GOALS BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 1 3.4Check Register Reconciliation Reconcile a bank statement Reconcile and correct a check register

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 2 Reconcile the Bank Statement Banks keep track of checking account transactions and send a monthly report, called a bank statement, to depositors.

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 3 Sample Bank Statement

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 4 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.

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 5 Canceled Check A canceled check is a check that the bank has paid and then marked so it can’t be used again.

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 6 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.

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 7 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.

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 8 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.

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 9 Sample Bank Reconciliation Form

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 10 BUSINESS 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.

BUSINESS MATH© Thomson/South-WesternLesson 3.4Slide 11 Reconcile the Check Register Add interest to the balance in the check register. Deduct service charges from the check register.