SECTIONI•UNDERSTANDINGANDUSINGCHECKINGACCOUNTS 101
REVIEW EXERCISES
You are the owner of the Busy Bee Launderette. Using the blanks provided, write out the
following checks in proper form.
1. Check #2550, September 14, 20xx, in the amount of $345.54 to the Silky Soap Company for
300 gallons of liquid soap.
20
BUSY BEE LAUNDERETTE
214 Collings Blvd.
Durham, NC 27704
2550
63-398/670
GUARDIAN ® SAFETY © Clarke American ES
Sept. 14 xx
2. Check
#2551
, September 20, 20xx, in the amount of
$68.95
to the Tidy Towel Service for six
dozen wash rags.
20
BUSY BEE LAUNDERETTE
214 Collings Blvd.
Durham, NC 27704
2551
63-398/670
xx
Sept. 20
You have just received a check. Your account number is #099-506-8. Write the following
endorsements in the space provided below and identify what type they are.
3. Allowing you to deposit the check in your account.
4. Allowing you to cash the check.
SECTION I
4
Dollars
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102 CHAPTER4•CHECKINGACCOUNTS
6. Properly fill out the deposit slip for The Star Vista Corp. based on the following information:
a. Date: July 9, 20xx.
b.
$1,680
in currency.
7. Properly fill out the deposit slip for Howard Lockwood based on the following information:
a. Date: December 18, 20xx.
b. A check for
$651.03
.
c.
$150
cash withdrawal.
CURRENCY
C
A
S
H
COIN
CHECKS
63-398/670
HOWARD LOCKWOOD
5700 S. W. 4th St.
Reno, NV 89501
651 03
8. From the following information, complete the three check stubs on page 103 in proper form.
a. Starting balance
.
b. February 12, 20xx, check #439 in the amount of
to The Fidelity Bank for a car
$377.10
$570.00
Source: Based on AARP The Magazine, “Not-so-safe deposits,” Nov./Dec. 2009, page 20.
safe-deposit boxes are a type of safe
usually located inside a bank vault or in
the back of a bank or post office. These
them in your homeowner’s or renter’s
insurance policy.
A “cyber backup” is a good way to
protect your important documents.
Banks and online vendors offer “virtual
safe-deposit boxes,” where digital cop-
ies of documents can be stored.
Dollars
and Sense
85461_ch04_hr_091-122.indd 102 9/23/15 4:36 PM
$2,455.94, $4,338.79
$1,461.69
SECTIONI•UNDERSTANDINGANDUSINGCHECKINGACCOUNTS 103
20
$
IF TAX DEDUCTIBLE
CHECK HERE
439 175.05
February 12
Fidelity Bank
xx
20
$
IF TAX DEDUCTIBLE
CHECK HERE
440 149.88
February 18
Apex Fitness Equipment
xx
20
$
IF TAX DEDUCTIBLE
CHECK HERE
441 23.40
February 27
Royalty Cleaners
xx
9. From the following information, complete the checkbook register:
a. Starting balance
$479.20
.
b. April 7, 20xx, deposit of
.
c. April 14, 20xx, debit card purchase in the amount of
$45.65
to Mario’s Market for
groceries.
d. April 16, ATM withdrawal,
.
e. April 17, check #1208 in the amount of
$870.00
to Banyan Properties, Inc., for rent.
f. April 21, 20xx, electronic payroll deposit of
$1,350.00
.
g. April 27, check #1209 in the amount of
to Elegant Decor for a dining room set.
4/7
PLEASE BE SURE TO DEDUCT ANY BANK CHARGES THAT APPLY TO YOUR ACCOUNT.
DESCRIPTION OF TRANSACTION
DATE
BALANCE FORWARD
To
For
Bal.
3
Deposit
479 20
766 90
CHECK
NUMBER
AMOUNT OF
PAYMENT OR
WITHDRAWAL (−)
AMOUNT OF
DEPOSIT OR
INTEREST (+)
10. From the following information, complete the checkbook register on page 104 through
October 10.
