3.1 Checking Accounts
Prepare a deposit slip
Record entries in a check register
Checking Account
 Many people deposit their cash receipts
in a checking account at a bank and
make their payments by check.
 A checking account is safe and easy to
use.
 The canceled checks returned to you by
the bank provide you with a record of
your payments.
Deposit Slip
 A deposit slip is used to deposit
paychecks and other monies.
Prepare a
Deposit Slip
1153
2053
 List cash deposits of bills and







coins on the line labeled CASH.
List each check on a separate line.
List additional checks on the back.
Enter total of additional checks on the Total from
Other Side line.
Add all the amounts and write the sum on the
Subtotal line.
To receive cash back from the bank, write the
amount wanted on the Less Cash Received line.
Subtract the cash received from the subtotal to
find the Total Deposit.
Sign on the signature line for cash back
Deposit Slip Example
 Sherry has check number 825 for $800,
she wants to deposit $700 of it and keep
$100 in cash.
Sherry Taylor
Add
signature if
getting cash
back
825
800.00
100.00
700.00
June 30
2008
Sheryl Smock
280 00
5 85
322 94
1 45
---- --610 24 <-Gross Deposit
100 00
510 24 <-Net Deposit
Textbook Pg. 85 Example A
Deposit-> 14 twenties, 21 quarters, 6 dimes,
checks: $322.94 & $1.45.
Cash Received -> $100
June 30
2008
602 00
13 45
39 86
3 83
---- --659 14 <-Gross Deposit
---- --659 14 <-Net Deposit
Textbook Pg. 85 Example B
Deposit-> 17 twenties, 18 tens, 9 fives, 37
ones, 49 quarters, 12 dimes,checks: $39.86 &
$3.83.
Cash Received -> $0
Checks
 When you write a check you direct the
bank to make a payment from your
checking account.
 Checks are numbered to make it easy to
keep track of checks.
Check Register
 The check register is part of the
checkbook in which deposits and checks
are recorded.
 A new balance, called a running balance,
is calculated after each entry.
– Each deposit is added to the previous
balance.
– Each check is subtracted from the previous
balance.
 The balance is the amount of money in
the account.
Sample Check Register
Payment/Debit
Money going out
Deposit/Credit
Money coming in
SEC 3-1 CHECK REGISTER
####
####
08/11 Deposit
08/13 Check Desc.
08/13 Check Desc.
825 00
96 40
2583 45
1220 00 3803 45
2978 45
2882 05
####
08/13 Check Desc.
12 78
2869 27
Final Balance
Pg. 87 C – Prev Bal $2,583.45, deposit $1,220, checks: $825,
96.40, $12.78
What’s the final balance?
SEC 3-1 CHECK REGISTER
####
####
####
08/11
08/11
08/13
08/13
08/13
Deposit
Deposit
Check Desc.
Check Desc.
Check Desc.
196 00
950 00
87 83
129
500 00 629
1236 00 1865
1669
719
631
New Balance
Pg. 87 D – Prev Bal $129.74, deposits: $500 & $1,236, checks:
$196, $950, $87.83
What’s the new balance?
74
74
74
74
74
91
SECTION 3-1 Rev. Questions
 TEXTBOOK PAGE 88 #7-13, 16, 17-19,
27-32
– (17 pts.)
SECTION 3-1 QUIZ
 WORKBOOK PAGE 29-30
– I have copies of this to give you
• ( 92 pts.)
 Internet Extra Credit Quizzes
3.2 Electronic Banking
Record electronic banking
transactions
Find account balance when
banking electronically
Electronic Banking
 All banks use computers to process
transactions electronically.
 Electronic banking allows bank
customers to use telephones, computers,
and other technologies in place of paper
transactions such as writing checks and
making loan payments.
Electronic Funds Transfer
 Banks use computers to transfer deposits
and checks, or “funds,” from person to
person and bank to bank.
 This process is called Electronic Funds
Transfer, or EFT.
Customer Account Numbers &
Bank Identification Number
 Banks print the account numbers of
customers and the bank identification
number in Magnetic Ink Character
Recognition, or MICR, form at the
bottom of deposit slips and checks.
