1. LESSON 5-1 Checking Accounts
4/23/2017
CHAPTER 5
Checking Accounts
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2. 5-1 CHECKING ACCOUNTS
In accounting money is usually referred to as cash.
-Most businesses make cash payments by check.
-Small cash payments may be made from petty cash.
-Can make errors when dealing with cash.
-Cash carries no “ownership” and can be lost easily.
For safety reasons most of a company’s cash is kept in the bank in a checking account
A checking account is an account from which payments can be ordered by a depositor.

3. DEPOSIT RECORDED ON A CHECK STUB
page 119
To put money into a bank you use a deposit slip.
-Cash receipts are journalized at the time cash is received.
-Later, the cash is deposited - will not journalize entry for deposit.
-Make sure to record the deposit on the check stub.
Deposit Slip

4. ENDORSEMENTS
page 120
Endorsing a check - a signature/stamp on the back of a check transferring ownership.
-Needs to be signed exactly as written
-Ownership can be transferred several times.
Blank Endorsement
Endorser’s Signature
Special Endorsement
Pay to the order of (new owner)
Restrictive Endorsement
For Deposit Only to Acct #

5. COMPLETED CHECK STUB 1 2 3 4 5 6 1. Write the amount of the check.
page 121 1
1. Write the amount of the check. 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.
6. Calculate the new checking account balance. 5 6

6. COMPLETED CHECK
page 121
To take money out of the bank you write a check - a form ordering the bank to pay cash from your account. 7 8 9 10 11 12
10. Write the amount in words.
7. Write the date.
11. Write the purpose of the check.
8. Write to whom the check is to be paid.
12. Sign the check.
9. Write the amount in figures.

7. RECORDING A VOIDED CHECK
LESSON 5-1
4/23/2017
RECORDING A VOIDED CHECK
page 122 2 4 1 3 5
1. Record the date.
2. Write the word VOID in the Account Title column
3. Write the check number.
4. Place a check mark in the Post. Ref. column.
5. Place a dash in the Cash Credit column.
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8. LESSON 5-1
4/23/2017
5-2 BANK RECONCILIATION
Reconciling is verifying that the information on the bank
statement = your checkbook balance.
-Cancelled Checks: Checks that have been processed by
the bank. (deducted from you account)
-Outstanding Checks: Checks you’ve written that have not been processed.
-Outstanding Deposits: Deposits you‘ve made that the
bank has not processed.
-Bank Service Charge - $ a bank charges for account each
month. (deducted electronically from your account)
ALWAYS Reconcile - Banks DO make mistakes!
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9. BANK STATEMENT
page 124
Bank Statement - a report with deposits, withdrawals, and a bank
balances sent to the depositor.

10. BANK STATEMENT RECONCILIATION
LESSON 5-1
4/23/2017
BANK STATEMENT RECONCILIATION
page 125
1. Date 1
2. Check Stub Balance 2 5
3. Service Charge
4. Adjusted Check Stub Balance 6 3
5. Bank Statement Balance 7
6. Outstanding Deposits 8 4 9
7. Subtotal
8. Outstanding Checks 10
9. Adjusted Bank Balance
10. Compare Adjusted Balances
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11. 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.
3. Calculate and record the new subtotal on the Subtotal line. 1 2 3

12. JOURNALIZING A BANK SERVICE CHARGE
page 127
August 31. Received bank statement showing August bank service charge, $8.00. Memorandum No. 3. 4 1 2 3
1. Date. Write the date.
2. Debit. Write the title of the account to be debited. Record the amount debited.
3. Credit. Record the amount credited.
4. Source document. Write the source document number.

13. 5-3 DISHONORED CHECKS AND ELECTRONIC BANKING
LESSON 5-1
4/23/2017
5-3 DISHONORED CHECKS AND ELECTRONIC BANKING
Dishonored Check - A check that the bank refuses to pay.
NSF or other reasons pg. 129
Electronic Funds Transfer (EFT) - Computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.
Usually used for vendors
Memos are the source document (not a check)
Debit Card - A bank card that automatically deducts the amount
of a purchase from the checking acct of the card holder.
Used to make purchases
Biggest mistake is forgetting to record on check stub
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14. 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.

15. 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. 1 4 2 3
1. Date. Write the date.
2. Debit. Write the title of the account to be debited.
3. Credit. Write the amount credited.
4. Source document. Write the source document number.

16. JOURNALIZING AN ELECTRONIC FUNDS TRANSFER
page 131
September 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No. 10. 4 2 1 3
1. Date. Write the date.
2. Debit. Write the title of the account to be debited. Record the amount debited.
3. Credit. Record the amount credited.
4. Source document. Write the source document number.

17. JOURNALIZING A DEBIT CARD TRANSACTION
page 132
September 5. Purchased supplies, $24.00, using debit card. Memorandum No. 12. 4 2 1 3
1. Date. Write the date.
2. Debit. Write the title of the account to be debited. Record the amount debited.
3. Credit. Record the amount credited.
4. Source document. Write the source document number.

18. LESSON 5-1
4/23/2017
5-4 PETTY CASH
Petty Cash: Cash kept on hand that is used for making small
payments.
-Petty cash has a normal debit balance (asset)
-The only time you will use the account name
“Petty Cash” is when you establish the fund.
Petty Cash Slip - A form used showing the purpose of the
payment (proof). They are kept in the box until it is replenished.
-Will write a check to replenish petty cash and journalize
to the accounts where the money was spent.
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19. ESTABLISHING A PETTY CASH FUND
page 134
August 19. Paid cash to establish a petty cash fund, $ Check No. 8. 4 1 2 3
1. Date. Write the date.
2. Debit. Write the title of the account to be debited. Record the amount debited.
3. Credit. Record the amount credited.
4. Source document. Write the source document number.

20. MAKING PAYMENTS FROM A PETTY CASH FUND WITH A PETTY CASH SLIP
page 135

21. 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. 4 1 2 3
1. Date. Write the date.
2. Debit. Write the title of the first account to be debited. Write the amount to be debited. Write the title of the second account to be debited. Record the amount to be debited.
3. Credit. Record the amount credited.
4. Source document. Write the source document number.