3.1checking accounts prepare a deposit slip record entries in a check register

3.13.1 Checking AccountsChecking Accounts

Prepare a deposit slipPrepare a deposit slip

Record entries in a check registerRecord entries in a check register

Checking Account Checking Account

Many people deposit their cash receipts Many people deposit their cash receipts in a checking account at a bank and in a checking account at a bank and make their payments by check.make their payments by check.

A checking account is safe and easy to A checking account is safe and easy to use.use.

The canceled checks returned to you by The canceled checks returned to you by the bank provide you with a record of the bank provide you with a record of your payments.your payments.

Deposit SlipDeposit Slip

A A deposit slipdeposit slip is used to deposit is used to deposit paychecks and other monies.paychecks and other monies.

Prepare a Prepare a Deposit SlipDeposit Slip

List cash deposits of bills and List cash deposits of bills and coins on the line labeled CASH.coins on the line labeled CASH.

List each check on a separate line.List each check on a separate line. List additional checks on the back.List additional checks on the back. Enter total of additional checks on the Enter total of additional checks on the Total from Total from

Other SideOther Side line. line. Add all the amounts and write the sum on the Add all the amounts and write the sum on the

SubtotalSubtotal line. line. To receive cash back from the bank, write the To receive cash back from the bank, write the

amount wanted on the amount wanted on the Less Cash ReceivedLess Cash Received line. line. Subtract the cash received from the subtotal to Subtract the cash received from the subtotal to

find the find the Total DepositTotal Deposit.. Sign on the signature line for cash backSign on the signature line for cash back

1153

2053

Deposit Slip ExampleDeposit Slip Example

Sherry has check number 825 for $800, Sherry has check number 825 for $800, she wants to deposit $700 of it and keep she wants to deposit $700 of it and keep $100 in cash.$100 in cash.

825 8 0 0 . 0 08 0 0 . 0 0

1 0 0 . 0 01 0 0 . 0 0

7 0 0 . 0 07 0 0 . 0 0

Sherry TaylorSherry Taylor

Add Add signature if signature if getting cash getting cash back back

Textbook Pg. 85 Example ATextbook Pg. 85 Example A

Deposit-> 14 twenties, 21 quarters, 6 dimes, Deposit-> 14 twenties, 21 quarters, 6 dimes, checks: $322.94 & $1.45.checks: $322.94 & $1.45.

Cash Received -> $100Cash Received -> $100

<-Gross Deposit

<-Net Deposit

280 00280 00 5 855 85322 94322 94 1 451 45

---- ------- ---610 24610 24100 00100 00

Sheryl Smock

510 24510 24

June 30 2008

Textbook Pg. 85 Example BTextbook Pg. 85 Example B

Deposit-> 17 twenties, 18 tens, 9 fives, 37 Deposit-> 17 twenties, 18 tens, 9 fives, 37 ones, 49 quarters, 12 dimes,checks: $39.86 & ones, 49 quarters, 12 dimes,checks: $39.86 & $3.83.$3.83.

Cash Received -> $0Cash Received -> $0

<-Gross Deposit

<-Net Deposit

602 00602 00 13 4513 45 39 8639 86 3 833 83

---- ------- ---659 14659 14---- ------- ---659 14659 14

June 30 2008

ChecksChecks

When you write a check you direct the When you write a check you direct the bank to make a payment from your bank to make a payment from your checking account.checking account.

Checks are numbered to make it easy to Checks are numbered to make it easy to keep track of checks.keep track of checks.

Check RegisterCheck Register

The The check registercheck register is part of the is part of the checkbook in which deposits and checks checkbook in which deposits and checks are recorded.are recorded.

A new balance, called a running balance, A new balance, called a running balance, is calculated after each entry.is calculated after each entry.– Each deposit is added to the previous Each deposit is added to the previous

balance.balance.– Each check is subtracted from the previous Each check is subtracted from the previous

balance.balance. The The balancebalance is the amount of money in is the amount of money in

the account.the account.

Sample Check RegisterSample Check RegisterPayment/DebitPayment/Debit

Money going outMoney going out

Deposit/CreditDeposit/CreditMoney coming inMoney coming in

SEC 3-1 CHECK REGISTERSEC 3-1 CHECK REGISTER

Pg. 87 C – Prev Bal $2,583.45, deposit $1,220, checks: $825, Pg. 87 C – Prev Bal $2,583.45, deposit $1,220, checks: $825, 96.40, $12.7896.40, $12.78

What’s the final balance?What’s the final balance?

2583 4508/11 Deposit 1220 00 3803 45

#### 08/13 Check Desc. 825 00 2978 45#### 08/13 Check Desc. 96 40 2882 05

#### 08/13 Check Desc. 12 78 2869 27

Final BalanceFinal Balance


Pg. 87 D – Prev Bal $129.74, deposits: $500 & $1,236, checks: Pg. 87 D – Prev Bal $129.74, deposits: $500 & $1,236, checks: $196, $950, $87.83$196, $950, $87.83

What’s the new balance?What’s the new balance?

129 7408/11 Deposit 500 00 629 74

#### 08/13 Check Desc. 196 00 1669 74

#### 08/13 Check Desc. 950 00 719 74#### 08/13 Check Desc. 87 83 631 91

New BalanceNew Balance

08/11 Deposit 1236 00 1865 74

SECTION 3-1 Rev. QuestionsSECTION 3-1 Rev. Questions

TEXTBOOK PAGE 88 #7-13, 16, 17-19, TEXTBOOK PAGE 88 #7-13, 16, 17-19, 27-3227-32– (17 pts.)(17 pts.)

SECTION 3-1 QUIZSECTION 3-1 QUIZ

WORKBOOK PAGE 29-30WORKBOOK PAGE 29-30– I have copies of this to give youI have copies of this to give you

• ( 92 pts.)( 92 pts.)