ROUTING
NUMBER
ACCOUNT
NUMBER
Automatic Teller Machine
 Individuals can also transfer funds
electronically when they use an
Automatic Teller Machine, or ATM.
 By using an ATM card issued by your
bank, you can withdraw or deposit
money, see account balances, or make
transfers between your accounts.
Personal Identification Number
 A Personal Identification Number, or PIN,
that is known only to you is entered into
the ATM before your transaction is
processed.
 The PIN provides protection against
unauthorized use of your ATM card.
Paying Bills with EFT
 EFTs may also be used to pay your
monthly bills, such as utility bills.
 You can instruct your bank to transfer
funds automatically each month from
your bank account to the account of your
utility provider.
 No checks are written or mailed.
Direct Deposit
 Some companies use EFT to pay their
employees by transferring funds directly
into their employees’ bank accounts
without writing any checks to the
employees.
 This is called direct deposit.
Debit Card
 Many people use a special form of EFT
called a debit card.
 Debit cards allow you to pay for your
purchases without using cash.
Using a Debit Card
 You insert your debit card into a special
computer terminal at stores.
 The computer system subtracts the
amount of each purchase automatically
from your checking account and adds the
same amount to the store’s bank account.
 You may also use your debit card to
withdraw cash from your account.
 Fees may be charged for using this card.
Recording Electronic
Transactions
 When you use a debit card you get a receipt of
the transaction.
 Save the receipt and immediately record the
payment or cash withdrawal in your check
register.
– Record the payment by writing the word “Debit”
and adding a short description as well.
– Record an ATM withdrawal by writing ATM-WD.
– Record an ATM deposit by writing ATM-DEP.
SEC 3-1 CHECK REGISTER
DB
DB
Atm
08/13 Car Repairs.
08/13 Clothing Purch
08/13 Withdrawal
782
697
611
561
85 00
86 54
50 00
New Balance
Pg. 92 A – Prev Bal $782.88, Debit Card: Car Repairs $85,
Clothing Purchase $86.54, ATM Withdrawal $50,
What’s the new balance?
88
88
34
34
SEC 3-1 CHECK REGISTER
DB
DB
Atm
08/13
08/13
08/13
08/13
Deposit
XXXXX
.
XXXXX
Withdrawal
12 87
118 94
200 00
1248
890 50 2138
2126
2007
1807
New Balance
Pg. 92 B – Prev Bal $1,248.40, Deposit $890.50, Debit Card:
$12.87, $118.94, ATM Withdrawal $200,
What’s the new balance?
40
90
03
09
09
SEC. 3-2 ELECTRONIC
BANKING - Review
Txtbk PAGE 93 # 5-8, 10-15
(16 pts.)
SEC. 3-2 ELECTRONIC
BANKING - Quiz
Wkbk PAGE 31 # 1-5
(10 pts.)
3.3 Online Banking
Calculate account balance needed
to make online payments
3.3 Online-Account Access
 Online banking allows you to do your
banking by using your personal
computer and the Internet.
 Each bank designs its own Internet
website.
 What you see on your screen and how
you use an online banking system differs
among banks.
3.3 Examples of
Online Banking Services
 Access accounts 24 hours day, 7 days a
week
 Transfer money between accounts
 Receive bills electronically
 Make payments
 Reorder checks
 Communicate with bank staff
 View account history
3.3 Sample Online Banking Screen
3.3 Making Decisions
About Online Accounts
 When selecting a bank at which to do
online banking, the most convenient
choice is the bank you now use.
 You should also evaluate the systems at
other banks.
 Select the system that best meets your
needs, is easiest to use, and does so at the
least cost.
3.3 Using Online Accounts
 You must identify sources of deposits to
the account and decide who will be paid
online.
 You will also have to determine the dates
on which bills are due and the usual
amount of the bill if it changes from
month to month.
 Online banking simplifies the banking
process, yet is very similar to using a
regular checking account.
SEC. 3-3 ONLINE BANKING
Textbook pg. 97 Ex B
B.)
+
-
$67.00
728.00
36.90
112.85
270.00
15.00
128.00
89.23
45.50
$97.52
Balance
Deposit
Debit Card Purchase
Debit Card Purchase
Check
Check
Boat Insurance
Charge Card
Medical Bill
.
