1. Chapter 3 Banking Services

2. 3.1 Checking Accounts

3. Deposit Slip
A deposit slip is used to deposit their paychecks and other monies.
Cash Including Coins:
Check:
Check:
Subtotal
Less Cash: 0
Total Deposited:

4. B. Cash Including Coins: 615.45
Check:
Check:
Subtotal
Less Cash: 0
Total Deposited:

5. Check Register
When you write a check you are telling the bank to take money from your account.
Check register is where deposits and checks are written.
Calculate a running balance or new balance
Deposits +
Checks (-)
Balance is the amount of money in account

8. C. 2, , =
D , =

9. 3.2 Electronic Banking

10. Electronic Banking Use telephone, computer, other technology
Banks use computers to transfer deposits and checks, or “funds” from person to person and bank to bank called EFT
Bank Identification Number

11. Automatic Teller Machine-ATM Personal Identification Number – PIN
What can you do with an ATM?
Personal Identification Number – PIN
Direct Deposit-Have paychecks automatically transferred from work to employee bank account
Debit Card- Allows you to pay for purchases without using cash or check-automatically withdrawn from checking account

12. =
1, =

13. 3.3 Online Banking

14. Online Account Access
Online banking allows you to do your banking online.
Available balance is the amount available to spend = =
B =

15. 3.4 Check Register Reconciliation

16. Reconcile the Bank Statement
Banks keep track of checking accounts and send the monthly report or bank statement to customers.
Interest earned is $ paid to customers for the use of their $
Service charge is a deduction made by the bank for handling the checking account.

17. A canceled check is one that the bank has paid and then marked so it can’t be used again
Outstanding checks means that the checks have been written but not yet received or paid by the bank
Outstanding deposit is deposit made after the closing date of the bank statement. – not on the statement but in your register

18. Bank Statement Balance
+ Outstanding deposi
- Outstanding checks
New Bank Balance 1,
-87.39 B
-32.78

19. Reconcile the Check Register
Check Register Balance
+ Interest Earned
Service Charge
+ Any Errors
New Check Register Balance
*CHECK REGISTER AND BANK STATEMENT MUST BALANCE TO RECONCILE

20. C
-18.90
+1.60 D
-7.68

21. 3.5 Other Reconciliation Problems

22. Reconcile the Checking Account
Sometimes there are errors when calculating your checking account
Compare checkbook register to bank statement item by item

23. S1: Compare the bank statement to the check register and note any differences between them.
S2: Prepare a reconciliation form to reconcile the bank statement.
S3: Reconcile the check register.

24. 107.87
+0.43
-56.00
+32.95
-35.29 B
-200
-80.17
624.77
-92.49

25. 3.6 Savings Accounts

26. Simple Interest
Interest-$ paid to an individual or institution for the privilege of using their $
Same as checking
Deposit $
Withdrawal $
Record transactions

27. Interest can be added to your savings account
Quarterly – 4x a year every three months
0.25 = ¼ = 3/12
Semiannually – 2x every six months
0.5 = ½ = 6/12
Annually – 1x a year
1 = 1/1 = 12/12
Monthly – 12 a year every month
0.083 = 1/12

28. Principal x Rate x Time = Interest
P x R x T = I
Time must be calculated out of one year Ex
quarterly = ¼ or 0.25
semiannually = ½ or 0.5
annually = 1
monthly = 1/12 or 0.083
Change percent to decimal

29. 2 ¼% = 2.25% =
860 x x 0.25=
P R T
B. 3.1% = 0.031
350 x x 0.5 =
P R T

30. Compound Interest
Interest is added into balance. – Becomes new principal
P x R x T = I
(Principal x Rate x Time = Interest)
I + P = NP
(Interest + Principal = New Principal)
NP x R x T = I
(New Principal x Rate x Time = Interest)

31. C. 700 x 0.03 x 0.25 = =
x 0.03 x 0.25= =
D. 400 x x 0.5 =
= 405
405 x .025 x 0.5 =5.06 =
– 400 = 10.06

32. Compound Interest Tables
Instead of formula can use a table
Pg. 113
E. Annual 3
1 ¼%
x 1,100 = 1,141.77
1, – 1,100 = 41.77

33. F. Annual 7 1%
x 720 =771.94
– 720 = 51.94

34. What if not for full year?
Interest x ¼ for quarterly
Interest x ½ for semiannually
Periods x 4 for quarterly
Periods x 2 for semiannually

35. G. 5% x 0.25 = 1.25%
2 years x 4 periods a year = 8
x 850 =
= 88.81
H. 2.5% x .5 = 1.25%
2 years x 2 periods a year = 4
x 1,600 = 1,681.51
1, – 1,600 = 81.51

36. 3.7 Money Market and CD Accounts
Some special savings paid higher rate than regular savings

37. Certificate of Deposit
CD – A time deposit or savings certificate
Deposit a minimum amount
Leave the money for minimum time or term
End of term is maturity date
Pay a penalty if withdrawal before term

38. Money Market Accounts Higher interest rates but more like a checking
Minimum balance requirements
Interest rate is fixed
A small # of checks may be written

39. P x R x T = I
A. 10,000 x x 3 = 1,620
B. March
2,000 x x = 2.32
April
2,000 x x = 2.19
= 4.51

40. Penalties on Certificates of Deposit
By law charged a penalty for early withdrawal
Penalty calculated on amount of $ withdrawn from CD
Amount Withdrawn x Rate x Time = Penalty

41. C. 500 x 0.02 x 0.25 = 2.5
D. 1,000 x x 1 = 47
1,000 – 47 = 953

42. Compare Savings Accounts
E. Time Deposit
1,400 x x 0.5 = 16.45
16.45 – = 1.32
F. 1,500 x x 0.25 = x 3 = 36.68
= 5.31

43. Effective Rate of Interest
Rate you actually earn by keeping money on deposit
Also called Annual Percentage Yield (APY)
Amount of Interest Earned for One Year =
Amount of Money on Deposit

44. G. 4% x 0.25 = 1%
1 x 4 = 4 Periods
x 2,000 =
2, – 2,000 = 81.21
81.21 / 2,000 = %

45. H. 5% x 0.5 = 2.5%
1 x 2 = 2 Periods
x 6,000 =
– 6,000 =
/ 6,000 = %