Internet Extra Credit QuizzesInternet Extra Credit Quizzes

3.23.2 Electronic BankingElectronic Banking

Record electronic banking Record electronic banking transactionstransactions

Find account balance when Find account balance when banking electronicallybanking electronically

Electronic BankingElectronic Banking

All banks use computers to process All banks use computers to process transactions electronically.transactions electronically.

Electronic banking allows bank Electronic banking allows bank customers to use telephones, computers, customers to use telephones, computers, and other technologies in place of paper and other technologies in place of paper transactions such as writing checks and transactions such as writing checks and making loan payments.making loan payments.

Electronic Funds TransferElectronic Funds Transfer

Banks use computers to transfer deposits Banks use computers to transfer deposits and checks, or “funds,” from person to and checks, or “funds,” from person to person and bank to bank.person and bank to bank.

This process is calledThis process is called Electronic Funds Electronic Funds Transfer,Transfer, or or EFTEFT..

Customer Account Numbers & Customer Account Numbers & Bank Identification Number Bank Identification Number Banks print the account numbers of Banks print the account numbers of

customers and the bank identification customers and the bank identification number in number in Magnetic Ink Character Magnetic Ink Character RecognitionRecognition, or , or MICRMICR, form at the , form at the bottom of deposit slips and checks.bottom of deposit slips and checks.

ROUTING ROUTING NUMBERNUMBER ACCOUNT ACCOUNT

NUMBERNUMBER

Automatic Teller MachineAutomatic Teller Machine

Individuals can also transfer funds Individuals can also transfer funds electronically when they use anelectronically when they use an Automatic Teller Machine, or ATM.Automatic Teller Machine, or ATM.

By using an ATM card issued by your By using an ATM card issued by your bank, you can withdraw or deposit bank, you can withdraw or deposit money, see account balances, or make money, see account balances, or make transfers between your accounts.transfers between your accounts.

Personal Identification NumberPersonal Identification Number

A A Personal Identification NumberPersonal Identification Number, or , or PINPIN, that is known only to you is entered , that is known only to you is entered into the ATM before your transaction is into the ATM before your transaction is processed.processed.

The PIN provides protection against The PIN provides protection against unauthorized use of your ATM card.unauthorized use of your ATM card.

Paying Bills with EFTPaying Bills with EFT

EFTs may also be used to pay your EFTs may also be used to pay your monthly bills, such as utility bills.monthly bills, such as utility bills.

You can instruct your bank to transfer You can instruct your bank to transfer funds automatically each month from funds automatically each month from your bank account to the account of your your bank account to the account of your utility provider.utility provider.

No checks are written or mailed.No checks are written or mailed.

Direct DepositDirect Deposit

Some companies use EFT to pay their Some companies use EFT to pay their employees by transferring funds directly employees by transferring funds directly into their employees’ bank accounts into their employees’ bank accounts without writing any checks to the without writing any checks to the employees.employees.

This is called This is called direct depositdirect deposit..

Debit CardDebit Card

Many people use a special form of EFT Many people use a special form of EFT called a called a debit carddebit card..

Debit cards allow you to pay for your Debit cards allow you to pay for your purchases without using cash.purchases without using cash.

Using a Debit CardUsing a Debit Card

You insert your debit card into a special You insert your debit card into a special computer terminal at stores.computer terminal at stores.

The computer system subtracts the The computer system subtracts the amount of each purchase automatically amount of each purchase automatically from your checking account and adds the from your checking account and adds the same amount to the store’s bank account.same amount to the store’s bank account.

You may also use your debit card to You may also use your debit card to withdraw cash from your account.withdraw cash from your account.

Fees may be charged for using this card.Fees may be charged for using this card.

Recording Electronic Recording Electronic TransactionsTransactions When you use a debit card you get a receipt of When you use a debit card you get a receipt of

the transaction.the transaction. Save the receipt and immediately record the Save the receipt and immediately record the

payment or cash withdrawal in your check payment or cash withdrawal in your check register.register.– Record the payment by writing the word “Debit” Record the payment by writing the word “Debit”

and adding a short description as well.and adding a short description as well.

– Record an ATM withdrawal by writing ATM-WD.Record an ATM withdrawal by writing ATM-WD.

– Record an ATM deposit by writing ATM-DEP.Record an ATM deposit by writing ATM-DEP.


Pg. 92 A – Prev Bal $782.88, Debit Card: Car Repairs $85, Pg. 92 A – Prev Bal $782.88, Debit Card: Car Repairs $85, Clothing Purchase $86.54, ATM Withdrawal $50, Clothing Purchase $86.54, ATM Withdrawal $50,


782 88DB 08/13 Car Repairs. 85 00 697 88

DB 08/13 Clothing Purch 86 54 611 34Atm 08/13 Withdrawal 50 00 561 34



Pg. 92 B – Prev Bal $1,248.40, Deposit $890.50, Debit Card: Pg. 92 B – Prev Bal $1,248.40, Deposit $890.50, Debit Card: $12.87, $118.94, ATM Withdrawal $200, $12.87, $118.94, ATM Withdrawal $200,


1248 40

DB 08/13 XXXXX . 12 87 2126 03

DB 08/13 XXXXX 118 94 2007 09Atm 08/13 Withdrawal 200 00 1807 09


08/13 Deposit 890 50 2138 90

SEC. 3-2 ELECTRONIC SEC. 3-2 ELECTRONIC BANKING - BANKING - ReviewReview

Txtbk PAGE 93 # 5-8, 10-15Txtbk PAGE 93 # 5-8, 10-15

(16 pts.)(16 pts.)

