6. Checking account reconciliation How do you balance your checkbook? Your roommate, Teresa, has never before had a checking account, but she finally opened one last month. Teresa 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, Teresa 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 Teresa through the process. TERESA: Thanks for helping me with this bank statement 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? TERESA: 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 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? TERESA: That's an easy one. I remember reading that I should reconcile my bank account deposit and withdrawal transactions online every couple of days. .but I should verify my ongoing YOU. That's right! Now that you've got the fundamentals under control, let's go through the actual process of balancing the checkbook. Now, with Teresa's latest bank statement and her check register or ledger in hand, you can examine the documents Use the grey slider along the right-hand side of each of the following boxes to see Teresa's bank statement and check register (account ledger). Fourth State Bank of San Francisco, CA Statement of Account Teresa Smythe March 20XX 550 Angel Street San Francisco, CA Account 348596 Date Description Subtractions Additions Balance 3-01 Previous balance 1,747.25 3-01 Deposit 250.00 1,997.25 3-03 Check 500 550.00 1,447.25 3-04 Check 501 275.00 1,172.25 3-05 ATM withdrawal 25.00 1,147.25 3-05 Deposit 62.50 1,209.75 3-11 ATM withdrawal 35.15 1,174.60 3-15 Deposit 250.00 1,424.60 3-18 Check 502 165.00 1,259.60 3-21 ATM withdrawal 47.65 1,211.95 3-22 Deposit 87,50 1,299.45 Check 503 55.00 1,244.45 3-26 ATM withdrawal 50.00 1,194.45 Date Mar 01 Mar-03 Balance $1,997.25 1,447.25 1,172.25 Mar 04 Mar-05 1,147.25 Mar-05 1,209.75 Mar-11 Mar-15 Mar-18 Teresa's Account Ledger Transaction Description Deposit Withdrawals Deposit - Payroll $250.00 Check 500 - Rent $550.00 Check 501 - Car payment 275.00 ATM withdrawal 87501 25.00 Deposit - Birthday gift 62.50 ATM withdrawal 89502 35.15 Deposit - Payroll 250.00 Check 502 - Groceries 165.00 ATM withdrawal 93503 47.65 Deposit - Stipend 87.50 Check 503 - Bookstore 55.00 ATM withdrawal 94504 50.00 Check 504 - Dry cleaning 44.00 ATM withdrawal 97505 100.75 Check 505 - Car insurance 110.00 Deposit - Belated birthday gift 187.50 ATM withdrawal 99506 37.50 1,174.60 1,424.60 1,259.60 1,211.95 1,299.45 Mar-21 Mar 22 1,244.45 Mar-24 Mar-26 Mar-27 1,194,45 1,150.45 Mar 27 Mar-27 1,049.70 939.70 Mar-28 Mar-29 1,127.20 1,089.70 Using the documentation from the bank and from Teresa's check register, construct the bank reconciliation statement for March 26. Using the documentation from the bank and from Teresa's check register, construct the bank reconciliation statement for March 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 Teresa Smythe's Bank Reconciliation for March 29 Ending balance per bank statement, March 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, March 29 y questions. I'll ask and you answer, and we'll agree on some fundamentals about re Eile your bank account or balance your checkbook? nance book, reconciling my account will help me spot potential errors in the bank sta unt's actual balance as of the reconciliation date according to the experts, how Inciliation be performed, ment deposits and withdrawals date on the bank statement but I should v mber reading that I should reconcile my bank account ons online every couple of days. not the fundamentale under control latla tatement thing. So, where do we start? s. I'll ask and you answer, and we'll agree on some fundamentals about reconciling bar ank account or balance your checkbook? ok, reconciling my account will help me spot potential errors in the bank statement or my ual balance as of the g to the experts, how frequently should a bank reconciliation be performed, and how freg posits and withdrawals be verified with the bank? but I should verify my ongo ading that I should reconcile my bank account e every couple of days. monthly undamentals under control, let's go through the quarterly Fess of balancing the checkbook. her check register or ledger in hand, you can examine the documents. of each of the following boxes to see Teresa's bank statement and check register (account lede 