1. Chapter 11 Cash Control and Banking

2. Cash Lifeblood of any business Involved in many transactions Easy target for theft and fraud

3. Cash Control Procedures Separation of duties Immediate listing of cash receipts –Prenumbered sales slips Daily cash proof Daily deposit of cash Payment by cheque Petty cash procedures Periodic audit Monthly bank reconciliations

4. Cash Short or Over Cash may not “balance” at the end of the day If “short” Dr Cash490 Dr Cash Short or Over 10 CrSales500 If “long” or extra cash Dr Cash510 Cr Sales500 Cr Cash Short or Over 10 * Where Cash Short or Over is an expense account

5. Petty Cash Many small transactions make cheques unworkable Establish and maintain an in office “cash box” to cover small expenditures Establish the fund: Dr Petty Cash200 Cr Cash200

6. Petty Cash Collect receipts or give out vouchers to be completed as proof Replenish the fund: DrMiscellaneous Expense35 DrGas Expense90 Dr Postage45 DrOffice Expenses20 Cr Cash190 Replenish the petty cash fund

7. Bank Reconciliation Prepared monthly to determine the true amount of cash available Compare bank statement with company cash account in ledger Deduct from Bank balance all outstanding cheques Add to Bank balance any late night deposit on statement date Adjust our cash account for service charges and interest received or charged

8. Bank Reconciliation

9. Necessary journal entries: Dr Cash5 Cr Interest Revenue5 Dr Bank Charges60 Cr Cash60