6. Checking account reconciliation How do you balance your checkbook? Your roommate, Juanita, has never before had a checking account, but she finally opened one last month. Juanita is standing in the doorway of the Kitchen with the check register in one hand and the recently arrived bank statement in the other. Admitting that she doesn't know what to do next Juanita asks for your help in reconciling, or balancing, her checkbook. Being both a good friend and a student of personal finance, you've agreed to walk Juanita through the process. JUANITA: Thanks for helping me with this bank staternent thing. So, where do we start? YOU: Let's start with some preliminary questions. I'll ask and you answer, and we'll agree on some fundamentals about reconciling bank accounts So, why is it a good idea to reconcile your bank account or balance your checkbook? JUANITA: According to my personal finance book, reconciling my account will help me spot potential errors in the bank statement or my own records, and it will verify my account's actual balance as of the reconciliation date YOU: You're absolutely correct. Now, according to the experts, how facilitation be performed, and how frequently should ongoing or between statement deposits and withdrawal data on the bank statement You: You're absolutely correct! Now, according to the experts, how frequently should a bank reconciliation be performed, and how frequently should ongoing or between statement deposits and withdrawals be verified with the bank? JUANITA: That's an easy one. I remember reading that I should reconcile my bank account but I should verify my ongoing deposit and withdrawal transactions online every couple of days. monthly YOU: That's right Now that you've got the fundamentals under control, let's go through the quarterly of balancing the checkbook. Now, with Juanita's latest bank statement and her check register or ledoor in hand, you can examine the documents. use the grey slider along the right-hand side of each of the following boxes to see Juanita's bank statement and check register (account ledger). Fourth State Bank of San Francisco, CA Statement of Account Juanita Smythe September 20XX 550 Angel Street San Francisco, CA Account 348596 Date Description Subtractions Additions Balance 9-01 Previous balance 1,246.00 9-01 Deposit 350.00 1,596.00 9-03 650.00 946.00 9-04 621.00 325.00 25.00 9-05 596.00 9-05 87.50 683.50 9-11 Check 900 Check 901 ATM withdrawal Deposit ATM withdrawal Deposit Check 902 ATM withdrawal Deposit 35.15 648.35 9-15 350.00 998.35 9-18 803.35 195.00 47.65 9-21 755.70 9-22 122.50 878.20 9-11 35.15 648.35 9-15 350.00 998.35 9-18 195.00 803.35 9-21 ATM withdrawal Deposit Check 902 ATM withdrawal Deposit Check 903 ATM withdrawal 47.65 755.70 9-22 122.50 878.20 9-24 813.20 65.00 50.00 9-26 763.20 Balance Date $1,596.00 Sep-01 946.00 Sep-03 621.00 Sep-04 Juanita's Account Ledger Transaction Description Deposit Withdrawals Deposit - Payroll $350.00 Check 900 - Rent $650.00 Check 901 - Car payment 325.00 ATM withdrawal 87501 25.00 Deposit - Birthday gift 87.50 ATM withdrawal 89502 35.15 Deposit - Payroll 350.00 596.00 Sep-05 683.50 Sep-05 648.35 Sep-11 998.35 Sep-15 195.00 803.35 Sep-18 Check 902 - Groceries 47.65 755.70 122.50 878.20 Sep-21 ATM withdrawal 93503 Sep-22 Deposit - Stipend Sep-24 Check 903 - Bookstore Sep-26 ATM withdrawal 94504 Sep-27 Check 904 - Dry cleaning 65.00 813.20 50.00 763.20 52.00 711.20 Sep-27 610.45 100.75 ATM withdrawal 97505 Sep-27 Check 905 - Car insurance 130.00 480.45 Sen-28 Deposit - Belated birthday gift 262.50 742.95 04. Assignment - Managing Sep-28 Deposit Belated birthday gift Sep-29 ATM withdrawal 99506 16 262.50 742.95 37.50 705.45 Using the documentation from the bank and from Juanita's check register, construct the bank reconciliation statement for September 26, Hint: Any items that you enter into the bank reconciliation statement should be entered in the order in which they appeared on the account ledger and bank statement Juanita Smythe's Bank Reconciliation for September 29 Ending balance per bank statement, September 26 Add: Deposit in transit Deduct: Outstanding checks and ATM transactions Check number ATM number Check number ATM number Total withdrawals Adjusted bank balance Balance per books, September 29