Banking and Bookkeeping

Unit 1
1-1 Writing Checks
1-2 Posting to a Cashbook
1-3 Making Bank Deposits
1-4 Reconciling a Bank Statement
OVERVIEW
 Banking and bookkeeping is one of the
most critical units in this Reference
Guide.
 Each business manager will be actively
involved in
– writing checks
– making weekly deposits
– posting to the cashbook
OVERVIEW
 The managers of Pettisville Bank will
post to the cashier’s check register,
which is similar to the cashbook.
 The balance in the cashbook and the
balance in the check register should
be the same
– unless the manager has recorded an
incoming check or cash receipt that has
not yet been deposited
OVERVIEW

 Managers who keep careful financial

records will make reconciling the bank
statement an easy task
TIMING

 Pettisville Bank will mail bank

statements on July 30
– which is at the end of the simulation.
BUSINESS FORMS
 Bank statements
 Cashbook
 Cashier’s check register (bank)
 Cashier’s check (bank)
 Check register
 Checks
 Deposit receipts
 Deposit slips
1.1 Writing Checks

 Helping Managers
– The managers of Pettisville Bank will
come to the instructor from time to time
to ask for the checks that have been
received.
– They are stored in the file folder labeled
Checks.
1.1 Writing Checks

 When using an electronic check

register, you are to keep a “paper and
pencil” version too.
 This will provide verification for the
accuracy of work and also alleviate
problems that occur when employees
are absent.
1.1 Writing Checks

 Managers will use the (check column)

when reconciling the bank statement
at the end of the month that “C”
stands for “cleared”
 Maintain the check register in pencil so
corrections can be made easily.
1.1 Writing Checks

 Checks must be written in ink.

 Business managers are not to accept
checks written in pencil.
 When a check is for an even amount
of money, it must include the decimal
and two zeros.
1.1 Writing Checks

 There are serious consequences for

“bouncing” a check.
 Banks charge substantial fees for
insufficient funds.
 The payee may also assess a returned
check fee.
1.1 Writing Checks

 A person’s credit rating and

reputation in the community suffers
too.
 When a company bounces checks
within the business community,
suppliers are reluctant to sell on credit
and will insist on cash payments.
1.2 Posting to a Cashbook

 When using an electronic cashbook

keep a “paper and pencil” version.
 This will provide verification for the
accuracy of work and also alleviate
problems that occur when employees
are absent
1.2 Posting to a Cashbook

 Recording a check for a promissory

note requires the use of two lines in
the cashbook rather than one.
 All managers will make this type of
entry when you complete Activity 1.2
on page 87
1.2 Posting to a Cashbook
 The “incoming cash slip” for each
business represents the cash sales for
the week in addition to cash receipts
from businesses within the community.
 The amount shown on the slip is added
to any additional cash receipts and
recorded as currency on the deposit slip.
1.2 Posting to a Cashbook

 Recording a deposit will take only one

line in the check register but many
take several lines in the cashbook.
 For example, a business that received
three incoming checks in addition to
it’s “incoming cash slip” will make four
entries in the cashbook
1.2 Posting to a Cashbook
 The checks will be listed on three
separate lines, and the “incoming cash
slip” will be listed as cash receipts on a
fourth line.
 Only the total of the deposit will be
recorded in the check register.
 The word deposit is never written in
the cashbook.
1.2 Posting to a Cashbook

 The last entry in the cashbook at the

end of July should be the bank service
charge.
 When posting to manual cashbooks
use a ruler when balancing the
cashbook.
1.2 Posting to a Cashbook

 The total of the RECEIPTS column

equals the total of the CASH IN
column and that the total of the
PAYMENTS column equals the total of
the CASH OUT column.
– Receipts = Cash IN
– Payments = Cash OUT
1.2 Posting to a Cashbook

 Balancing an electronic cashbook is a

simple procedure – just click on the
checkbox titled Click here to balance
1.2 Helping Managers

 Manger 1 at Pettisville Bank

 Do NOT accept “For Deposit” checks
that have not been properly endorsed.
1.2 Career Paths

 The concepts and skills taught in Unit

1 would be essential for success in the
following careers
– Auditor
– Bank teller
– Bookkeeper cashier
– Credit authorizer
– Financial adviser
– Loan counselor
– Loan officer
1.2 Career Paths

 Identify a minimum of three other

careers where these concepts and
skills would be important.
1.3 Making Bank Deposits

 Manager Tips
– The ABA number on checks deposited is
always 56-25 because all checks are
drawn on Pettisville Bank.
– List the payee’s name on the deposit slip
rather than the ABA number.
  