SEC. 3-3 ONLINE BANKING
Review
•Textbook PAGE 98 # 6-8, 11-13
Quiz at 10:30
SEC. 3-3 ONLINE BANKING
Quiz
 WKBK PAGE 32 # 1-4 PRACTICE
3.4 Check Register
Reconciliation
Reconcile a bank statement
Reconcile and correct a check
register
3.4 Reconcile the Bank Statement
 Banks keep track of checking account
transactions and send a monthly report,
called a bank statement, to depositors.
3.4 Sample Bank Statement
3.4 Bank Statement
 Typical items on a bank statement
– Checks paid by the bank
– Deposits, including interest earned
– ATM withdrawals
– Service charges
 Interest earned is money paid to customers for
the use of their money.
 A service charge is a deduction made by the
bank for handling the checking account.
3.4 Canceled Check
 A canceled check is a check that the bank
has paid and then marked so it can’t be
used again.
3.4 Transactions Outstanding
 Checks that are not returned by the bank
are called outstanding checks.
– This means that the checks have not yet been
received or paid by the bank.
 An outstanding deposit occurs when a
deposit is made after the closing date of
the bank statement and the deposit is
recorded in the check register.
3.4 Reconciliation
 The difference (their balances do not
match) in the checkbook balance and the
bank statement balance is the result of
the outstanding transactions, interest
earned, and the service charge.
 To bring both balances into agreement
(or match) and to make sure the bank’s
records are correct, both records must be
reconciled.
Ms. Smock will hand out the reconciliation forms
3.4 Reconcile the Bank Statement
 Follow the steps on the reconciliation
form on the back of the bank statement.
–
–
–
–
–
Enter Closing Balance from Statement
Add any deposits outstanding
Add lines 1 and 2
Enter total of Checks Outstanding
Subtract line 4 from line 3. This amount
should equal your check register balance.
• If not then you need to do more steps
3.4
Sample Bank
Reconciliation Form
3.4 BUSINESS TIP
 Outstanding items (checks and deposits)
are items that you have recorded in your
check register but the bank has not yet
received.
– That means they have not subtracted
outstanding checks from the bank balance
nor added outstanding deposits to the bank
balance.
 These are two reasons most likely reasons
why your balance doesn’t match the
bank’s balance.
3.4 Reconcile the Check Register
 Add interest to the balance in the check
register.
 Deduct service charges from the check
register.
 The Balance from the check register
should now equal the balance on the
reconciliation sheet
SEC. 3-4 CHECK REGISTER
RECONCILIATION
PG 101 A
1,383.53
1.) ENTER CLOSING BAL
------------2.) ADD ANY DEPOSITS +
1,383.53
3.)ADD LINES 1 & 2
=
216.84
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
= 1,166.69
OUTSTANDING
CHECKS
129.45
87.39
Continue on the next slide - TOTAL
216.84
6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED
TO THE CHECK REGISTER & UPDATE BALANCE NO
7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER
5 ON THE WORKSHEET?
YES
1166 69
SEC. 3-4 CHECK REGISTER
RECONCILIATION
PG 101 B
793.57
1.) ENTER CLOSING BAL
312.09
2.) ADD ANY DEPOSITS +
1,105.66
3.)ADD LINES 1 & 2
=
207.63
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
898.03
OUTSTANDING
CHECKS
278
174.85
280
32.78
Continue on the next slide - TOTAL
207.63
6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED
TO THE CHECK REGISTER & UPDATE BALANCE
NO
7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER
5 ON THE WORKSHEET?
YES
898 03
SEC. 3-4 CHECK REGISTER
RECONCILIATION
PG 102 C
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
OUTSTANDING
CHECKS
727.92
Continue on the next slide - TOTAL
6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED
TO THE CHECK REGISTER & UPDATE BALANCE
7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER
5 ON THE WORKSHEET?
PG 102 C
xx/xx Service Charge
xx/xx Interest Earned
YES
18 90
1 60
727 92
709 02
710 62
6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED
TO THE CHECK REGISTER & UPDATE BALANCE
7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER
5 ON THE WORKSHEET?
PG 102 D
xx/xx Service Charge
YES
7 68
457 38
449 70
SEC. 3-4 CHECK REGISTER
RECONCILIATION
Closing Balance on Bank statement is
300.00. Your balance in your
checkbook is 100.00. There are
outstanding checks of $45 and $200.
