Name______

Date______

BANKING

PROCEDURES

Objectives
/ After completing this chapter, you should be able to:
1. Endorse Checks.
2. Prepare deposit slips.
3. Prepare check stubs and checks.
4. Reconcile a bank statement.
Reading Assignment / Read Chapter 24 in your textbook.
Reading Comprehension Exercises / Complete the exercises below and on the next page of this study guide. Then verify your work with the self-check answers at the back of the guide. If you have difficulty or make many errors, reread the chapter in your textbook before continuing.
Text Applications / Complete any exercises and problems in the textbook that your instructor has assigned. Use a separate sheet of paper for the exercises. All the necessary forms for the problems are in your workbook. Use the self-checks in the workbook to verify your solutions to the problems.

EXERCISE 24-1.

Read each of the following statements carefully. Inthe Answer column, write Tif the statement is true or Fif it is false.

Answer

1. / A well-run business deposits all its cash receipts in a bank and makes all cash payments by check. / 1. ______
2. / Any salaried employee can sign checks for a business. / 2. ______
3. / Cash receipts may include coins, currency, checks, and money orders. / 3. ______
4. / Each bank deposit must be accompanied by a signature card. / 4. ______
5. / Checks must be endorsed before they are deposited. / 5. ______
6. / A blank endorsement consists of only the name of the endorser. / 6. ______
7. / A restrictive endorsement limits the use of a check to the purpose stated in the endorsement. / 7. ______
8. / A blank endorsement is less safe than a restrictive endorsement. / 8. ______
9. / The check stub or check register entry should be completed after a check is prepared. / 9. ______
10. / Checks should be written in pencil, in case a mistake is made. / 10. ______
11. / There may be alterations or erasures on a check. / 11. ______
12. / A business's check stubs or check register should provide an up-to-date record of its account balance. / 12. ______
13. / The amount of each deposit is subtracted from the account balance, and the amount of each check is added. / 13. ______
14. / When the bank statement is received, it should be reconciled with the checkbook. / 14. ______
15. / The reconciliation process involves finding the factors that cause a difference between the bank statement balance and the checkbook balance. / 15. ______
16. / The bank statement is accompanied by outstanding checks. / 16. ______

Answer

17. / Canceled checks should be stored after the reconciliation process is completed. / 17. ______
18. / A bank service charge must be entered in a firm's accounting records and its checkbook. / 18. ______

EXERCISE 24-2 Read each of the definitions given below. Then find a term that fits the definition. Write the identifying letter of the term in the Answer column.

Terms

/
Definition
/ Answer
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
M.
O. / Bank statement
Canceled check
Certified check
Check
Credit memorandum
Debit memorandum
Deposit slip
Drawer
Endorsement
Night depository
Outstanding check
Payee
Reconciliation form
Signature card
Stop payment order / 1. / A form used by a bank to verify signatures on checks. / 1. / ______
2. / The person or business to whom a check is issued. / 2. / ______
3. / A signature or stamp on the back of a check, which legally transfers the right to collect payment. / 3. / ______
4. / A check that was issued but has not yet been paid by the bank. / 4. / ______
5. / A form listing cash items that are to be deposited in the bank. / 5. / ______
6. / A form that instructs a bank not to pay a check. / 6. / ______
7. / The person or business that issues a check. / 7. / ______
8. / A check on which the bank guarantees payment. / 8. / ______
9. / A form provided by a bank at regular intervals to report checking account transactions. / 9. / ______
10. / A written authorization for a bank to pay a stated amount of money from an account. / 10. / ______
11. / A vault that can be used to make deposits when a bank is closed. / 11. / ______
12. / A form used to bring the bank statement balance and the checkbook balance into agreement. / 12. / ______
13. / A check that the bank has paid. / 13. / ______
14. / A form issued by a bank to explain any deductions from an account other than paid checks. / 14. / ______
15. / A form issued by a bank to explain any additions to an account other than deposits. / 15. / ______

EXERCISE 24-3 The bank statement received by the Wilson Card Company shows a balance of $3,840. The business's checkbook shows a balance of $4,279. A further examination of these two records revealed the following information. A deposit of $625 was made but is not listed on the bank statement. There are outstanding checks for $268 and $388. A service charge of $20 is not yet recorded in the checkbook. Enclosed with the bank statement was an NSF check for $450. Complete the reconciliation form given below.

Bank Statement Balance / $ / Checkbook Balance / $
Add: ______
Subtotal / $
Deduct: ______/ Deduct:
$______/ $
______
Total Deductions / Total Deductions
Adjusted Bank Statement Balance / $ / Adjusted Checkbook Balance / $

See the self-check answers at the back of the study guide booklet.

1

Chapter 24