1.3 Helping Managers

 By July 9, all businesses will have

made the first deposit.
– Managers should double check to see
that the deposit in the check register and
that the balance in the check register
equals the balance in the cashbook
1.3 Helping Managers
 Pettisville Bank
– Manager 1 should use a calculator to verify the
total on each deposit slip before writing the
receipt.
– All checks for deposit should be properly endorsed
and be listed on the back of the deposit slip.
– Only the total of the checks is listed on the front
of the deposit slip.
  
1.4 Reconciling a Bank
Statement: Helping Managers
 If there are no customers to serve at the drive-
in window, Manager 1 should be recording
checks and deposits on bank statements and in
the checking account register.
 The DAILY ACTIVITIES will not tell the
manager to do this.
 It is the manager’s responsibility to do this on a
regular basis
1.4 Reconciling a Bank
Statement: Helping Managers
 The Denim Maker is the only business
that will have an electronic funds
transfer, and it should already have
been recorded in the check register.
 The EFT is for payroll.
 Denim Maker: make sure that a
manager has deducted gross pay from
the check register and the cashbook.
1.4 Reconciling a Bank
Statement: Helping Managers
 If Pettisville Bank is using a manual
bank statement, the TOTAL
WITHDRAWL AMOUNT does not
include the service charge.
1.4 Reconciling a Bank
Statement: Helping Managers
 Plan to set aside extra time to balance
the bank statement.
 The problem is usually a result of
inaccurate entries in the check register
rather than errors made by the bank.
1.4 Reconciling a Bank
Statement: Manager Tips
 A very common error manager’s make on the
bank reconciliation is recording outstanding
deposits on the wrong side of the form.
 If an outstanding deposit is listed on the line
titled ADD DEPOSITS NOT ALREADY ENTERED
IN THE CHECKBOOK, the two balances at the
bottom of the page will equal but obviously will
not be correct.
1.4 Reconciling a Bank
Statement: Manager Tips
 Record service charges and other bank
charges in the check register and the
cashbook after the bank reconciliation
is complete.
1.4 Reconciling a Bank
Statement: Manager Tips
 Bank service charges vary depending on the
balance in the drawer’s account and the number of
checks written.
 Some customers do not pay a fee for a service
charge.
 For example, a bank may offer free checking to
students, senior citizens, or customers who
maintain a set minimum balance.
 To simplify procedures at Pettisville Bank, all
monthly service charges for all businesses are
$12.95.
1.4 Reconciling a Bank
Statement: Manager Tips
 At some banks customers earn interest
on their checking accounts.
 When reconciling the bank statement,
interest earned should be added to the
checkbook balance.
1.4 Reconciling a Bank
Statement: Manager Tips
 Pettisville Bank is a commercial bank.
 A commercial bank is also called a full-
service bank because it offers a wide
range of banking services.
1.4 Reconciling a Bank
Statement: Manager Tips
 Credit union: a financial institution owned
by employees of a business or an
organization
 Savings and loan: a bank that specializes
in savings accounts and making mortgage
loans
 Trust company: a bank that specializes in
managing people’s money and property for
them
1.4 Reconciling a Bank
Statement: Manager Tips
 Protection of Deposits.
– The Federal Deposit Insurance Corporation
insures deposits in commercial banks.
– Almost all commercial banks are members of the
FDIC.
– The Federal Reserve System (Fed) regulates its
member banks to assure the safety of
depositors’ money.
– All national banks are required to join the FRS,
and the state banks may join.