2. Accounting Chapter 5 1

3. CASH TRANSACTIONS Money = cash in accounting Businesses have large volumes of cash transactions both paid out and received Large payments made/received by checks Small payments made/received by cash Recording errors occur with large volumes of transactions Control systems needed to manage/track money, reduce errors Accounting records – ledgers and journals Checking Account Monthly bank statements

4. LESSON 5-1 Checking Accounts

5. CHECKING ACCOUNT CONTROL SYSTEM Checking account: a bank account from which payments can be ordered by a depositor Check: a business form ordering a bank to pay cash from a bank account Deposit slip: prepared each time cash or checks are placed in a bank account All deposits are entered on the next unused check stub

6. RECEIVING PROCESS You receive an investment from owner for $5000 Step 1: You issue a receipt to the owner You keep the stub (tear along perforation) Receipt given to Kim receipt

7. 6 Step 2: Enter deposit on the next unused check stub Step 3: Calculate a new Subtotal THE PROCESS

8. Step 4: Journalize the transaction in the journal Step 5: Post it to the ledger of accounts THE PROCESS

9. Step 6: Take money (checks & cash) to the bank At the Bank: Complete a Deposit slip: prepared each time cash or checks are placed in a bank account Endorse (sign) the back of the checks being cashed Bank issues a receipt for deposit Receipt not entered in journal (done step 5) THE PROCESS

10. Deposit Slips, Completing Check Stubs, Endorsements and Completing a Check, Recording a Voided Check STEP 7

11. PARTS OF A CHECK Check Number ABA Number Maker’s Name and Address Date PayeeNumeric Amount Written Amount Signature Routing Numbers Memo Account Number

12. MAKE DEPOSITS Deposit slip used to deposit or withdraw cash from account - Found in back of checkbook Enter total cash, individual checks and sum for subtotal Checks being cashed must be “endorsed” TechKnow Consulting Phone: 701-746-5555 4567 West 17 th Ave Grand Forks, ND 58201 Date: 20 Sign here for less cash in Teller’s presence Cash Checks Subtotal Less Cash Received Net Deposit Dollars Cents

13. MAKE DEPOSITS TechKnow Consulting Phone: 701-746-5555 4567 West 17 th Ave Grand Forks, ND 58201 Date: 20 Sign here for less cash in Teller’s presence Cash Checks Subtotal Less Cash Received Net Deposit Dollars Cents Went to the bank on October 1, 2010. Deposited $400.00 check from ABA 24-174 $850.00 check from ABA 12-510 $1772.50 in cash (TOTAL = 3022.50) 123003175 43’’  452119’’ 

14. RECORD DEPOSIT ON CHECK STUB TechKnow Consulting Phone: 701-746-5555 4567 West 17 th Ave Grand Forks, ND 58201 NO. 2 24-317 1230 Pay to The Order of $ Dollars Memo 123003175 43’’  452119’’  NO. 2$ Date 20 To For BAL BRO’T FOR’D ………… AMT DEPOSITIED.. SUBTOTAL ………………… OTHER SUBTOTAL…………………. AMT. THIS CHECK………….. BAL. CAR’D FOR’D………… Record Oct 1 deposit of $3022.50 4600 00

15. ENDORSEMENT : Endorsement: A signature or stamp on the back of a check transferring ownership – cashing a check Three types of endorsements: Blank endorsement - only of the endorser’s signature Special endorsement - indicating a new owner of the check Transfer check from you to someone else to cash Restrictive endorsement - restricting further transfer of a check’s ownership Limits use of check Ex: for deposit only

16. ENDORSEMENT : Blank endorsement: If lost with a blank endorsement, anyone can cash it Only done while standing at the bank ready to deposit Contains just a signature Special Endorsement Transfer to new owner - known as endorsement in full Ex: Pay to the order of John Smith, Kim Parker. (check written on front to Kim, Kim signs it over to John) Only the person named in the special endorsement can cash it (only John Smith) Restrictive endorsement Can only be used for what is stated on the back of the check EX: For deposit only to the account of TechKnow Consulting

17. ENDORSEMENTS Kim signs this check over to Eleanor Johnson Blank Endorsement Restrictive Endorsement Special Endorsement Kim wants this for deposit only into TechKnow Consultings Account.

18. WRITING CHECKS

19. RECORD DEPOSIT ON CHECK STUB TechKnow Consulting Phone: 701-746-5555 4567 West 17 th Ave Grand Forks, ND 58201 NO. 1 24-317 1230 Pay to The Order of $ Dollars Memo 123003175 43’’  452119’’  NO. 1$ Date 20 To For BAL BRO’T FOR’D ………… AMT DEPOSITIED.. SUBTOTAL ………………… OTHER SUBTOTAL…………………. AMT. THIS CHECK………….. BAL. CAR’D FOR’D………… Aug. 3, wrote Check NO 1 to Port City Supply Company for $275.00 for supplies Complete check stub first for your records 00 00 5000 00

20. RECORD DEPOSIT ON CHECK STUB TechKnow Consulting Phone: 701-746-5555 4567 West 17 th Ave Grand Forks, ND 58201 NO. 1 24-317 1230 Pay to The Order of $ Dollars Memo 123003175 43’’  452119’’  NO. 1$ Date 20 To For BAL BRO’T FOR’D ………… AMT DEPOSITIED.. SUBTOTAL ………………… OTHER SUBTOTAL…………………. AMT. THIS CHECK………….. BAL. CAR’D FOR’D………… Aug. 3, wrote Check NO 1 to Port City Supply Company for $275.00 for supplies. Complete check stub for your records Complete Check 00 00 5000 00 275 00 4725 00 275.00 August 3 10 Port City Supply Company Supplies 8 1 10

21. TechKnow Consulting Phone: 701-746-5555 4567 West 17 th Ave Grand Forks, ND 58201 NO. 1 24-317 1230 Pay to The Order of $ Dollars Memo 123003175 43’’  452119’’  NO. 1$ Date 20 To For BAL BRO’T FOR’D ………… AMT DEPOSITIED.. SUBTOTAL ………………… OTHER SUBTOTAL…………………. AMT. THIS CHECK………….. BAL. CAR’D FOR’D………… 00 00 5000 00 275 00 4725 00 275.00 August 3 10 Port City Supply Company Supplies 8 1 10 Checks written in error/mistake must be tracked Checks are voided and journalized Void is written across both the check and the check stub Check number entered as a transaction in the Journal VOIDED CHECKS Void

22. 1.Record the date. 2.Enter the word VOID in the Account Title column 3.Enter the check number for Doc NO. 4.Place a check mark in the Post. Ref. column 5.Place a dash in the Cash Credit column RECORDING A VOIDED CHECK

23. Checking Account Facts Postdated check: a check with a future date on it. Most banks will not accept postdated checks Most checks are only good for 6 months Checking Account Control Systems Assist with ethical behaviors of employees Code of Conduct: a statement that guides the ethical behavior of a company and its employees

24. TERMS REVIEW code of conduct checking account endorsement blank endorsement special endorsement restrictive endorsement postdated check