There is an outstanding deposit of
$50. The bank charges $5 service
charge. Interest earned is $10.
Reconcile the bank statement with
your checkbook.
SEC. 3-4 CHECK REGISTER
RECONCILIATION
x
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
300.00
OUTSTANDING
CHECKS
50.00
350.00
----
45.00
----
200.00
245.00
105.00
Continue on the next slide - TOTAL
245.00
6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED
TO THE CHECK REGISTER & UPDATE BALANCE
7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER
5 ON THE WORKSHEET?
YES
xx/xx Service Charge
xx/xx Interest Earned
5 00
10 00
100 00
95 00
105 00
SEC. 3-4 CHECK REGISTER
RECONCILIATION
Closing Balance on Bank statement is
20.00. Your balance in your
checkbook is 25.00. There are
outstanding checks of $5 and $10. The
bank charges $10 service charge. The
bank made a $10 error not in your
favor. Reconcile the bank statement
with your checkbook.
SEC. 3-4 CHECK REGISTER
RECONCILIATION
x
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
20.00
OUTSTANDING
CHECKS
--------20.00
----
5.00
----
10.00
15.00
5.00
Continue on the next slide - TOTAL
15.00
6.) ADD ANY SERVICE CHARGES OR INTEREST EARNED
TO THE CHECK REGISTER & UPDATE BALANCE
7.) DOES THE BALANCE EQUAL THE AMOUNT IN NUMBER
5 ON THE WORKSHEET?
YES
xx/xx Service Charge
xx/xx Bank Error
10 00
10 00
25 00
15 00
5 00
SEC. 3-4 CHECK REGISTER
RECONCILIATION
Review Textbook (16 pts.)
Page 103
5-7 do on paper, 8 & 10 use
reconciliation forms
I will have the reconciliation forms
for you
#19-23 do on paper
SEC. 3-4 CHECK REGISTER
RECONCILIATION
Quiz - Workbook page 34 # 1-4 (61
pts.)
•Use the worksheet Mrs. Smock
gives you.
Reconciliation
Form
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
OUTSTANDING
CHECKS
TOTAL
3.5 Other Reconciliation
Problems
Reconcile a checking account with
outstanding transactions and other
errors
Reconcile the Checking Account
 Sometimes you must reconcile a bank
statement and check register balances
when deposits, checks, and EFT
transactions are not recorded and when
other errors are made.
SEC. 3-5 OTHER
RECONCILIATION PROBLEMS
STEPS TO FIND PROBLEMS
1.) Check to see if balance of
check register and bank
statement are the same.
If they don’t agree you have to
reconcile the account.
SEC. 3-5 OTHER
RECONCILIATION PROBLEMS
STEPS TO FIND PROBLEMS
2.) Compare to see if each item of
on the register is also on the bank
statement.
If an item is on both put a checkmark
on the item in the bank statement.
Place an “X” on the items that need to be
looked into.
SEC. 3-5 OTHER
RECONCILIATION PROBLEMS
STEPS TO FIND PROBLEMS
3.) Prepare a reconciliation
form to reconcile the bank
statement.
4.) Reconcile the check
register.
Go over together Pg 106-107
SEC. 3-5
Pg. 106-107
632.31
OUTSTANDING
CHECKS
85.00
717.31
850
8.12
852
34.28
TOTAL
42.40
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
Ch851 7/19
ck853 wrong
ck853 correct
atm dep 7/28
Int. earned
ATM with 7/12
ATM fee 7/12
EFT truck loan
Debit card fee
42.40
674.91
37 16
72 05
120
1
416
6
00
50
18
40
1181 39
1144 23
27 05 1171 28
1099 23
118 20 1217 43
1 56 1218 99
1098 99
1097 49
681 31
674 91
SEC. 3-5
Pg. 108 A
161.96
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
TOTAL
161.96
Int. earned
atm dep
ck307 wrong
ck307 correct
OUTSTANDING
CHECKS
43
56 00
32 95
35 29
107 87
108 30
164 30
197 25
161 96
SEC. 3-5
Pg. 108 B
624.77
OUTSTANDING
CHECKS
--------624.77
201
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
ATM with
Ch202
92.49
TOTAL
92.49
92.49
532.28
200 00
812 45
612 45
80 17
532 28
SEC. 3-5
REVIEW
•TEXTBOOK PG 109 #7-10
•USE THE PAPER I GIVE YOU AND
LABEL THE PROBLEM NUMBERS
•TEXTBOOK PG 110 #18-21
•DO ON PAPER
30 POINTS
SEC. 3-5
QUIZ
•WKBK PG 35-36 #1-2
•I have copies for you
57 Points
SEC. 3-5
Banking Simulation
Banking Is Check set
Integra Bank
100 Points
3.6 Savings Accounts
Calculate simple interest on savings
deposits
Calculate compound interest on
savings deposits
Calculate interest using a compound
interest table
Interest
 One reason people open savings accounts
is to keep their money safe.
