ca$h book ii
DESCRIPTION
Ca$h Book II. What are we going to learn today?. Dishonoured cheques and treatment in Cash Book Bank loan Bank overdraft. A specimen cheque. Bobby Tan Dollars Fifty only. 50/=. A cheque is an order to the bank to pay some other person a fixed sum of money on demand. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Ca$h Book II](https://reader036.vdocuments.us/reader036/viewer/2022062521/56816903550346895de0172a/html5/thumbnails/1.jpg)
Ca$h Book II
![Page 2: Ca$h Book II](https://reader036.vdocuments.us/reader036/viewer/2022062521/56816903550346895de0172a/html5/thumbnails/2.jpg)
What are we going to learn today?
• Dishonoured cheques and treatment in Cash Book
• Bank loan• Bank overdraft
![Page 3: Ca$h Book II](https://reader036.vdocuments.us/reader036/viewer/2022062521/56816903550346895de0172a/html5/thumbnails/3.jpg)
A cheque is an order to the bank to pay some other person a fixed sum of money on demand.
Bobby TanDollars Fifty only
50/=
A specimen cheque
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A dishonoured cheque
Reasons for cheques being dishonoured:(a) signature not the same as the specimen given;(b) insufficient funds;(c) amount in words and in figures not the same;
(d) cheque post-dated
(e) signature missing;(f) incomplete particulars, etc..
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What happen when a cheque is dishonoured?
• Reverse the entries recorded in the Cash Book.
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Dishonoured cheque
Example 1March 1 Joe owed you from sales $500 3 Joe gave a cheque of $500 5 Joe’s cheque was dishonoured by the bank.
Record the entries into the Cash Book and ledger.
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Journal Entry1) Joe 500
Sales 5003) Bank 500
Joe 5005) Joe 500
Bank 500
Reversed
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2002Mar 3 Joe 500
2002Mar 5 Joe 500
AmountParticularsDateAmountParticularsDateDr Cr
2002 $ 2002 $
Joe
Mar 1 Sales 500 Mar 3 Bank 500
Mar 5 Bank 500
Date BankCashDiscountParticularsDateBankCashDiscountParticularsCash BookDr (IN) Cr (OUT)
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Dishonoured cheque
Exercise March 1 James owed you from sales $150 7 James gave a cheque of $120 in full settlement of his account. Discount allowed $30 9 Jame’s cheque was dishonoured by the bank.
Record the entries into the Cash Book and ledgers.
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What happen when we need more cash?
Bank loan Bank overdraft
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Bank Loan• a certain sum of money borrowed from the bank
Accounting entries:
Dr Bank Account XXCr Bank Loan XX
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Bank LoanExample: On May 1, we borrowed $10000 from the bank. We put the money into our bank account.
BankCashDiscountParticularsDateBankCashDiscountParticularsDateCash BookDr Cr
2002May 1 Bank loan 10000
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Can we draw out more cash than what we have in the bank account?
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Yes, we can provided our application for overdraft has been approved by the bank.
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So when does it have a credit balance?
Usually, bank account has a debit balance.
When we draw on the bank overdraft facility.
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Example 1 – Bank Overdraft
2002Jan 1 Christine’s Bank account in the cash book
shows a debit balance of $500. She has an overdraft facility of $10 000.
Jan 10 Christine bought an office equipment for $4 000 and paid by cheque.
How much is Christine drawing on her overdraft facility?
Is the bank account showing a debit or credit balance?
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Cr
$$$2002$$$2002
BankCashDiscountParticularsDateBankCashDiscountParticularsDateCash BookDr
Jan 1 Bal b/d 500 Jan 10 Office
Equipment 4000
Note:
Christine is drawing $3500 on her bank overdraft facility. Christine’s bank account has a credit balance.
She can continue to draw from her current account as long as the total credit amount does not exceed $10 000.
The overdraft facility limit is not to be recorded in the Cash Book.
31 Bal c/d 3500
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What have I learnt today?• Dishonoured cheques and
treatment in Cash Book• Bank loan• Bank overdraft