6. Checking account reconciliation How do you balance your checkbook? Your roommate, Rina, has never before had a checking account, but she finally opened one last month. Rina is standing in the doorway or 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, Rina asks for your help in reconciling, or balancing, her checkbook. Being both a good friend and a student of personal Tinance, you've agreed to walk Rina through the process. RINA: 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 Occounts So, why is it a good idea to reconcile your bank account of balance your checkbook? RINA: 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 date 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? RINA: That's an easy one. I remember reading that I should reconcile my bank account monthly, but I should verify my ongoing deposit and withdrawal transactions online every couple of days. 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 Rino's latest bank statement and her check register or ledger in hand, you can examine the documents Use the grey sider along the right-hand side of each of the following boxes to see Rina's bank statement and check register (account Midtger) Fourth State Bank of San Francisco, CA Statement of Account Rina 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 3-04 275.00 3-05 25.00 3-05 62.50 Check 501 ATM withdrawal Deposit ATM withdrawal Deposit Check 502 1,172.25 1,147.25 1,209.75 1,174.60 1,424.60 3-11 35.15 3-15 250.00 3-18 165.00 3-21 ATM withdrawal 47.65 1,259.60 1,211.95 1,299.45 3-22 Deposit 87.50 3-24 Check 503 55.00 1944.45 3-22 Deposit 87.50 3-24 Check 503 55.00 1,299.45 1,244.45 1,194.45 3-26 ATM withdrawal 50.00 Date withdrawals Balance Mar-01 Rina's Account Ledger Transaction Description Deposit Deposit - Payroll $250.00 Check 500 - Rent Check 501 - Car payment ATM withdrawal 87501 $1,997.25 Mar-03 Mar-04 $550.00 275.00 25.00 1,447.25 1,172.25 Mar-05 1,147.25 Mar-05 62.50 Deposit - Birthday gint ATM withdrawal 89502 Mar-11 1,209.75 1,174.60 35.15 Mar-15 Deposit - Payroll 250.00 1.424 A Mar-18 Check 502 - Groceries 165.00 1,259.60 Mar 21 47.65 Mar-22 87.50 Mar-24 55.00 ATM withdrawal 93503 Deposit - Stipend Check 503 - Bookstore ATM withdrawal 94504 Check 504 - Dry cleaning ATM withdrawal 97505 Mar-26 1,211.95 1,299.45 1,244.45 1,194.45 1,150.45 1,049.70 50.00 Mar-27 44.00 Mar-27 100.75 Mar-27 Check 505 - Car insurance 110.00 939.70 Mar 28 Deposit - Belated birthday gift 187.50 1,127.20 Mar-28 187.50 Deposit - Belated birthday gift ATM withdrawal 99506 1,127.20 1,089.70 Mar-29 37.50 Using the documentation from the bank and from Rine'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.. Rina 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 boots, March 20