 Another reason is that they earn interest
on their money.
 Interest is money paid to an individual or
institution for the privilege of using their
money.
Lesson 3.6
78
Transaction
 As with a checking account, you may
deposit money into or withdraw money
from your savings account.
 The bank teller may give you a receipt,
which is an official record of the
transaction.
 A transaction is something that happens
that has to be recorded, such as a deposit
or withdrawal.
Simple Interest
 Simple interest is often figured quarterly,
or four times a year, on the balance of the
account at the end of each quarter.
 The interest is paid on the first day of the
next quarter, or on January 1, April 1,
July 1, and October 1.
 Sometimes interest is paid twice a year,
or in semiannual periods (six months, or
one-half year).
Calculate Simple Interest
 To find the simple interest for any period,
first find the interest on the deposit for a
full year.
– Then multiply that amount by the fraction of
a year, such as ¼ or ½ for which you want to
find interest.
Interest = Principal × Rate × Time (I=PRT)
SEC. 3-6 SAVINGS ACCOUNTS
SIMPLE INTEREST –
PD QRTLY OR SEMI-ANNUAL
INTEREST = PRINCIPAL X RATE X TIME
PG 112 EX:
I = $400.60 X 0.055 X ½
= $11.016 OR $11.02
SEC. 3-6 SAVINGS ACCOUNTS
PG 112 A & B
A.)
I = $860 X 0.0225 X ¼
= $4.8375 OR $4.84
B.)
I = $350 X 0.031 X ½
= $5.425 OR $5.43
Compounding Interest
 At the end of each interest period, the interest
due is calculated and added to the previous
balance in the savings account.
 The new balance then becomes the principal on
which interest is calculated for the next period,
if no deposits or withdrawals are made.
 When you calculate interest and add it to the
old principal to make a new principal on which
you calculate interest for the next period, you
are compounding interest.
Compound Interest
 Regardless of how interest is earned, the total
money in the savings account at the end of the
last interest period is called the compound
amount, assuming that no deposits or
withdrawals have been made.
 The total interest earned, called compound
interest, is the difference between the original
principal and the compound amount.
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST – PAID DAILY
OR QUARTERLY
COMPOUND AMOUNT – TOTAL MONEY
IN THE SAVINGS ACCOUNT AT THE END OF
THE LAST INTEREST PERIOD
COMPOUND INTEREST =
=COMPOUND AMOUNT – ORIGINAL PRINCIPAL
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST –
PG 113 EX:
I = $800 X 0.06 X 1/4 = $12 (INTEREST FOR
1ST QTR)
FIND NEW ACCOUNT BALANCE
$800 + $12 = $812 (COMPOUND AMOUNT)
$812 X .06 X ¼ = $12.18 (INTEREST FOR 2ND
QTR)
FIND NEW ACCOUNT BALANCE
$812 + $12.18 = 824.18
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST –
FIND COMPOUND INTEREST FOR THE TWO INTEREST PERIODS
$824.18 - $800 = $24.18 (COMPOUND INTEREST)
SIMPLE INTEREST FOR SAME PROBLEM =
$800 X .06 X ½ = $24
COMPOUND INTEREST FOR SAME PROBLEM =
$24.18
WHICH MAKES YOU MORE INTEREST?
