ACC 221 1st Edition Lecture 13 Outline of Previous Lecture Chapter Reviews The Accounting Cycle Accounting Cycle Process All accounts in Cycle o P Permanent Accounts T Temporary Accounts Outline of Current Lecture Section 13 The Cash Account Cash Account Entries o Cash Account money goes in or comes out o Bank Reconciliation Bank Balance is Wrong o Deposits Outstanding o Check Outstanding Company Balance is Wrong o Service Charges o Collection of a Note Current Lecture Section 13 The Cash Account Cash Account Entries o Within the cash account money either goes in or comes out complexities arise with how we control the cash Internal controls reconciling the balance of the cash account with outside entity bank If all transactions are correct and up to date in both this will verify the amount of money in accounts Look at what you know about balance v what they know about bank balance Reconciliation happens outside of accounting cycle however transactions may be added if need be Transactions may be written all at once or in separate entries o Bank Reconciliation 2 halves Company side ending balance Bank side bank ledger These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Both act as the starting points Bank balance is wrong o Deposit outstanding Deposit outstanding an item that the bank does not know about and therefore is not reflected in the bank s balance Bank will correct once they find out Bank s side of reconciliation No need to make entry into accounting system bank will take care of it adjusting their balance to reflect the missing items and eventually matching your balance o Check Outstanding Check outstanding Checks that the bank does not yet know about Will bring balances down must record entry for the month Dr Expense account Cr Cash Will eventually balance with company balance Company balance is wrong o Service Charges Service charges fees owed due to average balance number of checks written number of deposits made or other services provided by the bank The bank s balance is correct but the company must reconcile their account Dr Cash if increasing balance Cr Cash if decreasing balance o Collection of a note For collections of loans company may sign legal documents so the bank will handle the collection for them Company receives the price of the loan and interest from the loan Company is charged a fee from the bank for their services o Cash increases from loan interest o Cash Decreases from service fee Entries o Dr Cash Cr Note Receivable o Dr Cash Cr Interest Receivable o Dr Service Charge Cr Cash o These may be recorded as separate of all together When the company balance is wrong entries must be made to correct the balance
View Full Document
Unlocking...