Cheryl Roberts’ account balance on September 26 was
$1,196.19
. On October 1, she
received
$3,023.11
by electronic payroll deposit. Also on October 1, she wrote check
$1,175.00
$37.79
$142.87
$18.46
$38.52
$50
85461_ch04_hr_091-122.indd 103 9/23/15 4:36 PM
104 CHAPTER4•CHECKINGACCOUNTS
9/28
10/1
PLEASE BE SURE TO DEDUCT ANY BANK CHARGES THAT APPLY TO YOUR ACCOUNT.
DESCRIPTION OF TRANSACTION
CHECK
NUMBER
DATE
AMOUNT OF
PAYMENT OR
WITHDRAWAL (−)
BALANCE FORWARD
AMOUNT OF
DEPOSIT OR
INTEREST (+)
To
For
To
For
Bal.
Bal.
3
Debit Card Purchase 37 79 1,158 40
$1,196 19
3,023 11
Payroll Deposit
BUSINESS DECISION: TELLER TRAINING
11. You are the training director for tellers at a large local bank. As part of a new training program
that you are developing, you have decided to give teller trainees a “sample” deposit slip, check,
and check register with common errors on them. The trainees must find and correct the errors.
Your task is to create the three documents.
a. On a separate sheet of paper, list some “typical errors” that bank customers might make on a
b. Use the following blank deposit slip, check, and check register to create “filled-out”
versions, each with one error you named for that document in part a. You make up all the
details: names, dates, numbers, etc.
For
Bal.
CURRENCY
C
A
S
H
COIN
CHECKS
JOHN Q. PUBLIC
1234 Main Street
Anywhere, U.S.A. 10101
20
$
JOHN Q. PUBLIC
1234 Main Street
Anywhere, U.S.A. 10101
PAY TO THE
ORDER OF
DOLLARS
30783078
63-398/670
DOLLARS
FOR
TO
DEPOSIT
BAL. FWD.
DEPOSIT
TOTAL
CENTS
20
$
CHECK HERE
037-049
Bank teller According to the U.S.
Department of Labor, bank tellers make
up
28%
of bank employees and conduct
most of a bank’s routine transactions.
In hiring tellers, banks seek people
Stockbyte/Getty Images
SECTIONII•BANKSTATEmENTRECONCIlIATION 105
PLEASE BE SURE TO DEDUCT ANY BANK CHARGES THAT APPLY TO YOUR ACCOUNT.
DESCRIPTION OF TRANSACTION
CHECK
NUMBER
DATE
AMOUNT OF
PAYMENT OR
WITHDRAWAL (–)
BALANCE FORWARD
AMOUNT OF
DEPOSIT OR
INTEREST (+)
To
For
To
Bal.
3
63-398/670
CHECKS AND OTHER ITEMS ARE RECEIVED FOR DEPOSIT SUBJECT TO THE PROVISIONS OF THE UNIFORM COMMERCIAL CODE OR ANY APPLICABLE COLLECTION AGREEMENTREV. 6/88
:067003985: 8213015083078 ..
.
=
037-049
11755 Biscayne Blvd.
North Miami, Florida 33161
20
$
JOHN Q. PUBLIC
1234 Main Street
Anywhere, U.S.A. 10101
PAY TO THE
ORDER OF
30783078
63-398/670
DOLLARS
FOR
TO
BAL. FWD.
CENTS
20
$
IF TAX DEDUCTIBLE
CHECK HERE
Bank Statement Reconciliation
Your monthly bank statement gives you a detailed review of the activity in your account
for a specific period of time. It’s your best opportunity to make sure your records match the
bank’s records. Be prepared to “match up” every activity (credits and debits) on the statement
with your checkbook.
Understanding the bank statement
Bank statements vary widely in style from bank to bank; however, most contain essentially
the same information. Exhibit 4-13 illustrates typical online and printed bank statements.
Note that it shows the balance brought forward from the last statement, the deposits and cred-
its that have been added to the account during the month, the checks and debits that have been
subtracted from the account during the month, any service charges assessed to the account,
and the current or ending balance.
