Post on 27-Dec-2015
Chapter 4
BankingBanking
McGraw-Hill/Irwin ©2011 The McGraw-Hill Companies, All Rights Reserved
1. Define and state the purpose of signature cards, checks, deposit slips, check stubs, check registers, and endorsements
2. Correctly prepare deposit slips, write checks
Banking#4#4Learning Unit ObjectivesThe Checking AccountLU4.1LU4.1
4-2
1. Explain the trends in the banking industry
2. Define and state the purpose of the bank statement
3. Complete a check register and a bank reconciliation
4. Explain the trends in online banking pro and con
Banking#4#4Learning Unit ObjectivesTrends in Banking Industry: Bank Statement and Reconciliation Process; Trends inOnline Banking
LU4.2LU4.2
4-3
4-4
Checks/Drafts
Written order instructing a bank, credit union, or savings and loan institution to pay a designated amount of your money on deposit w/the bank to a person or organization
Payee - To whom check is payable
Drawee- Bank ordered to pay
Drawer - One who writes the check
4-5
Deposit Slip - Fig 4.1
Gracie’s Natural Superstore80 Garfield StreetBartlet, NH 01835
Date ________________ 20 __________DEPOSITS MAY NOT BE AVAILABLE FOR IMMEDIATE WITHDRAWAL
IpswichBankipswichbank.com
211370587 88190662
Checks and other items are received for deposit subject to the provisions of the uniform commercial code or any applicable collection agreement
CASHList Checks Singly 1800.00
200.00
Total 2000.00
USE OTHER SIDE FOR ADDITIONAL LISTING. < ENTER TOTAL HERE.
March 4 0953-7058
4-6
The structure of a check - Fig 4.2
Gracie’s Natural Superstore80 Garfield Street 53-7058/2113 No. 633Bartlet, NH 01835 88190662
Pay ____________________20 _____To The Orderof ____________________________________________________$ ___________________
_________________________________________________________________ DOLLARS
IpswichBankipswichbank.com
Memo____________________________ _____________________
:211370587 88190662 633 0000006000
Staples Corporation
March 8 09
xx Six Thousand and 100
xx6,000 100
Molly KateOffice Equipment
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Types of Endorsements
Gracie’s Natural Superstore88190662
Pay to the order ofIpswich Bank
For deposit onlyGracie’s Natural Superstore88190662
Blank Full Restricted
Pay to the order ofIpswich BankGracie’s Natural Superstore 88190662
Can be further endorsed
Only person or company named in
the endorsement can transfer the
check to someone
Limits any further negotiation of the
check
4-8
Trends in Banking Industry
• Since 2008 trends in banking have been changing rapidly.
• The government has been involved in many bailout packages due to the financial crises.
• Some banks have had to close or merge.
Check textbook Web site for the latest updates on banking bailouts and government intervention. www.mhhe.com/slater10e.
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Bank Statement
A statement of different types of activity that have taken place during the month
•Debit - decreases the account -
• Credit - increases the account +
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Ipswich Bank Account Statement1 Pleasant St.Bartlett, NH 01835
Gracies Natural Superstore Checking Acct. 881900662
80 Garfield St.Barltett, NH 01835 Summary as of 3/31/11
Beginning Total Total Service EndingBalance Deposits Withdrawals Charge Balance$13,112.24 $8,705.28 $9,926.00 $28.50 $11,863.02
Deposits Date AmountDeposit 3/5 2,000.00EFT Leasing 3/18 1,808.06Interest 3/31 56.02
Charges Date AmountService 3/31 28.50EFT: Health 3/21 722.00
Checks Daily BalanceNumber Date Amount Date Balance633 3/13 6,000.00 2/28 13,112.24634 3/13 300.00 3/5 15,232.24
Checking Account Transactions
Bank Statement
4-11
Check Register
Used to track written checks
RECORD ALL CHARGES OR CREDIT THAT AFFECT YOUR ACCOUNT
Number Date Description of Transaction Payment/Debit x Fee Deposit/Credit Balance
633 3/8 Staples Co. 6,000 00 -6,000 00
2009
634 3/9 Health Food, Inc. 1,020 00 -1,020 00
3/9 Deposit 389 20 +389 20
15,136 24
9,136 24
8,116 24
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Bank Reconciliation
• Reconciles the difference between the bank statement and the checkbook
Differences in timing Transactions not entered in checkbook
CheckbookCheckbook Bank StatementBank Statement
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Reconciliation
Checkbook Balance
+EFT (electronic funds transfer) +Interest earned +Notes collected+Direct Deposit-ATM withdrawals-Automatic withdrawals-NSF check-Online fees-Automatic payments-Overdrafts-Service charges-Stop payments+/-Book errors
Bank Balance
+Deposit in transit-Outstanding checks+/-Bank errors
Bank StatementBank StatementCheckbook Checkbook
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Steps in Reconciling Account
1) Identify outstanding checks
2) Identify deposits in transit
3) Analyze bank statement for transactions not recorded in check register
4) Check for recording errors in checks, deposits, addition or subtraction
5) Compare the adjusted balances, if different repeat steps 1-4
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Bank ReconciliationGRACIE’S NATURAL SUPERSTORE
Bank Reconciliation as of March 31, 2011Checkbook Balance Bank BalanceGracie’s checkbook balance $6,588.42 Bank Balance $11,863.02Add: Add:EFT leasing: Bakery dept. $1,808.06 Deposit in transit 3,383.26EFT leasing: Meat dept. 4,228.00 $15,246.28Interest 56.02Error: Overstated ck # 634 720.00 6,6812.08
$13,400.50Deduct: Deduct:Service charge $28.50 Outstanding checks:NSF 104.00 No. 638 $572.00EFT Health Insurance pymt. 722.00 854.50 No. 639 638.94
No. 640 166.00
No. 641 406.28 No. 642 917.06 2,700.28
Reconciled balance $12,546.00 Reconciled balance $12,546.00
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Trends in Online Banking Pros and Cons
PROS• Many Online savings accounts are paying 3-4% interest• Online accounts like all bank accounts, are protected by the
Federal Deposit Insurance Corp up to $250,000 per account holder
CONS• Delay in transferring funds between accounts up to four days• The bank will hold up a transfer of funds because it wants to
make sure our funds are good before it lets us have them.