1. LESSON 5-1 Checking Accounts
4/21/2017
LESSON 5-1
Checking Accounts

2. New Vocabulary Checking Account Endorsement
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
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3. Restrictive Endorsement
Three Types of Endorsements
Blank Endorsement
An endorsement consisting only of the endorser’s signature
Special Endorsement
An endorsement indicating a new owner of a check
Restrictive Endorsement
An endorsement restricting further transfer of a check’s ownership
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4. Examples Blank Endorsement Special Endorsement Restrictive Endorsement
page 127
Blank Endorsement
Special Endorsement
Restrictive Endorsement
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5. Completed Check Stub and Check
A check stub is a record of each check written for a cash payment transaction. Concept: Objective Evidence
Always prepare the stub before you write the check
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6. COMPLETED CHECK STUB 1. Write the amount of the check. 1 2 3
page 128 2 3
2. Write the date of the check. 4
3. Write to whom the check is to be paid.
4. Record the purpose of the check.
5. Write the amount of the check. 5 6
6. Calculate the new checking account balance.
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7. COMPLETED CHECK 7 8 9 10 11 12 7. Write the date.
page 128 7 8 9 10 11 12
7. Write the date.
10. Write the amount in words.
8. Write to whom the check is to be paid.
11. Write the purpose of the check.
9. Write the amount in figures.
12. Sign the check.
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8. Recording a Voided Check
If an error is made, void should be written on the check.
Do not destroy the check.
Make a journal entry so the Doc. Number column records all checks.
Page 129
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9. RECORDING A VOIDED CHECK
LESSON 5-1
RECORDING A VOIDED CHECK
4/21/2017
page 129
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10. DEPOSITING CASH
page 126
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11. DEPOSIT RECORDED ON A CHECK STUB
page 119
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12. Audit Your Understanding
List the three types of endorsements.
Blank
Restrictive
Special
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13. 5-1 Work Together
Workbook Page / Handout
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14. LESSON 5-1 Bank Reconciliation
4/21/2017
LESSON 5-2
Bank Reconciliation

15. 5-2 Bank Statement
A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.
When a statement is received, the depositor must check it for accuracy.
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16. BANK STATEMENT
page 124
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17. Bank Statement (cont.)
A bank’s records and a depositors records may differ and both may still be correct.
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18. There are four reasons why this may happen.
A service charge may not have been recorded by the depositor.
Outstanding deposits recorded by the depositor may not be on the bank statement.
Outstanding checks may be recorded by the depositor, but not by the bank yet.
A depositor may have made math or recording errors.
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19. When a statement is received...
Compare canceled checks with check stubs and place a check mark on each stub for canceled checks.
Follow the same procedure for deposits.
Page 124
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20. BANK STATEMENT RECONCILIATION
page 125
1. Date 1
2. Check Stub Balance 2 5
3. Service Charge
4. Adjusted Check Stub Balance 6 3 7
5. Bank Statement Balance
6. Outstanding Deposits 8 4 9
7. Subtotal
8. Outstanding Checks 10
9. Adjusted Bank Balance
10. Compare Adjusted Balances
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21. After you complete the reconciliation...
Remember, the bank has already taken the amount of the service charge out of your account.
Write the service charge on a check stub and deduct it from your account balance.
Pg. 126
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22. After you complete the reconciliation...
The service charge must also be recorded in the journal.
Pg. 127
No check is written for the service charge.
Use a memo as your source document.
Miscellaneous expense is debited
Cash is credited
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23. RECORDING A BANK SERVICE CHARGE ON A CHECK STUB
page 126
1. Write Service Charge $8.00 on the check stub under the heading “Other.”
2. Write the amount of the service charge in the amount column. 1 2 3
3. Calculate and record the new subtotal on the Subtotal line.
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24. JOURNALIZING A BANK SERVICE CHARGE
page 127
August 31. Received bank statement showing August bank service charge, $8.00. Memorandum No. 3.
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25. Audit Your Understanding
List four reasons why a depositor’s records and a bank’s records may differ.
A service charge may not have been recorded by the depositor.
Outstanding deposits recorded by the depositor may not be on the bank statement.
Outstanding checks may be recorded by the depositor, but not by the bank yet.
The depositor may have made a math or recording error.
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26. Audit Your Understanding
If a check mark is placed on the check stub of each canceled check, what does a check stub with no check mark indicate?
It is an outstanding check.
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27. 5-2 Work Together
Workbook Page 95
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28. LESSON 5-1 Dishonored Checks and Electronic Banking
4/21/2017
LESSON 5-3
Dishonored Checks
and Electronic Banking

29. Dishonored Check A check that a bank refuses to pay.
Check appears to be altered.
Signature does not match the signature card at the bank.
Amounts written in words and figures do not agree.
Postdated check
Person who wrote check ordered stop payment.
Insufficient funds
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30. RECORDING A DISHONORED CHECK ON A CHECK STUB
page 129
1. Write Dishonored check $ on the line under the heading “Other.”
2. Write the total of the dishonored check in the amount column. 1 2 3
3. Calculate and record the new subtotal on the Subtotal line.
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31. JOURNALIZING A DISHONORED CHECK
page 130
November 29. Received notice from the bank of a dishonored check from Campus Internet Café, $70.00, plus $35.00 fee; total, $ Memorandum No. 55.
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32. Electronic Funds Transfer
A computerized cash payments system that uses electronic impulses to transfer funds
AKA: EFT
The business does not have to write a check.
Source document for journal entry is a memo.
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33. JOURNALIZING AN ELECTRONIC FUNDS TRANSFER
page 131
September 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No. 10.
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34. Debit Card
A bank card that, when making purchases, automatically deducts the amount of the purchase from the checking account of the cardholder.
Different from a credit card.
Purchase amount is automatically withdrawn from the checking account.
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35. Debit Card Purchases
When journalizing transactions involving debit cards, the source document is a memorandum.
Cash is credited.
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36. JOURNALIZING A DEBIT CARD TRANSACTION
page 132
September 5. Purchased supplies, $24.00, using debit card. Memorandum No. 12.
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37. Audit Your Understanding
List 6 Reasons why a bank may dishonor a check.
Altered checks
Signature does not match
Amounts do not match
Check is postdated
Stop payment issued
Insufficient funds
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38. Audit Your Understanding
What account is credited when EFT is used to pay cash on an account?
Cash
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39. Audit Your Understanding
What account is credited when a debit card is used to purchase supplies?
Cash
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40. 6-3 Work Together
Workbook page 97
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41. LESSON 5-1
4/21/2017
LESSON 5-4
Petty Cash 41

42. 5-4 Petty Cash Petty Cash = Asset Account Normal Debit Balance
An amount of cash kept on hand and used for making small payments.
The actual dollar amount in the account may differ from business to business.
Petty Cash = Asset Account
Normal Debit Balance
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43. ESTABLISHING A PETTY CASH FUND
page 134
August 17. Paid cash to establish a petty cash fund, $ Check No. 8.
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44. Petty Cash Slip Petty cash slip number Date To whom paid
Reason for payment
Amount paid
Account involved
Signature
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45. REPLENISHING PETTY CASH
page 136
August 31. Paid cash to replenish the petty cash fund, $30.00: miscellaneous expense, $20.00; advertising, $ Check No. 12.
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46. Audit Your Understanding:
Why do businesses use petty cash funds?
For making small cash payments
Why is Cash and not Petty Cash credited when a petty cash fund is replenished?
The check issued to replenish petty cash is a credit to Cash and does not affect Petty Cash.
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47. 5-4 Work Together
Workbook Page 99
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