Chapter 3 Banking Services

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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:
Check:
Check:
Subtotal
Less Cash:
Total Deposited:
285.85
322.94
1.45
610.24
0
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 #
214
Deposit
Date
Debit
215
Deposit
6/14
6/14
6/18
6/13
6/14
Description of
Transaction
Tribune-Democrat
Deposit of Checks
#465
Giant Eagle
Verizon Wireless
Check #245 & 4567
Payment/ Fee If
Debit (-) Any
35.00
Deposit/
Credit (+)
350.00
Balance
$ 1250.00
1215.00
1545.00
658.89
1508.21
1450.26
2109.15
36.79
57.95
Sherry and Jamal Taylor (1)
511 Ridge Road
Syracuse, NY 13205
(2) Date __________ 20____ (3) 13
2-0763
213
Pay to the order of _____(4)______________________________
$____(5)_____
_________(6)_______________________________________ Dollars
Apex National Bank (7)
For Classroom Use Only
Memo ______________(8)_______
(:021307630:)(10) 115” 7963(11) 13(12)
____________(9)______________
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purchases without using cash or checkautomatically withdrawn from checking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+728-36.90-112.85-270-15-128-89.2345.50 =
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
PxRxT=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
PxRxT=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 = 705.25
705.25 x 0.03 x 0.25=
5.29 + 705.25 = 710.54
D. 400 x 0.025 x 0.5 =
5 + 400 = 405
405 x .025 x 0.5 =5.06
405 + 5.06 = 410.06
410.06 – 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
• PxRxT=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%
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