SEC. 3-2 ELECTRONIC SEC. 3-2 ELECTRONIC BANKING - BANKING - QuizQuiz

Wkbk PAGE 31 # 1-5Wkbk PAGE 31 # 1-5

(10 pts.)(10 pts.)

3.33.3 Online BankingOnline Banking

Calculate account balance needed Calculate account balance needed to make online paymentsto make online payments

3.3 Online-Account Access3.3 Online-Account Access

Online bankingOnline banking allows you to do your allows you to do your banking by using your personal banking by using your personal computer and the Internet.computer and the Internet.

Each bank designs its own Internet Each bank designs its own Internet website.website.

What you see on your screen and how What you see on your screen and how you use an online banking system differs you use an online banking system differs among banks.among banks.

3.3 Examples of 3.3 Examples of Online Banking ServicesOnline Banking Services

Access accounts 24 hours day, 7 days a Access accounts 24 hours day, 7 days a weekweek

Transfer money between accountsTransfer money between accounts Receive bills electronicallyReceive bills electronically Make paymentsMake payments Reorder checksReorder checks Communicate with bank staffCommunicate with bank staff View account historyView account history

3.3 Sample Online Banking Screen3.3 Sample Online Banking Screen

3.3 Making Decisions 3.3 Making Decisions About Online AccountsAbout Online Accounts When selecting a bank at which to do When selecting a bank at which to do

online banking, the most convenient online banking, the most convenient choice is the bank you now use.choice is the bank you now use.

You should also evaluate the systems at You should also evaluate the systems at other banks.other banks.

Select the system that best meets your Select the system that best meets your needs, is easiest to use, and does so at the needs, is easiest to use, and does so at the least cost.least cost.

3.3 Using Online Accounts3.3 Using Online Accounts

You must identify sources of deposits to You must identify sources of deposits to the account and decide who will be paid the account and decide who will be paid online.online.

You will also have to determine the dates You will also have to determine the dates on which bills are due and the usual on which bills are due and the usual amount of the bill if it changes from amount of the bill if it changes from month to month.month to month.

Online banking simplifies the banking Online banking simplifies the banking process, yet is very similar to using a process, yet is very similar to using a regular checking account.regular checking account.

SEC. 3-3 ONLINE BANKINGSEC. 3-3 ONLINE BANKINGTextbook pg. 97 Ex B

B.)B.) $67.00$67.00 BalanceBalance

++ 728.00728.00 DepositDeposit- 36.9036.90 Debit Card PurchaseDebit Card Purchase- 112.85 112.85 Debit Card PurchaseDebit Card Purchase- 270.00 270.00 CheckCheck- 15.00 15.00 CheckCheck- 128.00 128.00 Boat InsuranceBoat Insurance- 89.2389.23 Charge CardCharge Card- 45.5045.50 Medical Bill .Medical Bill .

$97.52$97.52

SEC. 3-3 ONLINE BANKINGSEC. 3-3 ONLINE BANKINGReviewReview

•Textbook PAGE 98 # 6-8, 11-13Textbook PAGE 98 # 6-8, 11-13

Quiz at 10:30Quiz at 10:30

SEC. 3-3 ONLINE BANKINGSEC. 3-3 ONLINE BANKINGQuizQuiz

WKBK PAGE 32 # 1-4 PRACTICEWKBK PAGE 32 # 1-4 PRACTICE

3.43.4Check Register Check Register ReconciliationReconciliation

Reconcile a bank statementReconcile a bank statement

Reconcile and correct a check Reconcile and correct a check registerregister

3.4 Reconcile the Bank Statement3.4 Reconcile the Bank Statement

Banks keep track of checking account Banks keep track of checking account transactions and send a monthly report, transactions and send a monthly report, called a called a bank statementbank statement, to depositors., to depositors.

3.4 Sample Bank Statement3.4 Sample Bank Statement

3.4 Bank Statement3.4 Bank Statement

Typical items on a bank statementTypical items on a bank statement– Checks paid by the bankChecks paid by the bank

– Deposits, including interest earnedDeposits, including interest earned

– ATM withdrawalsATM withdrawals

– Service chargesService charges

Interest earnedInterest earned is money paid to customers for is money paid to customers for the use of their money.the use of their money.

A A service chargeservice charge is a deduction made by the is a deduction made by the bank for handling the checking account.bank for handling the checking account.

3.4 Canceled Check3.4 Canceled Check

A A canceled checkcanceled check is a check that the bank is a check that the bank has paid and then marked so it can’t be has paid and then marked so it can’t be used again.used again.

3.4 Transactions Outstanding3.4 Transactions Outstanding

Checks that are not returned by the bank Checks that are not returned by the bank are called are called outstanding checksoutstanding checks..– This means that the checks have not yet been This means that the checks have not yet been

received or paid by the bank.received or paid by the bank.

An An outstanding depositoutstanding deposit occurs when a occurs when a deposit is made after the closing date of deposit is made after the closing date of the bank statement and the deposit is the bank statement and the deposit is recorded in the check register.recorded in the check register.

3.4 Reconciliation3.4 Reconciliation The difference (their balances do not match) The difference (their balances do not match)

in the checkbook balance and the bank in the checkbook balance and the bank statement balance is the result of the statement balance is the result of the outstanding transactions, interest earned, and outstanding transactions, interest earned, and the service charge.the service charge.

To bring both balances into agreement (or To bring both balances into agreement (or match) and to make sure the bank’s records match) and to make sure the bank’s records are correct, both records must be reconciled.are correct, both records must be reconciled.

