lesson 5-3 dishonored checks and electronic banking
TRANSCRIPT
LESSON 5-3LESSON 5-3
Dishonored Checks and Electronic Banking
TERMSTERMS
Dishonored check: a check that a bank refuses to pay Electronic funds transfer: a computerized cash
payments system that uses electronic impulses to transfer funds
Debit card: a bank card that automatically deducts the amount of a purchase from the checking account of the cardholder
DISHONOR CHECKS DISHONOR CHECKS
Banks will dishonor a check when: The person who wrote the check has insufficient funds Check appears to be altered Signature on check does not match bank records Written amount in figures does not agree with numeric
amount The check is postdated The person who wrote the check has stopped payment
DISHONORED CHECKS CONTINUEDDISHONORED CHECKS CONTINUED
When the dishonored check is uncollectable: Bank charges a dishonored check fee to the business
receiving the check Dishonored check value + check fee = expense to the
business that received the check The business receiving the check will attempt to collect the
check amount + the fee from the business that wrote the check
Example: Your business received a check for $40 and it is uncollectable. The bank fee is $35. What is the amount your business will try to recover from the other business?
$75
You work for TechKnow Consulting. You receive notice of a Dishonored check from your bank. Tables of two groups get together and discuss the process that you will need to take to record the dishonored check?
RECORDING A DISHONORED CHECK:RECORDING A DISHONORED CHECK:
Step 1: Write a Memorandum “Received a dishonored check from Campus Internet Café, $70.00, plus
$35.00 fee; total, $105.00. Attach Notice from the bank to memorandum and given to accountant
Step 2: Enter $105 onto next unused Check Stub under “Other” Step 3: Journalize the transaction
The original transaction = received a payment of $70 on Account Increased cash, decreased amount the business owed you
To reverse this, What two accounts are impacted? Reduces your Cash Increases the amount of money someone owes you – What account?
November 29. Received notice from the bank of a dishonored check from Campus Internet Café, $70.00, plus $35.00 fee; total, $105.00. Memorandum No. 55
RECORDING A DISHONORED CHECK ON RECORDING A DISHONORED CHECK ON A CHECK STUBA CHECK STUB
1. Enter Dishonored check on the line under the heading “Other.” on the next unused check stub
2. Enter total of the dishonored check & fee
3. Record new Subtotal
November 29. Received notice from the bank of a dishonored check from Campus Internet Café, $70.00, plus $35.00 fee; total, $105.00. Memorandum No. 55
COMPLETE THE MEMORANDUMCOMPLETE THE MEMORANDUM
Received a dishonored check from Campus Internet Café, $70.00, plus $35.00 fee; total, $105.00.
Nov 29, 2010
55
JOURNALIZING A DISHONORED CHECKJOURNALIZING A DISHONORED CHECK
November 29. Received notice from the bank of a dishonored check from Campus Internet Café, $70.00, plus $35.00 fee; total, $105.00. Memorandum No. 55.
What two accounts are affected and how?
General
Sales Credit
Cash
Date Account TitleDoc
No.
PostRef Debit Credit Debit Credit
ELECTRONIC FUNDS TRANSFERELECTRONIC FUNDS TRANSFER
Electronic funds transfer: a computerized cash payments system that uses electronic impulses to transfer funds Businesses may use EFT to pay vendors instead of checks Same accounts impacted as when a check is written Uses a different source document than a check. What source
document is used? Memorandum
How do you keep the checkbook in balance for ETF? Recorded on check stub under “Other” and subtracted from balance
RECORDING AN EFT:RECORDING AN EFT:
Step 1: Write a Memorandum Step 2: Written on next unused Check Stub under “Other” Step 3: Journalize the transaction
December 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No. 56.
Dec. 2, 2010
56
EFT Payment on Account to Kelson Enterprises for $350.00
RECORDING AN EFT PAYMENT ON A RECORDING AN EFT PAYMENT ON A CHECK STUBCHECK STUB
1. Write EFT Payment on the line under the heading “Other.”
2. Write the total of $350.00 on the other amount column.
3. Subtract the payment and record the new subtotal
350 00
December 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No. 56.
5673 00
EFT payment – Kelson Enterprises
6023.00
JOURNALIZING AN EFTJOURNALIZING AN EFT
December 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No. 56.
M56
What two accounts are affected and how?
DEBIT CARD PAYMENTSDEBIT CARD PAYMENTS
Debit card: a bank card that automatically deducts the amount of a purchase from the checking account of the cardholder Eliminates the need for a checkbook Chance of recording errors increase Same process as an EFT payment Same accounts impacted as a check, in the journal and
posting except different source document
RECORDING AN DEBIT CARD PAYMENT:RECORDING AN DEBIT CARD PAYMENT:
Step 1: Write a Memorandum Step 2: Enter onto next unused Check Stub under “Other” Step 3: Journalize the transaction.
September 5. Purchased supplies, $24.00, using debit card. Memorandum No. 12.
Sep. 2, 2010
12
Debit Card Payment to purchase supplies for cash for $350.00
RECORDING AN EFT PAYMENT ON A RECORDING AN EFT PAYMENT ON A CHECK STUBCHECK STUB
1. Write Debit Card Payment on the line under the heading “Other.”
2. Write the total of $24.00 on the other amount column.
3. Calculate and record the new subtotal on the Subtotal line.
24 005649 00
Supplies purchased for cash – debit card
September 5. Purchased supplies, $24.00, using debit card. Memorandum No. 57.
5673.00
JOURNALIZING A DEBIT CARD JOURNALIZING A DEBIT CARD TRANSACTIONTRANSACTION
September 5. Purchased supplies, $24.00, using debit card. Memorandum No. 57.
What two accounts are affected and how?
M57
TERMS REVIEWTERMS REVIEW
dishonored check electronic funds transfer debit card
General
Sales Credit
Cash
Date Account TitleDoc
No.
PostRef Debit Credit Debit Credit
121
122
123