6. Checking account reconciliation How do you balance your checkbook? Your roommate, Teresa, has never before had a checking account, but she finally opened one last month. Teresa 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, Teresa 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 Teresa through the process. TERESA: Thanks for helping me with this bank statement 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? TERESA: 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 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? TERESA: That's an easy one. I remember reading that I should reconcile my bank account deposit and withdrawal transactions online every couple of days. .but I should verify my ongoing YOU. That's right! Now that you've got the fundamentals under control, let's go through the actual process of balancing the checkbook. Now, with Teresa's latest bank statement and her check register or ledger in hand, you can examine the documents Use the grey slider along the right-hand side of each of the following boxes to see Teresa's bank statement and check register (account ledger). Fourth State Bank of San Francisco, CA Statement of Account Teresa Smythe March 20XX 550 Angel Street San Francisco, CA Account 348596 Date Description Subtractions Additions Balance 3-01 Previous balance 1,747.25 3-01 Deposit 250.00 1,997.25 3-03 Check 500 550.00 1,447.25 3-04 Check 501 275.00 1,172.25 3-05 ATM withdrawal 25.00 1,147.25 3-05 Deposit 62.50 1,209.75 3-11 ATM withdrawal 35.15 1,174.60 3-15 Deposit 250.00 1,424.60 3-18 Check 502 165.00 1,259.60 3-21 ATM withdrawal 47.65 1,211.95 3-22 Deposit 87,50 1,299.45 Check 503 55.00 1,244.45 3-26 ATM withdrawal 50.00 1,194.45 Date Mar 01 Mar-03 Balance $1,997.25 1,447.25 1,172.25 Mar 04 Mar-05 1,147.25 Mar-05 1,209.75 Mar-11 Mar-15 Mar-18 Teresa's Account Ledger Transaction Description Deposit Withdrawals Deposit - Payroll $250.00 Check 500 - Rent $550.00 Check 501 - Car payment 275.00 ATM withdrawal 87501 25.00 Deposit - Birthday gift 62.50 ATM withdrawal 89502 35.15 Deposit - Payroll 250.00 Check 502 - Groceries 165.00 ATM withdrawal 93503 47.65 Deposit - Stipend 87.50 Check 503 - Bookstore 55.00 ATM withdrawal 94504 50.00 Check 504 - Dry cleaning 44.00 ATM withdrawal 97505 100.75 Check 505 - Car insurance 110.00 Deposit - Belated birthday gift 187.50 ATM withdrawal 99506 37.50 1,174.60 1,424.60 1,259.60 1,211.95 1,299.45 Mar-21 Mar 22 1,244.45 Mar-24 Mar-26 Mar-27 1,194,45 1,150.45 Mar 27 Mar-27 1,049.70 939.70 Mar-28 Mar-29 1,127.20 1,089.70 Using the documentation from the bank and from Teresa's check register, construct the bank reconciliation statement for March 26. Using the documentation from the bank and from Teresa's check register, construct the bank reconciliation statement for March 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 Teresa Smythe's Bank Reconciliation for March 29 Ending balance per bank statement, March 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, March 29 y questions. I'll ask and you answer, and we'll agree on some fundamentals about re Eile your bank account or balance your checkbook? nance book, reconciling my account will help me spot potential errors in the bank sta unt's actual balance as of the reconciliation date according to the experts, how Inciliation be performed, ment deposits and withdrawals date on the bank statement but I should v mber reading that I should reconcile my bank account ons online every couple of days. not the fundamentale under control latla tatement thing. So, where do we start? s. I'll ask and you answer, and we'll agree on some fundamentals about reconciling bar ank account or balance your checkbook? ok, reconciling my account will help me spot potential errors in the bank statement or my ual balance as of the g to the experts, how frequently should a bank reconciliation be performed, and how freg posits and withdrawals be verified with the bank? but I should verify my ongo ading that I should reconcile my bank account e every couple of days. monthly undamentals under control, let's go through the quarterly Fess of balancing the checkbook. her check register or ledger in hand, you can examine the documents. of each of the following boxes to see Teresa's bank statement and check register (account lede