3.4 Reconcile the Bank Statement3.4 Reconcile the Bank Statement

Follow the steps on the reconciliation Follow the steps on the reconciliation form on the back of the bank statement.form on the back of the bank statement.– Enter Closing Balance from StatementEnter Closing Balance from Statement– Add any deposits outstandingAdd any deposits outstanding– Add lines 1 and 2Add lines 1 and 2– Enter total of Checks OutstandingEnter total of Checks Outstanding– Subtract line 4 from line 3. This amount Subtract line 4 from line 3. This amount

should equal your check register balance. should equal your check register balance. • If not then you need to do more stepsIf not then you need to do more steps

Ms. Smock will hand out the reconciliation forms

3.4 Sample Bank 3.4 Sample Bank Reconciliation FormReconciliation Form

3.4 BUSINESS TIP3.4 BUSINESS TIP3.4 BUSINESS TIP3.4 BUSINESS TIP

Outstanding itemsOutstanding items (checks and deposits) (checks and deposits) are items that you have recorded in your are items that you have recorded in your check register but the bank has not yet check register but the bank has not yet received.received.– That means they have not subtracted That means they have not subtracted

outstanding checks from the bank balance outstanding checks from the bank balance nor added outstanding deposits to the bank nor added outstanding deposits to the bank balance.balance.

These are two reasons most likely reasons These are two reasons most likely reasons why your balance doesn’t match the why your balance doesn’t match the bank’s balance.bank’s balance.

3.4 Reconcile the Check Register3.4 Reconcile the Check Register

Add interestAdd interest to the balance in the check to the balance in the check register.register.

Deduct service chargesDeduct service charges from the check from the check register.register.

The Balance from the check register The Balance from the check register should now equal the balance on the should now equal the balance on the reconciliation sheetreconciliation sheet

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATIONPG 101 A PG 101 A 1.) ENTER CLOSING BAL

2.) ADD ANY DEPOSITS +

3.)ADD LINES 1 & 2 =

4.) TTL OF CHKS OUT -

5.) LINE 3 – LINE 4 =

OUTSTANDING OUTSTANDING CHECKSCHECKS

TOTAL

Continue on the next slide - -Continue on the next slide - -

1,383.531,383.53

-------------------------- 129.45129.45

87.3987.39

216.84216.84

1,383.531,383.53

216.84216.84

1,166.691,166.69

6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED 6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED TO THE CHECK REGISTER & UPDATE BALANCETO THE CHECK REGISTER & UPDATE BALANCE

7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER 7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER 5 ON THE WORKSHEET? 5 ON THE WORKSHEET?

1166 69

NONO

YESYES

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATIONPG 101 B PG 101 B 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

793.57793.57

312.09312.09 278 174.85278 174.85

280 32.78280 32.78

207.63207.63

1,105.661,105.66

207.63207.63

898.03898.03



7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER 7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER 5 ON THE WORKSHEET?5 ON THE WORKSHEET?

898 03

NONO

YESYES

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATIONPG 102 C PG 102 C 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

727.92727.92




727 92

PG 102 CPG 102 C

xx/xx Service Charge 18 90 xx/xx Service Charge 18 90 709 02 709 02

YESYES

xx/xx Interest Earnedxx/xx Interest Earned 1 60 1 60 710 62 710 62



457 38

PG 102 DPG 102 D


YESYES

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATIONClosing Balance on Bank statement is Closing Balance on Bank statement is

300.00. Your balance in your 300.00. Your balance in your checkbook is 100.00. There are checkbook is 100.00. There are outstanding checks of $45 and $200. outstanding checks of $45 and $200. There is an outstanding deposit of There is an outstanding deposit of $50. The bank charges $5 service $50. The bank charges $5 service charge. Interest earned is $10. charge. Interest earned is $10. Reconcile the bank statement with Reconcile the bank statement with your checkbook.your checkbook.

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATIONx x 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

300.00300.00

50.0050.00 ---- 45.00---- 45.00

---- 200.00---- 200.00

245.00245.00

350.00350.00

245.00245.00

105.00105.00




100 00


YESYES

xx/xx Interest Earned xx/xx Interest Earned 10 00 10 00 105 00 105 00

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATIONClosing Balance on Bank statement is Closing Balance on Bank statement is

20.00. Your balance in your 20.00. Your balance in your checkbook is 25.00. There are checkbook is 25.00. There are outstanding checks of $5 and $10. The outstanding checks of $5 and $10. The bank charges $10 service charge. The bank charges $10 service charge. The bank made a $10 error not in your bank made a $10 error not in your favor. Reconcile the bank statement favor. Reconcile the bank statement with your checkbook.with your checkbook.

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATIONx x 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

20.0020.00

------------------ ---- 5.00---- 5.00

---- 10.00---- 10.00

15.0015.00

20.0020.00

15.0015.00

5.005.00




25 00


YESYES

xx/xx Bank Error 10 00 xx/xx Bank Error 10 00 5 00 5 00

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATION

Review TextbookReview Textbook (16 pts.)

Page 103

5-7 do on paper5-7 do on paper, 8 & 10 use 8 & 10 use reconciliation formsreconciliation forms

I will have the reconciliation forms for you

#19-23 do on paper

SEC. 3-4 CHECK REGISTER SEC. 3-4 CHECK REGISTER RECONCILIATIONRECONCILIATION

Quiz - Workbook page 34 # 1-4 (61 Quiz - Workbook page 34 # 1-4 (61 pts.)pts.)

•Use the worksheet Mrs. Smock Use the worksheet Mrs. Smock gives you.gives you.

Reconciliation FormReconciliation Form - - 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

3.5Other Reconciliation Problems

Reconcile a checking account with outstanding transactions and other errors

Reconcile the Checking Account

Sometimes you must reconcile a bank statement and check register balances when deposits, checks, and EFT transactions are not recorded and when other errors are made.

SEC. 3-5 OTHER RECONCILIATION PROBLEMS

STEPS TO FIND PROBLEMSSTEPS TO FIND PROBLEMS

1.) Check to see if balance of 1.) Check to see if balance of check register and bank check register and bank statement are the same.statement are the same.

