GOALS

Lesson 3.4 Slide 1BUSINESS MATH © Thomson/South-Western

3.4 Check Register Reconciliation

Reconcile a bank statement Reconcile and correct a check register

Lesson 3.4 Slide 2BUSINESS MATH © Thomson/South-Western

Reconcile the Bank Statement

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

Lesson 3.4 Slide 3BUSINESS MATH © Thomson/South-Western

Sample Bank Statement

Lesson 3.4 Slide 4BUSINESS MATH © Thomson/South-Western

Bank Statement

Typical items on a bank statement Checks paid by the bank Deposits, including interest earned ATM withdrawals Service charges

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

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

Lesson 3.4 Slide 5BUSINESS MATH © Thomson/South-Western

Canceled Check

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

Lesson 3.4 Slide 6BUSINESS MATH © Thomson/South-Western

Transactions Outstanding

Checks that are not returned by the bank are called outstanding checks.

This means that the checks have not yet been received or paid by the bank.

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

Lesson 3.4 Slide 7BUSINESS MATH © Thomson/South-Western

Reconciliation

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

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

Lesson 3.4 Slide 8BUSINESS MATH © Thomson/South-Western

Reconcile the Bank Statement

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

equal your check register balance.

Lesson 3.4 Slide 9BUSINESS MATH © Thomson/South-Western

Sample Bank Reconciliation Form

Lesson 3.4 Slide 10BUSINESS MATH © Thomson/South-Western

BUSINESS TIPBUSINESS TIP

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

That means they have not subtracted outstanding checks from the bank balance nor added outstanding deposits to the bank balance.

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

Lesson 3.4 Slide 11BUSINESS MATH © Thomson/South-Western

Reconcile the Check Register

Add interest to the balance in the check register.

Deduct service charges from the check register.