chapter 3 banking services. 3.1 checking accounts
TRANSCRIPT
Chapter 3 Banking Services
3.1 Checking Accounts
Deposit Slip
• A deposit slip is used to deposit their paychecks and other monies.
A. Cash Including Coins: 285.85 Check: 322.94 Check: 1.45
Subtotal 610.24Less Cash: 0Total Deposited: 610.24
B. Cash Including Coins: 615.45
Check: 39.86
Check: 3.83
Subtotal 659.14
Less Cash: 0
Total Deposited: 659.14
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
Trans Type or Check #
Date Description of Transaction
Payment/ Debit (-)
Fee If Any
Deposit/ Credit (+)
Balance $ 1250.00
214 6/13 Tribune-Democrat 35.00 1215.00 Deposit 6/14 Deposit of Checks
#465 350.00 1545.00
Debit 6/14 Giant Eagle 36.79 1508.21 215 6/14 Verizon Wireless 57.95 1450.26 Deposit 6/18 Check #245 & 4567 658.89 2109.15
Sherry and Jamal Taylor (1) (2) Date __________ 20____ (3) 13 511 Ridge Road 2-0763
Syracuse, NY 13205 213 Pay to the order of _____(4)______________________________ $____(5)_____ _________(6)_______________________________________ Dollars Apex National Bank (7) For Classroom Use Only Memo ______________(8)_______ ____________(9)______________ (:021307630:)(10) 115” 7963(11) 13(12)
C. 2,583.45 +1,220-825-96.40-12.78 =
D. 129.74+500+1,236-196-950-87.83=
3.2 Electronic Banking
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
• Automatic Teller Machine-ATM– 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• Debit Card- Allows you to pay for purchases without using cash or check-automatically withdrawn from checking account
A. 782.88-85-86.54-50=
B. 1,248.40+890.50-200-12.87-118.94=
3.3 Online Banking
Online Account Access
• Online banking allows you to do your banking online.
• Available balance is the amount available to spend
A. 100+690-35-312.40-150-280 =
100-12.60 =
B. 67+728-36.90-112.85-270-15-128-89.23-45.50 =
3.4 Check Register Reconciliation
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.
• 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
• Bank Statement Balance
+ Outstanding deposi
- Outstanding checks
New Bank Balance
A. 1,383.53--29.45
-87.39
+312.09
B. 793.57
+312.09
-174.85
-32.78
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
C. 727.92
-18.90
+1.60
D. 457.38
-7.68
3.5 Other Reconciliation Problems
Reconcile the Checking Account
• Sometimes there are errors when calculating your checking account
• Compare checkbook register to bank statement item by item
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.
A. 107.87
+0.43
-56.00
+32.95
-35.29
B. 812.45
-200
-80.17
624.77
-92.49
3.6 Savings Accounts
Simple Interest
• Interest-$ paid to an individual or institution for the privilege of using their $
• Same as checking– Deposit $– Withdrawal $– Record transactions
• 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
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
A. 2 ¼% = 2.25% = 0.0225
860 x 0.0225 x 0.25=
P R T
B. 3.1% = 0.031
350 x 0.031 x 0.5 =
P R T
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)
C. 700 x 0.03 x 0.25 = 5.25 + 700 = 705.25705.25 x 0.03 x 0.25=5.29 + 705.25 = 710.54
D. 400 x 0.025 x 0.5 = 5 + 400 = 405405 x .025 x 0.5 =5.06405 + 5.06 = 410.06410.06 – 400 = 10.06
Compound Interest Tables
• Instead of formula can use a table
• Pg. 113
E. Annual 3
1 ¼%
1.037971 x 1,100 = 1,141.77
1,141.77 – 1,100 = 41.77
F. Annual 7
1%
1.072135 x 720 =771.94
771.94 – 720 = 51.94
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
G. 5% x 0.25 = 1.25%
2 years x 4 periods a year = 8
1.104486 x 850 = 938.81
938.81-850 = 88.81
H. 2.5% x .5 = 1.25%
2 years x 2 periods a year = 4
1.050945 x 1,600 = 1,681.51
1,681.51 – 1,600 = 81.51
3.7 Money Market and CD Accounts
• Some special savings paid higher rate than regular savings
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
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
• P x R x T = I
• A. 10,000 x 0.054 x 3 = 1,620
• B. March
2,000 x 0.014 x 0.083 = 2.32
April
2,000 x 0.0132 x0 .083 = 2.19
2.32 + 2.19 = 4.51
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
C. 500 x 0.02 x 0.25 = 2.5
D. 1,000 x 0.047 x 1 = 47
1,000 – 47 = 953
Compare Savings Accounts
E. Time Deposit
1,400 x 0.0235 x 0.5 = 16.45
16.45 – 15.13 = 1.32
F. 1,500 x 0.0326 x 0.25 = 12.23 x 3 = 36.68
36.68 - 31.37 = 5.31
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
G. 4% x 0.25 = 1%
1 x 4 = 4 Periods
1.040604 x 2,000 = 2081.21
2,081.21 – 2,000 = 81.21
81.21 / 2,000 = 0.0406 4.06%
H. 5% x 0.5 = 2.5%
1 x 2 = 2 Periods
1.050625 x 6,000 = 6303.75
6303.75 – 6,000 = 303.75
303.75 / 6,000 = 0.0506 5.06%