Chapter 3 Banking Services

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Chapter 3 Banking Services
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3.1 Checking Accounts
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Deposit Slip

• A deposit slip is used to deposit their paychecks
  and other monies.
• Cash Including Coins 285.85
• Check 322.94
• Check 1.45
• Subtotal 610.24
• Less Cash 0
• Total Deposited 610.24

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• B. Cash Including Coins 615.45
• Check 39.86
• Check 3.83
• Subtotal 659.14
• Less Cash 0
• Total Deposited 659.14

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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

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• C. 2,583.45 1,220-825-96.40-12.78
• D. 129.745001,236-196-950-87.83

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3.2 Electronic Banking
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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

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• 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  withdrawn from checking account

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1. 782.88-85-86.54-50
2. 1,248.40890.50-200-12.87-118.94

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3.3 Online Banking
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Online Account Access

• Online banking allows you to do your banking
  online.
• Available balance is the amount available to
  spend
• 100690-35-312.40-150-280
• 100-12.60
• B. 67728-36.90-112.85-270-15-128-89.23-45.50

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3.4 Check Register Reconciliation
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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.

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• A canceled check is one that the bank has paid
  and then marked so it cant 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

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• Bank Statement Balance
• Outstanding deposi
• - Outstanding checks
• New Bank Balance
• 1,383.53 --29.45
• -87.39
• 312.09

• B. 793.57
• 312.09
• -174.85
• -32.78

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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

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• C. 727.92
• -18.90
• 1.60
• D. 457.38
• -7.68

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3.5 Other Reconciliation Problems
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Reconcile the Checking Account

• Sometimes there are errors when calculating your
  checking account
• Compare checkbook register to bank statement item
  by item

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• 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.

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• 107.87
• 0.43
• -56.00
• 32.95
• -35.29

• B. 812.45
• -200
• -80.17
• 624.77
• -92.49

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3.6 Savings Accounts
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Simple Interest

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

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• 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

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• 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

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• 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

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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)

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• 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

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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

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• F. Annual 7
• 1
• 1.072135 x 720 771.94
• 771.94 720 51.94

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• 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

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• 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

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3.7 Money Market and CD Accounts

• Some special savings paid higher rate than
  regular savings

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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

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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

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• 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

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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

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• C. 500 x 0.02 x 0.25 2.5
• D. 1,000 x 0.047 x 1 47
• 1,000 47 953

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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

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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

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• 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

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• 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