Chapter 10
Cash Controls
309
Once the bank is reconciled to the ledger, all items that increase or decrease the ledger balance
must be recorded in the journal.The journal entries are shown in Figure 10.27.
Journal
Page 1
Date
2016
account title and explanation
Debit Credit
Oct 31 Cash
300
Accounts Receivable
300
Collection from customer
Oct 31 Rent Expense
1,300
Cash
1,300
Payment for rent
Oct 31 Accounts Receivable
200
Cash
200
NSF cheque from customer
Oct 31 NSF Charges Expense
15
Cash
15
Record NSF fee
Oct 31 Bank Charges Expense
10
Cash
10
Record bank service charge
Oct 31 Advertising Expense
180
Cash
180
Correct error on cheque
______________
FIGURE 10.27
An alternate way to record the journal entries is to make compound journal entries to combine
similar transactions. For example, all transactions that credit cash could be combined into a single
transaction. Each of the debited accounts would still be listed, but there would be a single credit to
cash for $1,705.
Petty Cash
At times, a business may require small amounts of cash to pay for petty (small) expenses such as
parking, postage stamps and courier fees. Instead of issuing a cheque each time, the business will
set up a petty cash fund to pay for these small amounts in cash.