If they don’t agree you have to reconcile the account.

SEC. 3-5 OTHER RECONCILIATION PROBLEMSSTEPS TO FIND PROBLEMSSTEPS TO FIND PROBLEMS

2.) Compare to see if each item of 2.) Compare to see if each item of on the register is also on the bank on the register is also on the bank statement.statement.

If an item is on both put a checkmark If an item is on both put a checkmark on the item in the bank statement.on the item in the bank statement.

Place an “X” on the items that need to be looked into.

SEC. 3-5 OTHER RECONCILIATION PROBLEMSSTEPS TO FIND PROBLEMSSTEPS TO FIND PROBLEMS

3.) Prepare a reconciliation 3.) Prepare a reconciliation form to reconcile the bank form to reconcile the bank statement.statement.

4.) Reconcile the check 4.) Reconcile the check register.register.

Go over together Pg 106-107

SEC. 3-5SEC. 3-5 Pg. 106-107 Pg. 106-107 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

632.31632.31

85.0085.00 850 8.12850 8.12

852 34.28852 34.28

42.4042.40

717.31717.31

42.4042.40

674.91674.91

1181 39

Ch851 7/19Ch851 7/19 37 16 37 16 1144 231144 23 ck853 wrong ck853 wrong 27 05 27 05 1171 281171 28 ck853 correct 72 05 ck853 correct 72 05 1099 23 1099 23

atm dep 7/28 atm dep 7/28 118 20 118 20 1217 43 1217 43 Int. earned Int. earned 1 56 1218 99 1 56 1218 99 ATM with 7/12 120 00 ATM with 7/12 120 00 1098 99 1098 99 ATM fee 7/12 1 50 ATM fee 7/12 1 50 1097 49 1097 49 EFT truck loan 416 18 EFT truck loan 416 18 681 31 681 31

Debit card fee 6 40 Debit card fee 6 40 674 91 674 91

SEC. 3-5SEC. 3-5 Pg. 108 A Pg. 108 A 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

161.96161.96

161.96161.96

107 87

ck307 wrong ck307 wrong 32 95 32 95 197 25 197 25 ck307 correct 35 29 ck307 correct 35 29 161 96 161 96

atm dep atm dep 56 00 56 00 164 30 164 30

Int. earned Int. earned 43 108 30 43 108 30

SEC. 3-5SEC. 3-5 Pg. 108 B Pg. 108 B 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

624.77624.77

------------------ 201 92.49201 92.49

92.4992.49

624.77624.77

92.4992.49

532.28532.28

812 45812 45

Ch202Ch202 80 17 80 17 532 28 532 28

ATM with 200 00 ATM with 200 00 612 45 612 45

•TEXTBOOK PG 109 #7-10TEXTBOOK PG 109 #7-10

•USE THE PAPER I GIVE YOU AND USE THE PAPER I GIVE YOU AND LABEL THE PROBLEM NUMBERSLABEL THE PROBLEM NUMBERS

•TEXTBOOK PG 110 #18-21TEXTBOOK PG 110 #18-21

•DO ON PAPERDO ON PAPER

30 POINTS30 POINTS

SEC. 3-5 REVIEWSEC. 3-5 REVIEW

57 Points57 Points

•WKBK PG 35-36 #1-2WKBK PG 35-36 #1-2

•I have copies for youI have copies for you

SEC. 3-5 QUIZSEC. 3-5 QUIZ

100 Points100 Points

Banking Is Check set Banking Is Check set

Integra BankIntegra Bank

SEC. 3-5 Banking SimulationSEC. 3-5 Banking Simulation

3.6 Savings Accounts

Calculate simple interest on savings deposits

Calculate compound interest on savings deposits

Calculate interest using a compound interest table

Lesson 3.6 78

Interest

One reason people open savings accounts is to keep their money safe.

Another reason is that they earn interest on their money.

InterestInterest is money paid to an individual or is money paid to an individual or institution for the privilege of using their institution for the privilege of using their money.money.

Transaction

As with a checking account, you may deposit money into or withdraw money from your savings account.

The bank teller may give you a receipt, which is an official record of the transaction.

A A transactiontransaction is something that happens is something that happens that has to be recorded, such as a deposit that has to be recorded, such as a deposit or withdrawal.or withdrawal.

Simple Interest

Simple interest is often figured Simple interest is often figured quarterlyquarterly, , or four times a year, on the balance of the or four times a year, on the balance of the account at the end of each quarter.account at the end of each quarter.

The interest is paid on the first day of the The interest is paid on the first day of the next quarter, or on January 1, April 1, next quarter, or on January 1, April 1, July 1, and October 1.July 1, and October 1.

Sometimes interest is paid twice a year, Sometimes interest is paid twice a year, or in or in semiannualsemiannual periods (six months, or periods (six months, or one-half year).one-half year).

Calculate Simple Interest

To find the simple interest for any To find the simple interest for any period, first find the interest on the period, first find the interest on the deposit for a deposit for a full yearfull year..– Then multiply that amount by the fraction of Then multiply that amount by the fraction of

a year, such as ¼ or ½ for which you want to a year, such as ¼ or ½ for which you want to find interest.find interest.

Interest = Principal × Rate × Time (I=PRT)

SEC. 3-6 SAVINGS ACCOUNTSSIMPLE INTERESTSIMPLE INTEREST – –

PD QRTLY OR SEMI-ANNUALPD QRTLY OR SEMI-ANNUAL

INTERESTINTEREST = = PRINCIPALPRINCIPAL X X RATERATE X X TIMETIME

PG 112 EX:

I = $400.60 X 0.055 X ½

= $11.016 OR $11.02

SEC. 3-6 SAVINGS ACCOUNTSPG 112 A & BPG 112 A & B

A.)A.)

