Chapter 9 Summary: Cash Receipts, Cash Payments, and Banking Procedures

Cash receipts can be in the form of checks, currency, and coins.
A cash receipts journal is used to record cash receipts, with separate columns for frequently used accounts.
Column totals are posted to the general ledger at the end of the month.
When recording cash sales, ensure total credits equal total debits.
Cash Short or Over account is used to account for discrepancies in the cash register.
Businesses may offer sales discounts for early payments, recorded in a Sales Discounts Debit column.
Collection of a promissory note involves recording the note and interest in the Other Accounts Credit section.
Before posting from the cash receipts journal, verify total debits equal total credits.
Update the subsidiary ledger, noting the cash receipts journal page number.
The "CR1" indicates that the transaction appears on page 1 of the cash receipts journal.

A cash payments journal records transactions involving cash payments.
The cash payments journal is a special journal used to record transactions involving the payment of cash.
When there's cash payments, the credit is entered in the Cash Credit column.
Update subsidiary accounts daily and post debits from the Other Accounts Debit column.
The "CP1" indicates that the entry is recorded on page 1 of the cash payments journal.

Petty cash is used for small payments that cannot be made by check.
A petty cash voucher documents each payment from the fund.
Total vouchers plus cash on hand should equal the fund amount.
Replenish the petty cash fund at the end of each month.
Petty cash fund checks should be made to the person in charge of the fund, not to "Cash."
Assign one person to control the petty cash fund.
Keep petty cash in a safe, a locked cash box, or a locked drawer.
Prepare a petty cash voucher for each payment.

Only designated employees should handle cash.
Keep cash receipts secure.
Record all cash receipts promptly.
Deposit cash receipts intact and promptly.
Reconcile bank statements by someone independent of cash handling duties.
Make payments by check, except for petty cash.
Issue checks with approved documentation.
Separate duties for approving bills, preparing checks, and signing/mailing checks.
Use prenumbered check forms and compare canceled checks during reconciliation.

Differences between bank and book balances can arise from errors or timing issues.
Common reasons for balancing issues:
- Outstanding checks.
- Deposits in transit.
- Service charges.
- Unrecorded deposits.
Bank reconciliation format includes adjusting both bank and book balances.
First Section: add deposits in transit, deduct outstanding checks, and consider bank errors to find the adjusted bank balance
Second Section: record any deposits made by the bank that have not been recorded in the accounting records. Record deductions made by the bank. Compute the adjusted book balance

Adjusting entries are needed for items like NSF checks and bank service charges.

Businesses use online banking for electronic funds transfers (EFTs), payments to government agencies, and security alerts.

Under a perpetual inventory system, the merchandise inventory account is credited when a cash discount is taken.