Cash Control Systems

Accounting I
Chapter 5
Learning objectives
1. Record a deposit on a check stub
2. Endorse checks
3. Prepare a check stub and a check
4. Complete a bank statement reconciliation
5. Record and journalize bank service charge
6. Journalize an electronic funds transfer
7. Journalize a debit card transaction
8. Establish petty cash fund
9. Replenish petty cash fund
Checking Accounts / key terms
 Checking account-bank account from which
payments can be ordered by a depositor
 Deposit Slip-a bank form which lists the
checks, currency, and coins an account holder
is adding to a bank account
 Endorsement-signature or stamp on the back
of a check transferring ownership
◦ Blank endorsement-endorsement consisting of only
the endorser’s signature
◦ Special endorsement-endorsement indicating a new
owner of a check
 ◦ Restrictive endorsement-endorsement restricting
further transfer of a check’s ownership
 Postdated check-check with a future date on
it
 Voided check – a check that cannot be

processed because the maker has made it

invalid.
Depositing Cash
 Deposit slip
◦ Checks are listed on deposit slips according to bank routing number on each
check
For Example:

The routing number is 22-1508

The printed verification is Jan 2,20, 20--- and is printed on the top left edge
Check Stub
 After the deposit is recorded on the check stub, a checkbook
subtotal is calculated. The balance brought forward on Check Stub
No. 1 is zero because the checking account has just been opened.
The  deposit is the first transaction for this newly opened checking
account. The previous balance, , plus the deposit, , equals the
subtotal, .
Preparing completed check and check
stub
Preparing check stub
1. Write the amount of the check
2. Write the date of the check
3. Write to whom the check is to be paid
4. Record the purpose of check
5. Write the amount of the check
Preparing check
 7. write the date
 8. write to whom the check is to be paid
 9. write the amount in figures
 10. write the amount in words
 11. write the purpose of the check
 12. sign the check
Endorsement
 There are 3 types of endorsements:
◦ Blank endorsements indicates that the subsequent
owner is whoever has the check
Special endorsement
 Endorsements in full
 When you are signing your check over to

someone else.
Restrictive Endorsement
 It restrict further transfer of check’s
ownership
Recording a voided check
 Invalid check for several reasons has to be
voided in the general journal.
1. Record the date
2. Write the word void
3. Write the check number
4. Place a check mark in the post ref. column
5. Place a dash in both the debit and credit columns
Instructions
 Do the OWP 5:1 end of lesson review
◦ Work together and on your own
Bank Reconciliation
 Bank statement-report of deposits,
withdrawals, and bank balances sent to a
depositor by a bank
 Reconciliation-getting the check stub balance

to equal the bank statement balance

 Canceled Check- a check which has been

paid by the bank

Bank Statement
Bank Statement Reconciliation
 This the act of verifying that the information
is correct between the bank statement and
checkbook.
Steps to reconciling a bank statement
1. Write the date
2. In the left amount column, list the balance brought forward
on Check Stub No 14, the next unused check stub
3. In the space for bank charges, list any charges
4. Write the adjusted check stab balance in the space provided
at the bottom of the left amount column
5. Write the ending balance shown on the bank statement.
6. Write the date
7. Add the ending bank statement balance to the total
outstanding deposits
8. List the outstanding checks and their amounts
9. Calculate the adjusted bank balance and write it down
10. Compare adjusted balances
Recording a bank service charge on a
check stub
1. Write service charge
2. Write the amount of service charge
3. Calculate and record the new subtotal
Journalizing a bank service charge
1. Write the date
2. Debit misc. expense
3. Credit cash
4. Source document
Assignment
 5-2 work together and on your own
Review
 Without looking at your notes or book answer
the following questions:
 1. Describe a restrictive endorsement.
 2. Describe a blank endorsement.
 3. Describe a special endorsement.
 4. What does reconciling a bank account do?
 5. What is the journal entry for recording

bank service charges (debit and credit)?

Dishonored Checks and Electronic
Banking
 Dishonored check-check that a bank refuses
to pay
 Electronic funds transfer (EFT)-computerized

cash payments system that transfers funds

without currency or paper documents
 Debit card-bank card that automatically

deducts the amount of a purchase from the

checking account of the cardholder
Recording a Dishonored check on a
check stub
1. Write DISHONORED CHECK under the
heading
2. Write the total of the dishonored check
3. Calculate and record the new subtotal
Journalizing a dishonored check
1. Write the date
2. Debit the proper account
3. Credit the proper account
4. Right in source document
Journalizing EFT
1. Write date
2. Debit – is the account we are paying to
payable acct
3. Credit cash
4. Document source document
Journalizing Debit Card Transaction
1. Write Date
2. Debit the proper account
3. Credit the proper account
4. Document Source document
assignment
 Animated activity video 1, 2
 Animated activity quiz 1 and 2
 OWP 5-3 end of lesson activity

◦ Work together and

◦ On your own
Petty Cash
 Petty cash-amount of cash kept on hand and
used for making small payments
 Petty cash slip-form showing proof of a petty

cash payment
◦ Petty Cash journals the same as Cash
Establishing a Petty Cash Fund
 We use petty cash to make small payments
Petty Cash Slip/ Report
Replenishing Petty Cash
Replenishing Petty Cash
1. Write the date
2. Debit account titles
3. Write the account cash short or cash over
4. Credit
5. Source document
Assignment
 Animated Activity Video
 Animated Activity Quiz
 OWP 5-4 end of lesson Review

◦ Work together and

◦ On your own