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST – Pg 113 C & D
C)
I = $700 X 0.03 X 1/4 = $5.25 (INTEREST FOR
1ST QTR)
FIND NEW ACCOUNT BALANCE
$700 + $5.25 = $705.25 (COMPOUND AMOUNT)
$705.25 X .03 X ¼ = $5.29 (INTEREST FOR 2ND
QTR)
FIND NEW ACCOUNT BALANCE
$705.25 + $5.29 = 710.54
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST – Pg 113 C & D
D) I = $400 X 0.05 X ½ = $10
(INTEREST FOR 1ST QTR)
FIND NEW ACCOUNT BALANCE
$400 + $10 = $410 (COMPOUND AMOUNT)
$410 X .05 X ½ = $10.25 (INTEREST FOR 2ND QTR)
FIND NEW ACCOUNT BALANCE
$410 + $10.25 = $ 420.25
Interest Earned in one year
$420.25 - $400 = $20.25
Compound Interest Tables
 When you calculate compound interest for
several interest periods, you can use a
compound interest table.
 The table shows the value of one dollar ($1)
after it is compounded for various interest
rates and periods.
Sample Compound Interest Table
Using a Compound Interest Table
1. To calculate annual interest, locate the
column and row where the interest rate and
the number of interest periods meet.
2. The number you find is called the
multiplier.
3. Multiply the deposit amount by the
multiplier to find the compound amount.
4. Subtract the original principal from the
compound amount to find compound
interest.
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST TABLES –
EX 3 PG 114
2 ½ % @ 12 yrs
$400 X 1.344888 = $537.9552 ->
$537.96 COMPOUND AMOUNT
$537.96 - $400 = $137.96
COMPOUND INTEREST
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST TABLES –
PG 114 E
5% @ 3 yrs
$1,100 X 1.157625 = $1273.3875
$1,273.39 COMPOUND AMOUNT
$1,273.39 - $1,100 = $173.39
INTEREST
COMPOUND
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST TABLES –
PG 114 F
6% @ 7 yrs
$720 X 1.503630 = $1082.6136
$1,082.61 COMPOUND AMOUNT
$1,082.61 - $720 = $362.61
INTEREST
COMPOUND
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST TABLES –
EX 4 PG 114
1/4 X 8% = 2% QUARTERLY RATE
4 X 3 = 12 INTEREST PERIODS
2% @ 12 yrs
$1,200 * 1.268242 = $1,521.89
$1,521.89 – $1,200 = $321.89
COMPOUND AMOUNT
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST TABLES –
PG 115 G
1/4 X 5% = 1.25% QUARTERLY RATE
4 X 2 = 8 INTEREST PERIODS
1.25% @ 8 yrs
$850 * 1.104486 = $938.81
$938.81 – $850 = $88.81
COMPOUND AMOUNT
INTEREST EARNED
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST TABLES –
PG 115 G
1/2 X 4% = 2% QUARTERLY RATE
2 X 2 = 4 INTEREST PERIODS
2% @ 4 yrs
$1,600 * 1.082432 = $1,731.89 COMPOUND AMOUNT
$1,731.89 – $1,600 = $131.89
INTEREST EARNED
SEC. 3-6 SAVINGS ACCOUNTS
COMPOUND INTEREST TABLES –
Review 3-6 ->
WKBK PG 37-38 ALL
#1-5
Simple Interest
#6-9
Calculate Compound
Interest Manually
#10-18
Use Compound Table
I will make copies of this for you.
SEC. 3-6 SAVINGS ACCOUNTS
QUIZ TEXTBK PG 116 #7-18, 31-35
•For problem number 17 the money is
in the bank for only 3 compounding
periods.
•For problem number 34 use the table
on page 41
Extra Credit Pg. 116 #19 & 20
3.7 Money Market and
CD Accounts
Calculate interest earned on special
savings accounts
Calculate the penalty for early
withdrawals from CD accounts
Compare the interest earned on savings
accounts
Calculate the effective rate of interest
3.7 Special Savings Accounts
 In addition to regular passbook savings
accounts, many banks also offer special
savings accounts for long-term savers.
 The interest rates paid on these special
savings accounts are higher than the rates
paid on regular savings accounts.
3.7 CERTIFICATE OF DEPOSIT
 The certificate of deposit is widely
referred to as a CD.
