1. Chapter 4
Banking

2. Learning Unit Objectives#4
Banking
Learning Unit Objectives
The Checking Account; Credit Card Transactions
LU4.1
Define and state the purpose of signature cards, checks, deposit slips, check stubs, check registers, and endorsements
Correctly prepare deposit slips, write checks

3. Learning Unit Objectives#4
Banking
Learning Unit Objectives
Bank Statement and Reconciliation Process; Trends in Banking
LU4.2
Define and state the purpose of the bank statement
Complete a check register and a bank reconciliation
Explain the trends in online banking

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
Drawee- Bank ordered to pay
Drawer - One who writes the check
Payee - To whom check is payable

5. Deposit Slip - Fig 4.1 IpswichBank 53-7058 March 4 09 ipswichbank.com
Gracie’s Natural Superstore
80 Garfield Street
Bartlet, NH 01835
Date ________________ 20 __________
DEPOSITS MAY NOT BE AVAILABLE FOR IMMEDIATE WITHDRAWAL
IpswichBank
ipswichbank.com
Checks and other items are received for deposit subject to the provisions of the uniform commercial code or any applicable collection agreement
March 4 09
USE OTHER SIDE FOR ADDITIONAL LISTING. < ENTER TOTAL HERE.

6. The structure of a check - Fig 4.2
Gracie’s Natural Superstore
80 Garfield Street / No. 633
Bartlet, NH
Pay ____________________20 _____
To The
Order
of ____________________________________________________$ ___________________
_________________________________________________________________ DOLLARS
IpswichBank
ipswichbank.com
Memo____________________________ _____________________ :
March 8 09 xx 6,
Staples Corporation xx
Six Thousand and 100
Office Equipment
Molly Kate

7. Types of Endorsements Blank Full Restricted
Pay to the order of
Ipswich Bank
For deposit only
Gracie’s Natural Superstore
Gracie’s Natural Superstore
Pay to the order of
Ipswich Bank
Gracie’s Natural Superstore
Only person or company named in the endorsement can transfer the check to someone
Limits any further negotiation of the check
Can be further endorsed

8. Bank Statement
A statement of different types of activity that have taken place during the month
Debit - decreases the account -
Credit - increases the account +

9. Bank Statement

10. 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
/15 Staples Co
2009
12/18 Deposit
/22 Health Food, Inc
316.33
729 11

11. Transactions not entered in checkbook
Bank Reconciliation
Reconciles the difference between the bank statement and the checkbook
Bank Statement
Checkbook
Differences in timing
Transactions not entered in checkbook

12. Reconciliation Bank Balance +Deposit in transit -Outstanding checks
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 Statement
Checkbook

13. 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

14. Bank Reconciliation GRACIE’S NATURAL SUPERSTORE
Bank Reconciliation as of March 31, 2009
Checkbook Balance Bank Balance
Gracie’s checkbook balance $6, Bank Balance $11,863.02
Add: Add:
EFT leasing: Bakery dept. $1, Deposit in transit ,383.26
EFT leasing: Meat dept. 4, $15,246.28
Interest
Error: Overstated ck # ,
$13,400.50
Deduct: Deduct:
Service charge $ Outstanding checks:
NSF No. 638 $572.00
EFT Health Insurance pymt No No No
No ,700.28
Reconciled balance $12, Reconciled balance $12,546.00

15. Trends in Online Banking
Increase Use of Internet
New Bank Legislation
Role of Middlemen in the Internet

16. Problem 4-9:
Solution:
Sue’s Checkbook Balance $ Bank Balance $
Add: Add:
Interest Deposit in Transit 1,215.15
$ $1,530.80
Deduct: Deduct:
Service Charge $ Outstanding Checks:
Overdraft No $603.15 No No
Reconciled Balance: $ Reconciled Balance: $

17. Challenge Problem Solution:
Checkbook Balance: $ Bank Balance: $1,430.33
Add: Add:
Interest $ Deposit in Transit
IRS Refund 1, , $2,361.41
$2,017.58
Deduct: Deduct:
Gas Company $ Outstanding Checks:
ATM Fee No $138.20
Service Fee No
Debit (5x$.45) No
Printing No
Reconciled Balance $1, Reconciled Balance $1,862.13