1. © 2014 Cengage Learning. All Rights Reserved. Do Now ●Independent Reading: Read text page 121, summarizing each individual paragraph ●Then bring summaries together to summarize the whole piece in two sentences ●Then answer two questions following reading ●Be prepared to discuss! SLIDE 1 Lesson 5-1 LO1

2. © 2014 Cengage Learning. All Rights Reserved. Think, Pair, Share: ●Have you ever received a check? ●What did you do with it? ●What other experiences have you had with a bank? SLIDE 2

3. © 2014 Cengage Learning. All Rights Reserved. How Businesses Use Cash ●Most businesses make major payments by check ●Petty Cash - Small cash payments for items like postage and some supplies are made from cash fund kept at place of business SLIDE 3 Lesson 5-1 LO1

4. © 2014 Cengage Learning. All Rights Reserved. How Businesses Use Cash ●Issues related to cash due to frequency of transaction ●Chance of recording errors ●Ease of transfer without any question about ownership ●Loss as cash is moved from one place to another SLIDE 4 Lesson 5-1 LO1

5. © 2014 Cengage Learning. All Rights Reserved. How Businesses Use Cash ●Safety measure: ●Keep cash in bank ●All cash receipts placed in back for business to have written support and evidence to support accounting records ●Compare record of checks written with bank’s record of checks paid SLIDE 5 Lesson 5-1 LO1

6. © 2014 Cengage Learning. All Rights Reserved. Checking Account ●A business form ordering a bank to pay cash from a bank account is known as a check. ●A bank account from which payments can be ordered by a depositor is called a checking account. ●Opening a checking account ●Signature card – signature of check signers ●Deposit slip SLIDE 6 LO1 Lesson 5-1

7. © 2014 Cengage Learning. All Rights Reserved. What Comes with a Checking Account ●Checkbook ●Checks ●Check register SLIDE 7

8. © 2014 Cengage Learning. All Rights Reserved. Deposit Slips ●Checks listed on deposit slip according to bank routing number on each check ●Identifies bank on which check is written ●Banks give depositors receipts when deposit is made ●Can include copy of deposit slip ●Printed verification printed along top page of deposit slip ●Initials are those of bank employee who accepted deposit ●Cash receipts journalized at time cash is received ●Later, cash receipts are deposited in checking account, so no journal entry is needed for deposits SLIDE 8 LO2 Lesson 5-1

9. © 2014 Cengage Learning. All Rights Reserved. Depositing Cash ●A bank form which lists the checks, currency, and coins an account holder is adding to the bank account is called a deposit slip. ●Bank customer prepares this each time cash or checks are deposited in bank account ●May differ slightly from one bank to another SLIDE 9 LO1 Lesson 5-1

10. © 2014 Cengage Learning. All Rights Reserved. Deposit Recorded on a Check Stub SLIDE 10 LO1 Lesson 5-1 1. 1.Write balance brought forward on the check stub. 2. 2.Write the date of the deposit on the stub. 3. 3.Write the amount of the deposit on the stub. 1 1 4. 4.Calculate the subtotal. 2 2 3 3 4 4

11. © 2014 Cengage Learning. All Rights Reserved. Checking Accounts Today ●Managing a checking account ●https://www.youtube.com/watch?v=IaAJNFyf9fwhttps://www.youtube.com/watch?v=IaAJNFyf9fw ●Why do we use checking accounts? What are the benefits? SLIDE 11

12. © 2014 Cengage Learning. All Rights Reserved. Endorsement ●A signature or stamp on the back of a check transferring ownership is called an endorsement. ●Three types of commonly used endorsements ●Blank endorsement ●Special endorsement ●Restrictive endorsement SLIDE 12 LO2 Lesson 5-1

13. © 2014 Cengage Learning. All Rights Reserved. Blank Endorsement ●An endorsement consisting only of the endorser’s signature is called a blank endorsement. ●Indicates subsequent owner is whoever has check ●Can be cashed by anyone in possession SLIDE 13 LO2 Lesson 5-1

14. © 2014 Cengage Learning. All Rights Reserved. Special Endorsement ●An endorsement indicating a new owner of a check is called a special endorsement. ●A special endorsement is sometimes known as an endorsement in full. ●“Pay to order of” ●Original owner signs underneath SLIDE 14 LO2 Lesson 5-1

