Chapter 6 Cash Control System

Vocabulary 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 endorser’s signature

Vocabulary Continued Special endorsement – An endorsement indicating a new owner of the check. Restrictive Endorsement – An endorsement restricting further transfer of a check’s ownership. Postdated Check – A check with a future date on it.

BLANK ENDORSEMENT, SPECIAL ENDORSEMENT, AND RESTRICTIVE ENDORSEMENT Lesson 6-1, page 127

DEPOSITING CASH Lesson 6-1, page 126

DEPOSIT RECORDED ON A CHECK STUB Lesson 6-1, page 126

COMPLETED CHECK STUB AND CHECK 1 2 7 3 4 8 9 10 11 12 5 6 Preparing check stubs Preparing checks 1. Write the amount of the check. 7. Write the date. 2. Write the date of the check. 8. Write to whom the check is to be paid. 3. Write to whom the check is to be paid. 9. Write the amount in figures. 4. Record purpose of the check. 10. Write the amount in words. 5. Write the amount of the check. 11. Write the purpose of the check. 6. Calculate the new account balance. 12. Sign the check. Lesson 6-1, page 128-129

RECORDING A VOIDED CHECK  4 1 2 3 5 1. Record the date. 2. Write the word VOID in the account title. 3. Write the check number. 4. Place a check mark in the Post. Ref. column. 5. Place a dash in the Cash Credit column. Lesson 6-1, page 129

6-1 Work together and on your own

BANK STATEMENT Lesson 6-2, page 131

Vocabulary Bank Statement – A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.

Differences between bank balance and bank statement balance occur A service charge may not have been recorded in the depositor’s business records. Outstanding deposits may be recorded in the depositor’s records but not a bank statement. Outstanding checks may be recorded in the depositor’s records but not on a bank statement. A depositor may have made math or recording errors.

BANK STATEMENT RECONCILIATION 1. Date 1 2. Check Stub Balance 2 5 3. Service Charge 3 6 4. Adjusted Check Stub Balance 7 8 5. Bank Statement Balance 6. Outstanding Deposits 9 4 10 7. Subtotal 8. Outstanding Checks 9. Adjusted Bank Balance Lesson 6-2, page 132 10. Compare Adjusted Balances

RECORDING A BANK SERVICE CHARGE ON A CHECK STUB 1. Write Service Charge. 2. Write the amount of the service charge. 3. Calculate and record the new subtotal. 2 1 3 Lesson 6-2, page 133

JOURNALIZING A BANK SERVICE CHARGE 1 2 4 3 1. Write the date. 2. Debit Miscellaneous Expense. 3. Credit Cash. 4. Write the source document number. Lesson 6-2, page 134

6-2 Work together and on your own

Vocabulary Dishonored Check – A check that a bank refuses to pay. Electronic Funds Transfer (EFT) – A computerized cash payments system that uses electronic funds transfer to pay vendors

RECORDING A DISHONORED CHECK ON A CHECK STUB 1. Write Dishonored Check $50.00. 2. Write the amount of the dishonored check. 3. Calculate and record the new subtotal. 2 1 3 Lesson 6-3, page 136

Reasons a Check may be Dishonored The check appears to be altered The signature of the person who signed the check does not match the one on the signature card at the bank. The amounts written in figures and in words do not agree. The check is postdated The person who wrote the check has stopped payment on the check. The account of the person who wrote the check has insufficient funds to pay the check.

JOURNALIZING A DISHONORED CHECK November 29. Received notice from the bank of a dishonored check from Learn N Play, $35.00, plus $15.00 fee; total, $50.00. Memorandum No. 55. 1. Which accounts are affected?Accounts Rec-Learn N Play & Cash Cash Accounts Rec.—Learn N Play Debit Normal Balance 2. How is each account classified? Accounts Rec-Learn N Play/ asset account.Cash/ account. 50.00  3. How is each classification changed? Assets are increased. Assets are decreased. Debit Normal Balance 50.00  4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 6-3, page 137

JOURNALIZING A DISHONORED CHECK 4 3 1 2 1. Write the date. 2. Debit Accounts Receivable—Learn N Play. 3. Credit Cash. 4. Write the source document number. Lesson 6-3, page 137

JOURNALIZING AN ELECTRONIC FUNDS TRANSFER 4 3 1 2 1. Write the date. 2. Debit Accounts Payable—Kelson Enterprises. 3. Credit Cash. 4. Write the source document number. Lesson 6-3, page 138

6-3 work together and on your own

Vocabulary Petty Cash – An amount of cash kept on hand and used for making small payments. Petty Cash Slip – A form showing proof of petty cash payment.

ESTABLISHING A PETTY CASH FUND August 17. Paid cash to establish a petty cash fund, $200.00. Check No. 8. 1. Which accounts are affected? Petty Cash & Cash Cash Petty Cash Debit Normal Balance 2. How is each account classified? Petty Cash/ asset account. Cash/asset account. 200.00  3. How is each classification changed? Assets are increased. Assets are decreased. Debit Normal Balance 200.00  4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 6-4, page 141

ESTABLISHING A PETTY CASH FUND 4 3 1 2 1. Write the date. 2. Debit Petty Cash. 3. Credit Cash. 4. Write the source document number. Lesson 6-4, page 141

MAKING PAYMENTS FROM A PETTY CASH FUND WITH A PETTY CASH SLIP Lesson 6-4, page 142

REPLENISHING PETTY CASH 4 3 2 1 1. Write the date. 2. Debit Miscellaneous Expense and Advertising Expense. 3. Credit Cash. 4. Write the source document number. Lesson 6-4, page 143