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Ca$h Book III. 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.

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What are we going to learn today l.jpg
What are we going to learn today?

  • Dishonoured cheques and treatment in Cash Book

  • Bank loan

  • Bank overdraft


A specimen cheque l.jpg
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.


A dishonoured cheque l.jpg

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..

A dishonoured cheque


What happen when a cheque is dishonoured l.jpg
What happen when a cheque is dishonoured?

  • Reverse the entries recorded in the Cash Book.


Dishonoured cheque l.jpg
Dishonoured cheque

Example 1

March 1 Joe owed you $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.


Slide7 l.jpg

Cr (OUT)

Dr (IN)

Cash Book

Date

Discount

Cash

Particulars

Discount

Cash

Bank

Date

Particulars

Bank

Joe

Mar 1 Bal b/d 500

2002

Mar 3 Joe 500

2002

Mar 5 Joe 500

Mar 3 Bank 500

Mar 5 Bank 500


Dishonoured cheque8 l.jpg
Dishonoured cheque

Example 2

March 1 James owed you $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.


Slide9 l.jpg

Cash Book

Cr (OUT)

Dr (IN)

Date

Discount

Cash

Particulars

Discount

Cash

Bank

Date

Particulars

Bank

Discount allowed

Dr

Cr

Date

Particulars

Amount

Date

Particulars

Amount

2002 $

2002 $

2002

Mar 7 James 30 120

2002

Mar 9 James 120

James

Dr

Cr

Date

Particulars

Amount

Date

Particulars

Amount

2002 $

2002 $

Mar 1 Bal b/d 150

Mar 7 Bank 120

Discount 30

9 Bank 120

Discount 30

Mar 9 James 30



What happen when we need more cash l.jpg

Bank loan

Bank overdraft

What happen when we need more cash?


Bank loan l.jpg
Bank Loan

• a certain sum of money borrowed from the

bank

Accounting entries:

Dr Bank Account XX

Cr Bank Loan XX


Bank loan13 l.jpg

Dr

Cash Book

Cr

Date

Particulars

Discount

Cash

Bank

Date

Particulars

Discount

Cash

Bank

Bank Loan

Example: On May 1, we borrowed $10000 from the bank.

We put the money into our bank account.

2002

May 1 Bank loan 10000




So when does it have a credit balance l.jpg

Usually, bank account has a debit approved by the bank.

balance.

So when does it have a credit balance?

When we draw on the bank

overdraft facility.


Example 1 bank overdraft l.jpg
Example 1 – Bank Overdraft approved by the bank.

2002

Jan 1

Christine’s Bank account in the cash book shows a debit balance of $500. She has an overdraft facility of $10 000.

Christine bought an office equipment for $4 000 and paid by cheque.

Jan 10

How much is Christine drawing on her overdraft facility?

Is the bank account showing a debit or credit balance?


Slide18 l.jpg

Dr approved by the bank.

Cash Book

Date

Particulars

Discount

Cash

Bank

Date

Particulars

Discount

Cash

Bank

2002

$

$

$

2002

$

$

$

Jan 1 Bal b/d 500

Cr

Jan 10 Office

Equipment 4000

31 Bal c/d 3500

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.


What have i learnt today l.jpg
What have I learnt today? approved by the bank.

  • Dishonoured cheques and treatment in Cash Book

  • Bank loan

  • Bank overdraft


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