© 2014 cengage learning. all rights reserved. do now ●predict the process for cashing a check...
TRANSCRIPT
© 2014 Cengage Learning. All Rights Reserved.
Do Now
● Predict the process for cashing a check that the bank later determines to be dishonored
● Remember, you were given this check because you were owed this money
SLIDE 1
© 2014 Cengage Learning. All Rights Reserved.
Use of Video clip:
● Animated Activity & Quiz Via MindTap
SLIDE 2
© 2014 Cengage Learning. All Rights Reserved.
Recording a Dishonored Check on a Check Stub
● A check that a bank refuses to pay is called a dishonored check.
● A check dishonored by the bank because of insufficient funds in the account of the maker of the check is called a non-sufficient funds check.
● A non-sufficient funds check is also known as an NSF check.● May affect credit rating of person or business that issued the
check● Often, value can be recovered and becomes expense of
business that wrote check
SLIDE 3
LO6
Lesson 5-3
© 2014 Cengage Learning. All Rights Reserved.
Dishonored Checks
● Banks may dishonor checks for other reasons:1. Checks appears to be altered in some way2. Signature of person who signed check does not
match one on signature card at bank3. Amounts written in figures and words do not
agree4. Check post-dated5. Person who wrote check has stopped payment
on check
SLIDE 4
© 2014 Cengage Learning. All Rights Reserved.
Dishonored Checks
● Most banks charge fee for handling NSF checks that have previously been accepted for deposit● Expense of business receiving such a check● Business attempts to collect fee in addition to
amount of NSF check from business that wrote the check
SLIDE 5
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Dishonored Checks
● When check is dishonored, bank deducts amount of check plus fee from business that received the check● Dishonored check recorded as cash payment● Memorandum is source document
SLIDE 6
© 2014 Cengage Learning. All Rights Reserved.
Recording a Dishonored Check on a Check Stub
SLIDE 7
LO6
Lesson 5-3
1. Write Dishonored Check under the heading Other.
1
2
3
3. Calculate and record the new subtotal.
2. Write the total of the dishonored check in the amount column. This is the amount of the dishonored check plus the service fee.
© 2014 Cengage Learning. All Rights Reserved.
Take a Breather
● Record a T-account to visualize the journal payment for a dishonored check of $60.00, with a bank charge of $50.00
SLIDE 8
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Journalizing a Dishonored Check
SLIDE 9
225.00Accts. Rec.—Valley Landscaping
Cash225.00
August 29. Received notice from the bank of a dishonored check from Valley Landscaping, $185.00, plus $40.00 fee; total, $225.00. Memorandum No. 52.
LO6
Lesson 5-3
2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column.
1. Write the date in the Date column.
3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column.
4. Write the source document number in the Doc. No. column.
1 Date 4 Source DocumentDebit2
3 Credit
© 2014 Cengage Learning. All Rights Reserved.
Journalizing an Electronic Funds Transfer
● A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents is called electronic funds transfer (EFT).● Many businesses use this to pay vendors● To control cash payments through EFT, person
responsible for requesting transfers should be given a password
● Bank should not accept EFT requests from any person unable to provide password
SLIDE 10
LO7
Lesson 5-3
© 2014 Cengage Learning. All Rights Reserved.
Electronic Funds Transfer
● Journal entry for payments on account through EFT is same as when check is written● Only difference is that source document used is a
memorandum● Recorded on check stub as “Other”
● Keeps checkbook in balance during time lag from when EFT is made until receipt of bank statement
● Identified in check column of bank statement by “EFT” rather than check number
SLIDE 11
© 2014 Cengage Learning. All Rights Reserved.
Journalizing an Electronic Funds Transfer
SLIDE 12
LO7
Lesson 5-3
380.00Accts. Pay.—Murniak Enterprises
Cash380.00
June 5. Paid cash on account to Murniak Enterprises, $380.00, using EFT. Memorandum No. 18.
2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column.
1. Write the date in the Date column.
3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column.
4. Write the source document number in the Doc. No. column.
1 Date 4 Source DocumentDebit2
3 Credit
© 2014 Cengage Learning. All Rights Reserved.
Journalizing a Debit Card Transaction
● A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder is called a debit card.● Purchase with debit card means amount of purchase
automatically deducted from checking account of cardholder, eliminating need to write check or carry checkbook
● Still record all purchases to avoid errors in checking account
● “Other” on check stub, keeping balance during time lag between payment and bank receipt
SLIDE 13
LO8
Lesson 5-3
© 2014 Cengage Learning. All Rights Reserved.
June 8. Purchased supplies, $75.00, using debit card. Memorandum No. 21.
Journalizing a Debit Card Transaction
SLIDE 14
LO8
Lesson 5-3
75.00
Supplies
Cash
75.00
2. Write the title of the account to be debited in the Account Title column. Record the amount debited in the Debit column.
1. Write the date in the Date column.
3. On the next line, indented, write the title of the amount credited in the Account Title column. Write the credit amount in the Credit column.
4. Write the source document number in the Doc. No. column.
1 Date 4 Source DocumentDebit2
3 Credit
© 2014 Cengage Learning. All Rights Reserved.
QUESTIONING● FOCUS for students to use: Writing and mailing checks is better than
online banking.● Students ask as many questions as possible, don’t stop asking questions,
write down every question as stated, and change any statement into a question
● Students then categorize questions as closed- or open-ended● Students list advantages and disadvantages of each type of question● Students then turn closed-ended questions into open-ended questions, and
vice-versa● Students then prioritize questions● Class discussion/Parking Lot concerning priority of questions
(advantages/disadvantages to each way of paying out of checking accounts)● Class comes to conclusion as to which method of making payments is more efficient
SLIDE 15
Lesson 5-3
© 2014 Cengage Learning. All Rights Reserved.
Lesson 5-3 Audit Your Understanding
1. List six reasons why a bank may dishonor a check.
SLIDE 16
ANSWER
1. The check appears to be altered.2. The signature on the check does not match the signature on
the signature card.3. The amounts written in figures and in words do not agree.4. The check is postdated.5. The person who wrote the check has stopped payment on it.6. The account of the person who wrote the check has
insufficient funds to pay the check.
Lesson 5-3
© 2014 Cengage Learning. All Rights Reserved.
Lesson 5-3 Audit Your Understanding
2. Which account is credited when electronic funds transfer is used to pay cash on account?
SLIDE 17
ANSWER
Cash
Lesson 5-3
© 2014 Cengage Learning. All Rights Reserved.
Lesson 5-3 Audit Your Understanding
3. Which account is credited when a debit card is used to purchase supplies?
SLIDE 18
ANSWER
Cash
Lesson 5-3
© 2014 Cengage Learning. All Rights Reserved.
“King of the Hill” Review Game
● Complete WT 5-3 individually● Top 5 (determined by correctness) advance to
next round● Complete OYO 5-3 (all students)
● Top 2 of remaining 5 advance to next round● Complete crossword puzzle (all students)
● Student to finish first wins and gets candy
● Outstanding questions
SLIDE 19
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Closure
● Fist of Five: ● regarding chapter 5 material thus far
SLIDE 20