ACC 221 1st Edition Lecture 14 Outline of Previous 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 Outline of Current Lecture Section 14 Review Cash Account Cash Accounts o Uses 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 14 Review Cash Account Cash Accounts o Uses Main function is to have the company s money flowing in and out However at the end of the accounting cycle when reconciling the balances the balance may not always be correct depending on if all of the transactions have been recorded in both the company s side and the bank s side of the balance recordings Two causes for accounts to be wrong Bank balance is wrong Company balance is wrong 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 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
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