Bounced Checks Erica White, a college junior, normally prides herself on keeping control of her finances. But the fall semester of 2004 was a disaster. She contracted West Nile virus and was very sick for months. It was an effort just to keep up with her classes, let alone balance her checkbook.

Because she had to quit her part-time job, she knew her checking account balance was getting a little low, but she didn’t realize quite how low until she got a bank notice indicating that she had bounced several checks. She had written four checks that were returned:

▲ Purpose Valley Electric Authority: $40.32

(electric bill).

▲ Safeway: $64.28 (groceries).

▲ Hot Wok Café: $8.54 (take-out Chinese).

▲ Papa John’s: $13.68 (pizza).

Erica’s current account balance is $119.40.

1. Assuming that each retailer (but not the electric company) charges her a penalty of $20 and her bank charges $25 for each bounced check, how much will this cash management mistake cost her in total?

2. How much does she need to deposit in the account to have enough to make good on all her bills plus pay her penalties?