2 Control Features: Use of a Bank Contributes to good internal control over cash.Minimizes the amount of currency on hand.Creates a double record of bank transactions.Bank reconciliation.
3 Control Features: Use of a Bank Illustration 7-7Bank StatementsDebit MemorandumBank service chargeNSF (not sufficient funds)Credit MemorandumCollect notes receivable.Interest earned.
4 Control Features: Use of a Bank Review QuestionThe control features of a bank account do not include:having bank auditors verify the correctness of the bank balance per books.minimizing the amount of cash that must be kept on hand.providing a double record of all bank transactions.safeguarding cash by using a bank as a depository.
5 Control Features: Use of a Bank Reconciling the Bank AccountReconcile balance per books and balance per bank to their adjusted (corrected) cash balances.Reconciling Items:Deposits in transit.Outstanding checks.Bank memoranda.Errors.Time LagsSO 5 Prepare a bank reconciliation.
6 Control Features: Use of a Bank Reconciliation ProceduresIllustration 7-8+ Deposit in Transit- Outstanding Checks+/- Bank Errors+ Notes collected by bank- NSF (bounced) checks- Check printing or other service charges+/- Book ErrorsCORRECT BALANCECORRECT BALANCESO 5 Prepare a bank reconciliation.
7 Control Features: Use of a Bank Advertising expenseSO 5 Prepare a bank reconciliation.
8 Control Features: Use of a Bank Illustration: Prepare a bank reconciliation at April 30.Cash balance per bank statement $15,907.45Add: Deposit in transit 2,201.40Less: Outstanding checks (5,904.00)Adjusted cash balance per bank $12,204.85Cash balance per books $11,589.45Add: Collection of notes receivable 1,035.00Error in check NoLess: NSF check (425.60)Bank service charge (30.00)Adjusted cash balance per books $12,204.85SO 5 Prepare a bank reconciliation.
9 Control Features: Use of a Bank Illustration: Journalize the adjusting entries at April 30 on the books of Laird Company.Dr.Cr.Apr. 30CashBank fee expense 45.00Accounts receivableNotes receivable 1,000.00Interest revenue 50.00Advertising expense 36.00SO 5 Prepare a bank reconciliation.
10 Control Features: Use of a Bank Review QuestionThe reconciling item in a bank reconciliation that will result in an adjusting entry by the depositor is:a. outstanding checks.b. deposit in transit.c. a bank error.d. bank service charges.SO 5 Prepare a bank reconciliation.