlike credit card) 1. Date 2. Account Title “Supplies” 3. Doc. No. 4. General ______________________ 5. Cash ________________________

E STABLISHING A P ETTY CASH FUND ______________________: an amount of cash kept on hand and used for making small payments. Petty cash = Asset with a Normal __________ balance 1. Date 2. Account Title: Petty Cash 3. Doc. No. 4. General __________________ 5. Cash _____________________

M AKING P AYMENTS FROM PETTY CASH A petty cash ______________ is a form showing proof of a petty cash payment. Petty cash slip shows the following information: 1. Petty cash slip _____________ 2. Date of petty cash payment 3. To whom paid 4. Reason for payment 5. Amount paid 6. Account in which amount is to be recorded 7. Signature of person approving payment

R EPLENISHING P ETTY C ASH Eventually the petty cash fund must be replenished & payments recorded Before payment made a proof of the fund must be completed. The last line must show the same total as the _____________________ balance. Journalizing: Date Account Titles & General ___________ Cash __________________ Doc. No. = Check ….