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Chapter 3: Problem 2

Rona filled out this information on her monthly statement. Find Rona鈥檚 revised statement balance. Does her account reconcile? $$\begin{array}{|l|l|}\hline \text { Checking Account Summary } \\ \hline \text { Ending Balance } & {\$ 725.77} \\ \hline \text { Deposits } & {+\$ 610.00} \\ \hline \text { Checks Outstanding } & {-\$ 477.00} \\ \hline \text { Revised Statement Balance } & {} \\ \hline \text { Check Register Balance } & {\$ 864.52} \\ \hline\end{array}$$

Short Answer

Expert verified
Rona's revised statement balance is $858.77. Since this is different from her check register balance of $864.52, the account does not reconcile. There seems to be a discrepancy of $5.75.

Step by step solution

01

Identify the Given Values

From the exercise, it can be identified that the ending balance is $725.77, the total deposit made was $610.00, and the total outstanding checks amount to $477.00. Also, her check register balance is $864.52.
02

Compute for the Revised Statement Balance

To compute for the revised statement balance, the ending balance and deposits should be added, while the outstanding checks should be subtracted. Verbally, the expression should be: (ending balance + deposits) - checks outstanding. Substituting the values, the expression becomes: \((725.77 + 610.00) - 477.00\).
03

Verification of Account Reconciliation

After calculating the revised statement balance, it should be compared to the check register balance which should be the same value if the account reconciles. The check register balance as given in the problem is $864.52.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Checking Account Balancing
Checking account balancing is a crucial financial skill that helps you keep track of your money. It involves ensuring that the amount of money recorded in your check register aligns with your bank statement. The check register is your personal record of deposits, withdrawals, and transactions.

Balancing your checkbook regularly ensures that you notice discrepancies quickly. It helps in verifying that all transactions have been recorded and ensures accuracy in managing your funds.

To balance a checkbook:
  • Start with your current balance and account for all deposits and withdrawals.
  • Check your records against the bank statement to spot any differences.
  • Correct any errors and make necessary adjustments to your records.
This practice helps you prevent overdraft fees, makes financial planning easier, and gives a clear picture of your financial health.
Account Reconciliation
Account reconciliation is the process of ensuring that two sets of records are in agreement. In the context of checking accounts, it's about making sure your check register and bank statement match.

For Rona, whose case we discussed earlier, she needs to ensure that her revised statement balance matches her check register balance. This involves
  • Adding up all deposits that are in your register but not on the statement.
  • Subtracting any outstanding checks or payments not yet cleared by the bank.
  • Adjusting for errors or forgotten transactions.
A successful reconciliation means all figures align, often indicating no record errors. If differences remain, it's crucial to investigate further as discrepancies could indicate unauthorized transactions or bank errors.
Bank Statement Analysis
Bank statement analysis involves reviewing your bank statement to understand the status and movements of your checking account. It helps in identifying patterns, recognizing irregularities, and planning finances better.

To effectively analyze a bank statement, consider these steps:
  • Review all transactions, confirming their validity and accuracy.
  • Check that all expected deposits and withdrawals are recorded.
  • Look for any unfamiliar transactions that may need further investigation.
Rona, for example, would use her bank statement to ensure all entries match her personal records and that the balance reflects all recent account activities.

Through analysis, you spot areas where you might cut costs or make improvements in financial management. It also gives insight into spending habits, enabling better, more informed financial decisions.

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Most popular questions from this chapter

John, Paul, and George are having a disagreement over interest rates. John says that 6\(\frac{3}{4} \%\) can be expressed as 6.75\(\%\) . George thinks that 6\(\frac{3}{4}\) can be expressed as \(0.0675 .\) paul remembers converting percents to equivalent decimals and thinks it can be expressed as 0.0675\(\% .\) Who is correct, and who is incorrect? Explain.

Zoe creates a spreadsheet to make simple interest calculations. The user inputs values for the principal, rate, and time in years in row 2. Write each formula. a. For A2 to compute the interest. b. For B2 to compute the principal. c. For C2 to compute the interest rate. d. For D2 to compute time in years, given the interest, rate, and the principal. e. For E2 to compute the time in months, given the time in years.

Sydney invests \(\$ 100\) every month into an account that pays 5\(\%\) annual interest, compounded monthly. Benny invests \(\$ 80\) every month into an account that pays 8\(\%\) annual interest rate, compounded monthly. a. Determine the amount in Sydney鈥檚 account after 10 years. b. Determine the amount in Benny鈥檚 account after 10 years. c. Who had more money in the account after 10 years? d. Determine the amount in Sydney鈥檚 account after 20 years. e. Determine the amount in Benny鈥檚 account after 20 years. f. Who had more money in the account after 20 years? g. Write the future value function for Sydney鈥檚 account. h. Write the future value function for Benny鈥檚 account. i. Graph Benny and Sydney鈥檚 future value function on the same axes. j. Explain what the graph indicates.

Island Bank is advertising a special 6.55\(\%\) APR for CDs. Manny takes out a one-year \(\mathrm{CD}\) for \(\$ 40,000 .\) The interest is compounded daily. Find the annual percentage yield for Manny's account to the nearest hundredth of a percent.

Hannah wants to write a general formula and a comparison statement that she can use each month when she reconciles her checking account. Use the Checking Account Summary at the right to write a formula and a statement for Hannah. $$\begin{array}{|l|l|}\hline \text { Checking Account Summary } \\ \hline \text { Ending Balance } & {B} \\ \hline \text { Deposits } & {D} \\ \hline \text { Checks Outstanding } & {C} \\ \hline \text { Revised Statement Balance } & {S} \\ \hline \text { Check Register Balance } & {R} \\\ \hline\end{array}$$
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