Credits are additions to the account, such as interest earned, notes collected, and electronic
funds transfers of direct deposit payroll checks. Debits are subtractions from the account,
bank statementA monthly summary
of the activities in a checking account,
including debits, credits, and beginning
and ending balance. Sent by the bank to
4-6
creditsAdditions to a checking account,
such as deposits and interest earned.
debitsSubtractions from a checking
account, such as service charges.
nonsufficient fund (nsF) feeA fee
4
SECTION II
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SECTIONII•BANKSTATEmENTRECONCIlIATION 111
REVIEW EXERCISES
1. On April 3, Erin Gardner received her bank statement showing a balance of
$2,087.93
. Her
CHECKBOOK
BALANCE
Add:
Interest Earned
& Other Credits
$$
STATEMENT
BALANCE
Add:
Deposits in
Transit
Checks Outstanding
No.Amount
1,493.90
450.00
2,087.93
813.11
224 15
327 80
88 10
2. Bob Albrecht received his bank statement on July 5 showing a balance of
$2,663.31
.
$1,931.83
CHECKBOOK
BALANCE
$$
STATEMENT
BALANCE
1,931.83
2,663.31
Checks Outstanding
No.Amount
182 00
4
SECTION II
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$1,493.90
112 CHAPTER4•CHECKINGACCOUNTS
3. On December 2, John Leahy received his bank statement showing a balance of
. His
checkbook showed a balance of
. There was a check printing charge of
$13.95
, and
interest earned was
$6.40
. The outstanding checks were for
$22.97
,
$80.36
,
$19.80
, and
$4.50
.
The deposits in transit totaled
. Use the form below to reconcile John’s account.
CHECKBOOK
BALANCE
Add:
Interest Earned
& Other Credits
$$
STATEMENT
BALANCE
Add:
Deposits in
Transit
Checks Outstanding
No. Amount
479.39
6.40
358.97
240.50
22 97
80 36
19 80
4 50
BUSINESS DECISION: CHOOSING A BANK
4. You are looking for a bank in which to open a checking account for your new part-time
business. You estimate that in the first year, you will be writing
30
checks per month and will
make three debit transactions per month. Your average daily balance is estimated to be
$900
for
the first six months and
$2,400
for the next six months.
Use the following information to solve the problem.
Bank Monthly Fees and Conditions
Intercontinental Bank
$15.00
with
$1,000
min. daily balance
-or-
$25.00
under
$1,000
min. daily balance
$4.50
$0.50
10
$1.00
$6
$0.25
$2.00
$9
$0.15
a. Calculate the cost of doing business with each bank for a year.
Intercontinental Bank:
City National Bank:
175
Taking a Toll
2008 to 2010, U.S. bank failures increased
dramatically as part of the global financial
crisis.
150
125
100
In the two-year period from 2008 to
2010, U.S. bank failures increased dra–
matically as part of the global finan–
85461_ch04_hr_091-122.indd 112 9/23/15 4:36 PM
ChAPTER SUMMARY 113
Bank of America:
First Union Bank:
b. Which bank should you choose for your checking account?
chapter sUmmary
section i: Understanding and Using Checking Accounts
topic important Concepts illustrative Examples
Checks
Performance Objectives 4-1 and
4-2, Pages 92–95
Checks, or drafts, are negotiable instruments
ordering the bank to pay money from the
checking account to the name written on the
check.
See Check with Parts Labeled, Exhibit 4-2, p. 93
Trailing Edge
Date of Check
Bank and Federal Reserve
District Number
Payor’s
Name and Address
Check Number
DepositSlips
Performance Objective 4-1,
Deposit slips, or deposit tickets, are printed
forms with the depositor’s name, address,
account number, and space for the details of
the deposit.
See Deposit Slip, Exhibit 4-3, p. 93
CURRENCY
C
A
S
H
COIN
CHECKS
63-398/670
JOHN Q. PUBLIC
1234 Main Street
Anywhere, U.S.A. 10101
Check Stubs
Performance Objective 4-1,
Check stubs, with checks attached by
perforation, are a bound part of the
checkbook.
See Check Stub with Check, Exhibit 4-4, p. 94
20
JOHN Q. PUBLIC
1234 Main Street
Anywhere, U.S.A. 10101
30783078
63-398/670
TO
20
$
IF TAX DEDUCTIBLE
CHECK HERE
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