II = $860 X 0.0225 X ¼ = $860 X 0.0225 X ¼

= $4.8375 OR $= $4.8375 OR $4.844.84

B.)B.)

II = $350 X 0.031 X ½ = $350 X 0.031 X ½

= $5.425 OR $= $5.425 OR $5.435.43

Compounding Interest At the end of each interest period, the interest At the end of each interest period, the interest

due is calculated and added to the previous due is calculated and added to the previous balance in the savings account.balance in the savings account.

The new balance then becomes the principal on The new balance then becomes the principal on which interest is calculated for the next period, which interest is calculated for the next period, if no deposits or withdrawals are made.if no deposits or withdrawals are made.

When you calculate interest and add it to the When you calculate interest and add it to the old principal to make a new principal on which old principal to make a new principal on which you calculate interest for the next period, you you calculate interest for the next period, you are compounding interest.are compounding interest.

Compound Interest

Regardless of how interest is earned, the total Regardless of how interest is earned, the total money in the savings account at the end of the money in the savings account at the end of the last interest period is called the last interest period is called the compound compound amountamount, assuming that no deposits or , assuming that no deposits or withdrawals have been made.withdrawals have been made.

The total interest earned, called The total interest earned, called compound compound interestinterest, is the difference between the original , is the difference between the original principal and the compound amount.principal and the compound amount.

SEC. 3-6 SAVINGS ACCOUNTS

COMPOUND INTERESTCOMPOUND INTEREST – PAID DAILY – PAID DAILY OR QUARTERLYOR QUARTERLY

COMPOUND AMOUNTCOMPOUND AMOUNT – – TOTAL MONEY TOTAL MONEY IN THE SAVINGS ACCOUNT AT THE END OF IN THE SAVINGS ACCOUNT AT THE END OF THE LAST INTEREST PERIODTHE LAST INTEREST PERIOD

COMPOUND INTERESTCOMPOUND INTEREST = =

==COMPOUND AMOUNTCOMPOUND AMOUNT – – ORIGINAL PRINCIPALORIGINAL PRINCIPAL

SEC. 3-6 SAVINGS ACCOUNTSCOMPOUND INTERESTCOMPOUND INTEREST – –

PG 113 EX:PG 113 EX:

I = $800 X 0.06 X 1/4 = $12I = $800 X 0.06 X 1/4 = $12 (INTEREST FOR 1(INTEREST FOR 1STST QTR)QTR)

FIND NEW ACCOUNT BALANCEFIND NEW ACCOUNT BALANCE

$800 + $12 = $812$800 + $12 = $812 (COMPOUND AMOUNT)(COMPOUND AMOUNT)

$812 X .06 X ¼ = $12.18$812 X .06 X ¼ = $12.18 (INTEREST FOR 2ND (INTEREST FOR 2ND

QTR)QTR)


$812 + $12.18 = 824.18$812 + $12.18 = 824.18

SEC. 3-6 SAVINGS ACCOUNTSCOMPOUND INTERESTCOMPOUND INTEREST – –FIND COMPOUND INTEREST FOR THE TWO INTEREST PERIODSFIND COMPOUND INTEREST FOR THE TWO INTEREST PERIODS

$824.18 - $800 = $24.18 $824.18 - $800 = $24.18 (COMPOUND INTEREST)(COMPOUND INTEREST)

SIMPLE INTEREST FOR SAME PROBLEM = SIMPLE INTEREST FOR SAME PROBLEM =

$800 X .06 X ½ = $24 $800 X .06 X ½ = $24

COMPOUND INTEREST FOR SAME PROBLEM =COMPOUND INTEREST FOR SAME PROBLEM = $24.18 $24.18

WHICH MAKES YOU MORE INTEREST?WHICH MAKES YOU MORE INTEREST?

SEC. 3-6 SAVINGS ACCOUNTSCOMPOUND INTERESTCOMPOUND INTEREST – – Pg 113 C & DPg 113 C & D

C)C)

I = $700 X 0.03 X 1/4 = $5.25I = $700 X 0.03 X 1/4 = $5.25 (INTEREST FOR (INTEREST FOR 11STST QTR) QTR)


$700 + $5.25 = $705.25$700 + $5.25 = $705.25 (COMPOUND AMOUNT)(COMPOUND AMOUNT)

$705.25 X .03 X ¼ = $5.29$705.25 X .03 X ¼ = $5.29 (INTEREST FOR 2ND (INTEREST FOR 2ND

QTR)QTR)


$705.25 + $5.29 = 710.54$705.25 + $5.29 = 710.54

SEC. 3-6 SAVINGS ACCOUNTSCOMPOUND INTERESTCOMPOUND INTEREST – – Pg 113 C & DPg 113 C & D

D)D) I = $400 X 0.05 X ½ = $10I = $400 X 0.05 X ½ = $10 (INTEREST FOR 1(INTEREST FOR 1STST QTR) QTR)


$400 + $10 = $410$400 + $10 = $410 (COMPOUND AMOUNT)(COMPOUND AMOUNT)

$410 X .05 X ½ = $10.25$410 X .05 X ½ = $10.25 (INTEREST FOR 2ND QTR)(INTEREST FOR 2ND QTR)


$410 + $10.25 = $ 420.25$410 + $10.25 = $ 420.25Interest Earned in one yearInterest Earned in one year

$420.25 - $400 = $20.25$420.25 - $400 = $20.25

Compound Interest Tables

When you calculate compound interest for several interest periods, you can use a compound interest table.

The table shows the value of one dollar ($1) after it is compounded for various interest rates and periods.

Sample Compound Interest Table

Using a Compound Interest Table1. To calculate annual interest, locate the column

and row where the interest rate and the number of interest periods meet.