 The CD is also known as a time deposit or
a savings certificate.
 Some government rules apply to
certificate of deposit accounts.
(continued on the next slide)
3.7 CERTIFICATE OF DEPOSIT
 Most banks require depositors to meet
certain requirements.
– Deposit a minimum amount.
– Leave the money on deposit for a minimum
time. The time may be specified in number
of days, months, or years. The minimum
time is called the term. The date that marks
the end of the term is the maturity date.
– Pay a penalty if money is withdrawn before
the end of the term.
3.7 MONEY MARKET ACCOUNTS
 Money market accounts offer higher
interest rates than regular accounts.
 Special rules apply:
– A minimum balance must be kept in the
account for the term specified. More money
may be added to the account at any time.
– The interest rate paid is fixed for short
periods of time.
– A small number of checks may be written
against the account.
3-7 MONEY MARKETS
& CD ACCOUNTS
1/12
PG. 119 A & B
A.) 10,000 x .054 x 3 = $1,620
B.) 2,000 x .044 x .08333= $7.33
2,000 x .0432 x .08333 = $7.20
7.33 + 7.20 = $14.53
3.7 Penalties on CDs
 By law, banks must charge depositors a
penalty for withdrawing money early
from a certificate of deposit.
 Each bank sets its own penalty for early
withdrawals.
 The penalty usually varies with the term
of the certificate.
3-7 MONEY MARKETS
& CD ACCOUNTS
3/12
PG 120 C & D
C.) 500 x .049 x .25 = $6.13
D.) 1,000 x .067 x 1 = $67
1,000 – 67 = $933
3.7 Compare Savings Accounts
 Savings accounts are often compared by
the interest earned in each account.
 To compare, calculate the interest that
would be earned by each type of account
for the same time period.
3-7 MONEY MARKETS
& CD ACCOUNTS
PAGE 121 E & F
E.) .0535 x .5 x 1,400 = $37.45
37.45 – 15.13 = $22.32
F.) .0426 x .75 x 1,500 = $47.93
47.93 – 31.37 = $16.56
3.7 Effective Rate of Interest
 The effective rate of interest is the rate
you actually earn by keeping your money
on deposit for one year.
 The annual rate and the effective rate
you earn can be different.
 The effective rate is sometimes referred
to as the annual percentage yield.
Amount of Interest Earned for One Year
Amount of Money on Deposit
= Effective Rate of Interest
3-7 PG 122 G & H
– Use Table on Pg. 113
G.) 6% / 4 = 1.5%
1 x 4 = 4 yrs
Pg. 113
1.5% at 4
yrs.
1.061364 x 2,000 = $2,122.728
2,122.728 - 2,000 = $122.728
122.73 / 2,000 = .061364 = 6.14%
3-7 PG 122 G & H
– Use Table on Pg. 113
H.) 5% / 2 = 2.5%
1 x 2 = 2 yrs
Pg. 113
2.5% at 2
yrs.
1.050625 x 6,000 = $6,303.75
6,303.75 - 6,000 = $303.75
303.75 / 6,000 = .050625 = 5.10%
SEC. 3-7 MONEY MARKETS
& CD ACCOUNTS
Review 3-7 ->
WKBK PG 39 - 40 ALL
40 pts
10:30 Quiz Begins 
SEC. 3-7 MONEY MARKETS
& CD ACCOUNTS
Quiz 3.7 ->
TXTBK PG 123 #9-11, 13, 18-20
#9 – all simple interest no compound
30 pts
CHAPTER 3 REVIEW
PAGE 124 – 125 ALL
40 pts.
CHAPTER 3 TEST
PAGE 129 # 11-18
100 Pts.
CHAPTER 3
INTEGRATED PROJECT
Integrated Project
100 Pts.
CHAPTER 3 GOOGLE DOCS
FIND AND RATE TYPES OF
SAVINGS ACCOUNTS GOOGLE
DOCS PROJECT
100 Pts.
Reconciliation
Form
1.) ENTER CLOSING BAL
2.) ADD ANY DEPOSITS +
3.)ADD LINES 1 & 2
=
4.) TTL OF CHKS OUT 5.) LINE 3 – LINE 4
=
OUTSTANDING
CHECKS
TOTAL