CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 5-3 Dishonored Checks and Electronic Banking

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 5-3 Define the following terms: Dishonored check Electronic funds transfer Debit card Petty cash Petty cash slip page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 5-3 Dishonored Checks Dishonored check – check that a bank refuses to pay Check appears to be altered Signature of the person who signed the check does not match the one on the signature card Amounts written in figures and words do not agree Check is postdated Person who wrote the check has stopped payment Account of the person who wrote the check has insufficient funds page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 5-3 Dishonored Checks Writing a check on insufficient funds is illegal in most states Altering or forging a check is illegal in all states page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 5-3 Dishonored Checks If the value of a dishonored check cannot be recovered the amount becomes an expense to the business Most banks charge a fee to the depositor for attempting to deposit a dishonored check Most business charge a fee to the customer to cover the bank fee; they also try to collect the amount on the check The dishonored check must be recorded in the check register and the journal page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 5-3 RECORDING A DISHONORED CHECK ON A CHECK STUB 1.Write Dishonored check $ on the line under the heading “Other.” page Write the total of the dishonored check in the amount column. 3.Calculate and record the new subtotal on the Subtotal line.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 5-3 JOURNALIZING A DISHONORED CHECK page November 29. Received notice from the bank of a dishonored check from Campus Internet Café, $70.00, plus $35.00 fee; total, $ Memorandum No Write the title of the account debited. Write the debit amount. 3.Write the title of the account credited. Write the amount credited. 4. Write the source document number in the Doc. No. column Write the date.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 5-3 ELECTRONIC FUNDS TRANSFERS Electronic funds transfer – (EFT) computerized cash payments system that uses electronic impulses to transfer funds Setup with bank using account numbers Common with vendors A cash payment made by EFT is recorded on the check stub as “Other” to keep the checkbook in balance page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 5-3 JOURNALIZING AN ELECTRONIC FUNDS TRANSFER page 131 September 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No Write the title of the account debited. Record the amount debited. 3.Write the title of the account credited. Record the amount credited. 4. Write the source document number in the Doc. No. column Write the date.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 5-3 DEBIT CARD TRANSACTIONS Debit card – bank card that automatically deducts the amount of the purchase from the checking account of the cardholder Eliminates need of writing checks A cash payment made by debit card is recorded on the check stub as “Other” to keep the checkbook in balance page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 5-3 JOURNALIZING A DEBIT CARD TRANSACTION page 132 September 5. Purchased supplies, $24.00, using debit card. Memorandum No Write the title of the account debited. Record the amount debited. 3.Write the title of the account credited. Record the amount credited. 4.Write the source document number in the Doc. No. column Write the date.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 5-3 PETTY CASH Petty cash – amount of cash kept on hand and used for making small payments Writing a check is not always time or cost effective Differs from business to business Petty cash account = Asset Normal debit balance page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON Write the date. ESTABLISHING A PETTY CASH FUND page 134 August 19. Paid cash to establish a petty cash fund, $ Check No Write the title of the account debited. Record the amount debited. 3.Write the title of the account credited. Record the amount credited. 4.Write the source document number in the Doc. No. column

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 5-3 MAKING PAYMENTS WITH PETTY CASH Petty cash slip – form showing proof of a petty cash payment Number Date To whom paid Reason Amount Account Signature Petty cash slips are kept in the petty cash box until the fund is replenished page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 5-4 MAKING PAYMENTS FROM A PETTY CASH FUND WITH A PETTY CASH SLIP page 135

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 5-3 MAKING PAYMENTS WITH PETTY CASH NO entries are made in the journal for the individual petty cash payments Petty cash is journalized when the petty cash account is replenished page 133

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON Write the date. REPLENISHING PETTY CASH page August 31. Paid cash to replenish the petty cash fund, $30.00: miscellaneous expense, $20.00; advertising, $ Check No Write the source document number in the Doc. No. column. 3.Write the title of the account credited. Record the credit amount. 2.Write the title of the first account debited. Write the debit amount. Write the title of the second account. Record the debit amount. 2 3