15. © 2014 Cengage Learning. All Rights Reserved. Restrictive Endorsement ●An endorsement restricting further transfer of a check’s ownership is called a restrictive endorsement. ●Many businesses stamp check with restrictive endorsement to prevent others from cashing SLIDE 15 LO2 Lesson 5-1

16. © 2014 Cengage Learning. All Rights Reserved. Completed Check Stub and Check ●Consecutive numbers on checks provide easy way of identifying each check ●Also ensures none are lost or misplaced ●Check stub is business’s record of each check written for cash payment transaction ●PREPARED BEFORE CHECK IS WRITTEN SLIDE 16 LO3 Lesson 5-1

17. © 2014 Cengage Learning. All Rights Reserved. Completed Check Stub and Check SLIDE 17 LO3 Lesson 5-1 1. 1.Write the amount of the check on the stub. 4. 4. Record the purpose of the check on the stub. 2. 2.Write the date of the check on the stub. 3. 3.Write to whom the check is to be paid on the stub. 5. 5.Write the amount of the check on the stub. 5 5 4 4 2 2 1 1 3 3 6. 6.Calculate the new checking account balance and record the new balance. 6 6

18. © 2014 Cengage Learning. All Rights Reserved. Completed Check Stub and Check SLIDE 18 LO3 Lesson 5-1 7. 7.Write the date the check is issued. 10. 10.Write the amount in words. 8. 8.Write to whom the check is to be paid. 9. 9.Write the amount in figures. 11. 11.Write the purpose of the check. 11 10 8 8 7 7 9 9 12. 12.Sign the check. 12

19. © 2014 Cengage Learning. All Rights Reserved. Recording a Voided Check ●Banks usually refuse to accept altered checks, so new checks should be prepared if an error occurs ●All checks not used due to error should be retained for records ●Check that cannot be processed because maker has made it invalid is a voided check. ●VOID written in large letters across check stub and check SLIDE 19 LO3 Lesson 5-1

20. © 2014 Cengage Learning. All Rights Reserved. 1. 1.Record the date in the Date column. Recording a Voided Check SLIDE 20 LO3 Lesson 5-1 1 1 2 2 3 3 4 4 3. 3.Write the check number in the Doc. No. column. 2. 2.Write the word VOID in the Account Title column. 4. 4.Place a check mark in the Post. Ref. column. 5. 5.Place a dash in both the Debit and Credit columns. 5 5

21. © 2014 Cengage Learning. All Rights Reserved. Lesson 5-1 Audit Your Understanding 1.List the three types of endorsements. SLIDE 21 ANSWER Blank endorsement Special endorsement Restrictive endorsement Lesson 5-1

22. © 2014 Cengage Learning. All Rights Reserved. Lesson 5-1 Audit Your Understanding 2.List the steps for preparing a check stub. SLIDE 22 ANSWER 1.Write the amount of the check after the dollar sign at the top of the stub. 2.Write the date of the check on the Date line. 3.Write to whom the check is to be paid on the To line. 4.Record the purpose of the check on the For line. 5.Write the amount of the check after the words Amt. This Check. 6.Calculate the new checking account balance and record it in the amount column on the last line of the stub. Lesson 5-1

23. © 2014 Cengage Learning. All Rights Reserved. Lesson 5-1 Audit Your Understanding 3.List the steps for preparing a check. SLIDE 23 ANSWER 1. Write the date. 2. Write to whom the check is to be paid following the words Pay to the order of. 3. Write the amount in figures following the dollar sign. 4. Write the amount in words and draw a line through the unused space up to the word Dollars. 5. Write the purpose of the check on the line labeled For. 6. Sign the check. Lesson 5-1

24. © 2014 Cengage Learning. All Rights Reserved. 3 Corners: Which Type of Endorsement and Purpose SLIDE 24

25. © 2014 Cengage Learning. All Rights Reserved. SLIDE 25 3 Corners: Which Type of Endorsement and Purpose

26. © 2014 Cengage Learning. All Rights Reserved. SLIDE 26 3 Corners: Which Type of Endorsement and Purpose