2. The number you find is called the multiplier.

3. Multiply the deposit amount by the multiplier to find the compound amount.

4. Subtract the original principal from the compound amount to find compound interest.

SEC. 3-6 SAVINGS ACCOUNTSCOMPOUND INTEREST TABLESCOMPOUND INTEREST TABLES – –

EX 3 PG 114EX 3 PG 114

$400 X 1.344888 = $537.9552 -> $400 X 1.344888 = $537.9552 -> $537.96$537.96 COMPOUND AMOUNT COMPOUND AMOUNT

$537.96 - $400 = $537.96 - $400 = $137.96$137.96

COMPOUND INTERESTCOMPOUND INTEREST

2 ½ % @ 12 yrs2 ½ % @ 12 yrs

COMPOUND INTEREST TABLESCOMPOUND INTEREST TABLES – –

PG 114 EPG 114 E

$1,100 X 1.157625 = $1273.3875 $1,100 X 1.157625 = $1273.3875 $1,273.39$1,273.39 COMPOUND AMOUNTCOMPOUND AMOUNT

$1,273.39 - $1,100 = $1,273.39 - $1,100 = $173.39$173.39 COMPOUND COMPOUND INTERESTINTEREST


5% @ 3 yrs5% @ 3 yrs


PG 114 FPG 114 F

$720 X 1.503630 = $1082.6136 $720 X 1.503630 = $1082.6136 $1,082.61$1,082.61 COMPOUND AMOUNTCOMPOUND AMOUNT

$1,082.61 - $720 = $1,082.61 - $720 = $362.61$362.61 COMPOUND COMPOUND INTERESTINTEREST

6% @ 7 yrs6% @ 7 yrs


EX 4 PG 114EX 4 PG 114

1/41/4 X 8% = 2% X 8% = 2% QUARTERLY RATE QUARTERLY RATE

44 X 3 = 12 X 3 = 12 INTEREST PERIODS INTEREST PERIODS

$1,200 * $1,200 * 1.2682421.268242 = $1,521.89 = $1,521.89 COMPOUND AMOUNTCOMPOUND AMOUNT

$1,521.89 – $1,200 = $321.89$1,521.89 – $1,200 = $321.89

2% @ 12 yrs2% @ 12 yrs


PG 115 GPG 115 G

1/41/4 X 5% = 1.25% X 5% = 1.25% QUARTERLY RATE QUARTERLY RATE


$850 * $850 * 1.1044861.104486 = $938.81 = $938.81 COMPOUND AMOUNTCOMPOUND AMOUNT

$938.81 – $850 = $88.81 $938.81 – $850 = $88.81 INTEREST EARNEDINTEREST EARNED

1.25% @ 8 yrs1.25% @ 8 yrs


PG 115 GPG 115 G

1/21/2 X 4% = 2% X 4% = 2% QUARTERLY RATE QUARTERLY RATE


$1,600 * $1,600 * 1.0824321.082432 = $1,731.89 = $1,731.89 COMPOUND AMOUNTCOMPOUND AMOUNT

$1,731.89 – $1,600 = $131.89 $1,731.89 – $1,600 = $131.89 INTEREST EARNEDINTEREST EARNED

2% @ 4 yrs2% @ 4 yrs


COMPOUND INTEREST TABLESCOMPOUND INTEREST TABLES – –

Review 3-6 Review 3-6 -> ->

WKBK PG 37-38 ALLWKBK PG 37-38 ALL

#1-5#1-5 Simple InterestSimple Interest

#6-9#6-9 Calculate Compound Calculate Compound Interest Manually Interest Manually

#10-18 #10-18 Use Compound TableUse Compound Table

I will make copies of this for you.I will make copies of this for you.

SEC. 3-6 SAVINGS ACCOUNTSQUIZ TEXTBK PG 116 #7-18, 31-35QUIZ TEXTBK PG 116 #7-18, 31-35

•For problem For problem number 17 number 17 the money is the money is in the bank for only 3 compounding in the bank for only 3 compounding periods.periods.

•For problem For problem number 34 number 34 use the table use the table on page 41on page 41

Extra Credit Pg. 116 #19 & 20Extra Credit Pg. 116 #19 & 20

3.7Money Market and CD Accounts

Calculate interest earned on special savings accounts

Calculate the penalty for early withdrawals from CD accounts

Compare the interest earned on savings accounts

Calculate the effective rate of interest

3.7 Special Savings Accounts

In addition to regular passbook savings accounts, many banks also offer special savings accounts for long-term savers.

The interest rates paid on these special savings accounts are higher than the rates paid on regular savings accounts.

3.7 CERTIFICATE OF DEPOSIT

The The certificate of depositcertificate of deposit is widely is widely referred to as a CD.referred to as a CD.

The CD is also known as a The CD is also known as a time deposittime deposit or or a a savings certificatesavings certificate..

Some government rules apply to Some government rules apply to certificate of deposit accounts.certificate of deposit accounts.

(continued on the next slide)

3.7 CERTIFICATE OF DEPOSIT

Most banks require depositors to meet Most banks require depositors to meet certain requirements.certain requirements.– Deposit a minimum amount.Deposit a minimum amount.– Leave the money on deposit for a minimum Leave the money on deposit for a minimum

time. The time may be specified in number time. The time may be specified in number of days, months, or years. The minimum of days, months, or years. The minimum time is called the time is called the termterm. The date that marks . The date that marks the end of the term is the the end of the term is the maturity datematurity date..

– Pay a penalty if money is withdrawn before Pay a penalty if money is withdrawn before the end of the term.the end of the term.

3.7 MONEY MARKET ACCOUNTS

Money market accounts offer Money market accounts offer higher higher interest ratesinterest rates than regular accounts. than regular accounts.

