Electronic Funds Transfer System a. How do banks use the electronic funds transfer

Preparing a Deposit Slip and Writing Checks On August 14 Loretta Harper, owner of Peabody Cards and Gifts, deposited the following items in the checking account of the business. Cash: $784.29 Checks: Charles Ling, drawn on American Bank of Commerce, ABA No. 32-7091; $39.44 Keith Lopez, drawn on Peoples Bank, ABA No. 84-268; $22.95 Marjorie Luke, drawn on Horizon Federal Savings and Loan, ABA No. 84-6249; $52.95 Mable Parker, drawn on Security National Bank, ABA No. 84-2242; $67.45 On August 15 Peabody received the July bill from Northeast Telephone for $214.80. On August 17 Peabody received an advertising bill from the Bay side News for $275.00. Instructions Using the forms provided in your working papers: 1. Complete a deposit slip. 2. Record the deposit on the check stub for Check 41. 3. Record the information for paying the telephone bill on Check Stub 41 and complete the check stub. Use August 16 as the date. 4. Prepare Check 41 to pay the telephone bill and sign your name as a drawer. 5. Prepare the check stub and Check 42 to pay the bill for advertising. Use August 17 as the date and sign your name as a drawer.

Analysing a Source Document Instructions Review the Global Travel Agency bank statement and answer the following question in your working papers. 1. What is the amount of the returned check? 2. How much did the bank charge Global Travel Agency for the returned check? 3. What account will be debited for the $12 bank service charge?

Internal Controls a. Why do businesses need internal controls? b. What internal controls can a business use to protect cash?

Checking Account Forms a. What is the purpose of a signature card? b. In addition to a signature card, what other forms are involved in using a checking account?

Check Stubs a. What is the purpose of a check stub? b. Why should you complete the check stub before writing the check?

Writing a Check a. How should the amount be written on the check? b. Why should checks be written in ink or by typewriter, computer, or check-writing machine?

Bank Deposit a. How often should a business deposit cash as part of its internal controls? b. What information should you include on a deposit slip?

Bank Reconciliation a. What information does a bank statement contain? b. List the steps to reconcile a bank statement

Bank Service Charges a. What is a bank service charge? b. How does a business record bank service charges in its checkbook and in its accounting records?

Electronic Funds Transfer System a. How do banks use the electronic funds transfer system (EFTS)? b. What are some of the ways customers make electronic purchases?

Handling Deposits On October 4 the owner of Wilderness Rentals deposited the following in the business checking account at First National Bank. The beginning balance in the account is $3,306.54 before these transactions. Cash: Currency, $374.00; Coins, $7.42 Checks: Bob Warner, drawn on Consumers Bank, ABA No. 63-706; $64.98 Joan Walkman, drawn on Mountain Bank, ABA No. 63-699; $349.81 Ernesto Garcia, drawn on Progressive Savings and Loan, ABA No. 63-710; $29.44 Instructions In your working papers: 1. Place a restrictive endorsement on each check. Use Wilderness Rentals. 2. Fill out a deposit slip. Use the ABA number to identify each check. 3. Record the deposit in the checkbook on Check Stub 651.

Maintaining the Checkbook As the accounting clerk for Hot Suds Car Wash, you write checks and make deposits. The current checkbook balance is $3,486.29. Instructions For each transaction: 1. Record the necessary information on the check stub. Determine the new balance and carry the balance forward. 2. Prepare the necessary checks and sign your name as a drawer. Calculate the balance brought forward amount on Check Stub 508.

Reconciling the Bank Statement On October 31 George Flaum, the accountant for Kits & Pups Grooming, received the bank statement dated October 30. After comparing the company's checkbook with the bank statement, George found the following: 1. The checkbook balance on October 31 is $960. 2. The ending bank statement balance is $1,380. 3. The bank statement shows a service charge of $10. 4. A deposit of $405 was made on October 30, but does not appear on the bank statement. 5. Check 768 for $529 and Check 772 for $306 are outstanding. Instructions In your working papers: 1. Record the bank service charge in the checkbook. 2. Reconcile the bank statement. 3. Journalize the bank service charge in the general journal, page 4. 4. Post the bank service charge journal entry to the appropriate general ledger accounts. How many checks are outstanding? Identify the total amount that is outstanding.

Reconciling the Bank Statement On October 31 Juanita Ortega, owner of Outback Guide Service, received a bank statement dated October 30. Juanita found the following: 1. The checkbook has a balance of $2,551.34. 2. The bank statement shows a balance of $2,272.36. 3. The statement shows a bank service charge of $20.00. 4. A check from Podaski Systems for $62.44, deposited on October 18, was returned by the bank. There is no fee for handling the NSF check. 5. A deposit of $672.48 made on October 30 does not appear on the bank statement. 6. These checks are outstanding: Check 872 for $126.84 Check 883 for $192.80 Check 881 for 87.66 Check 887 for 68.64 Instructions Using the preceding information: 1. Record the service charge and the NSF check in the checkbook. 2. Reconcile the bank statement. 3. Record the service charge and NSF check on page 7 of the general journal. 4. Post the journal entries to the appropriate general ledger accounts. Review the Miscellaneous Expense account found in your working papers. Identify the Miscellaneous Expense account balance after posting the October 31 entry.

Reconciling the Bank Statement On October 31 Showbiz Video received the bank statement dated October 30. The accountant reviewed it and found the following: 1. The checkbook balance on October 31 is $13,462.96. 2. The ending bank statement balance is $13,883.80. 3. The bank statement shows a service charge of $17.50. 4. Deposits of $675.00 on October 28 and $925.00 on October 29 do not appear on the bank statement. 5. The following checks are outstanding: Check 1766 $125.00 Check 1770 $1,462.19 Check 1768 69.42 Check 1771 381.73 Instructions In your working papers: 1. Record the bank service charge in the checkbook in your working papers. 2. Reconcile the bank statement. 3. Record the entry for the bank service charge on general journal page 13. 4. Post the bank service charge journal entry to the proper ledger accounts. Calculate the Cash in Bank balance after the October 31 posting. Does it agree with the adjusted checkbook balance?

Reconciling the Bank Statement Using the Account Form On October 20 Job Connect received its bank statement dated October 18. 1. The checkbook balance on October 20 is $880.84. 2. The ending bank statement balance is $344.58. 3. A $14.00 service charge appears on the bank statement. 4. The following checks are outstanding: Check 864 $ 88.41 Check 871 $129.88 Check 869 69.34 Check 873 14.25 5. A $68.42 check from Tom McCrary deposited on October 13 was returned by the bank for insufficient funds. The bank charged Job Connects account $7.00 for the NSF check. No journal entry was made for the NSF check. 6. A $938.72 deposit on October 19 is not on the bank statement. 7. A check for $200.00 to Fontenot Inc. was lost in the mail and has not been deposited. A stop payment order, which cost $10.00, was issued on October 15. No new check was issued. Instructions Reconcile the bank statement using the account form in your working papers. Identify the account that will be debited for both the NSF check and the bank handling charge on the check.