Special rules apply:Special rules apply:– A minimum balance must be kept in the A minimum balance must be kept in the

account for the term specified. More money account for the term specified. More money may be added to the account at any time.may be added to the account at any time.

– The interest rate paid is fixed for short The interest rate paid is fixed for short periods of time.periods of time.

– A small number of checks may be written A small number of checks may be written against the account.against the account.

3-7 MONEY MARKETS & CD ACCOUNTS

PG. 119 A & BPG. 119 A & B

A.) A.) 10,000 x .054 x 310,000 x .054 x 3 = $1,620 = $1,620

B.) B.) 2,000 x .044 x .08333= $7.332,000 x .044 x .08333= $7.33

2,000 x .0432 x .083332,000 x .0432 x .08333 = $7.20= $7.20

7.33 + 7.20 = 7.33 + 7.20 = $14.53$14.53

1/121/12

3.7 Penalties on CDs

By law, banks must charge depositors a By law, banks must charge depositors a penalty for withdrawing money early penalty for withdrawing money early from a certificate of deposit.from a certificate of deposit.

Each bank sets its own penalty for early Each bank sets its own penalty for early withdrawals.withdrawals.

The penalty usually varies with the term The penalty usually varies with the term of the certificate.of the certificate.

3-7 MONEY MARKETS & CD ACCOUNTSPG 120 C & D

C.) 500 x .049 x .25 = $6.13

3/123/12

D.) 1,000 x .067 x 1 = $67

1,000 – 67 = $933

3.7 Compare Savings Accounts

Savings accounts are often compared by Savings accounts are often compared by the interest earned in each account.the interest earned in each account.

To compare, calculate the interest that To compare, calculate the interest that would be earned by each type of account would be earned by each type of account for the same time period.for the same time period.

3-7 MONEY MARKETS & CD ACCOUNTS

PAGE 121 E & FPAGE 121 E & F

E.) E.) .0535 x .5 x 1,400 = $37.45.0535 x .5 x 1,400 = $37.45

37.45 – 15.13 = 37.45 – 15.13 = $22.32$22.32

F.) F.) .0426 x .75 x 1,500 = $47.93.0426 x .75 x 1,500 = $47.93

47.93 – 31.37 = 47.93 – 31.37 = $16.56$16.56

3.7 Effective Rate of Interest

The effective rate of interest is the rate The effective rate of interest is the rate you actually earn by keeping your money you actually earn by keeping your money on deposit for one year.on deposit for one year.

The annual rate and the effective rate The annual rate and the effective rate you earn can be different.you earn can be different.

The effective rate is sometimes referred The effective rate is sometimes referred to as the to as the annual percentage yieldannual percentage yield..

Effective Rate of InterestAmount of Interest Earned for One Year

Amount of Money on Deposit=

3-7 PG 122 G & H PG 122 G & H

– – Use Table on Pg. 113Use Table on Pg. 113

G.)G.) 6% / 4 = 6% / 4 = 1.5%1.5%

1 x 4 = 1 x 4 = 4 yrs4 yrs

1.0613641.061364 x 2,000 = x 2,000 = $2,122.728$2,122.728

2,122.728 - 2,000 = 2,122.728 - 2,000 = $122.728$122.728

122.73 / 122.73 / 2,000 = .061364 = 2,000 = .061364 = 6.14%6.14%

Pg. 113 Pg. 113 1.5% at 4 1.5% at 4

yrs.yrs.

3-7 PG 122 G & H PG 122 G & H

– – Use Table on Pg. 113Use Table on Pg. 113

H.)H.) 5% / 2 = 5% / 2 = 2.5%2.5%

1 x 2 = 1 x 2 = 2 yrs2 yrs

1.0506251.050625 x 6,000 = x 6,000 = $6,303.75$6,303.75

6,303.75 - 6,000 = 6,303.75 - 6,000 = $303.75$303.75

303.75 / 303.75 / 6,000 = .050625 = 6,000 = .050625 = 5.10%5.10%

Pg. 113 Pg. 113 2.5% at 2 2.5% at 2

yrs.yrs.

SEC. 3-7 MONEY MARKETS & CD ACCOUNTS

Review 3-7 -> Review 3-7 -> WKBK PG 39 - 40 ALLWKBK PG 39 - 40 ALL

40 pts40 pts

10:30 Quiz Begins 10:30 Quiz Begins

SEC. 3-7 MONEY MARKETS & CD ACCOUNTS

Quiz 3.7 -> Quiz 3.7 -> TXTBK PG 123 #9-11, 13, 18-20TXTBK PG 123 #9-11, 13, 18-20

#9 – #9 – all simple interest all simple interest no compoundno compound

30 pts30 pts

CHAPTER 3 REVIEW

PAGE 124 – 125 ALLPAGE 124 – 125 ALL

40 pts.40 pts.

CHAPTER 3 TEST

PAGE 129 # 11-18PAGE 129 # 11-18

100 Pts.100 Pts.

CHAPTER 3 INTEGRATED PROJECT

Integrated ProjectIntegrated Project

100 Pts.100 Pts.

CHAPTER 3 GOOGLE DOCS

FIND AND RATE TYPES OF FIND AND RATE TYPES OF SAVINGS ACCOUNTS GOOGLE SAVINGS ACCOUNTS GOOGLE DOCS PROJECTDOCS PROJECT

100 Pts.100 Pts.

Reconciliation FormReconciliation Form - - 1.) ENTER CLOSING BAL




5.) LINE 3 – LINE 4 =


TOTAL

3.1checking accounts prepare a deposit slip record entries in a check register

Documents

savings accounts compound

yrs slide

use compound table

tables pg

total deposit

checking accounts

cash receipts

check register slide