Deitz J.E., Southam J.L. Contemporary Business Mathematics for Colleges

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C (32 points) In the following problems, the markup percent is based on selling price. Find the missing

terms. (2 points for each correct answer)

100% 2

Markup Markup Selling Selling Dollar Markup

Cost Percent Percent Price Price Cost Markup Percent

15. $855 40% 16. $1,040 $676

35%$364$1,42560%

154 Part 2 Percentage Applications

Assignment 8.2 Continued

100% 2 40% 5 60%; $855 4 0.60 5 $1,425 $1,040 2 $676 5 $364; $364 4 $1,040 5 0.35

17. $143 45% 18. $45 $27

40%$18$26055%

100% 2 45% 5 55%; $143 4 0.55 5 $260 $45 2 $27 5 $18; $18 4 $45 5 0.40

19. $2,520 30% 20. $1,400 $924

34%$476$3,60070%

100% 2 30% 5 70%; $2,520 4 0.70 5 $3,600 $1,400 2 $924 5 $476; $476 4 $1,400 5 0.34

21. $533 35% 22. $840 $462

45%$378$82065%

100% 2 35% 5 65%; $533 4 0.65 5 $820 $840 2 $462 5 $378; $378 4 $840 5 0.45

Score for C (32)

D (24 points) Business Applications. In the following problems, the markup percent is based on selling

price. Round all percents to the nearest tenth of a percent. (3 points for each correct answer)

23. At the end of summer, Alpine Hardware features garden equipment specials. One rototiller has a selling

price of $348. The markup to cover expenses and profit is 50% based on the selling price. Calculate the

dollar markup and the cost.

Dollar markup

Cost

24. Parkside Cyclery is a retail bicycle store. For last year’s Christmas season, Parkside purchased one model

of mountain bike to use in a Christmas promotion. The bicycles cost $156 each. For this promotion,

Parkside’s markup was 40% of selling price. Find the selling price and the dollar markup.

Selling price

Dollar markup

25. City TV & Stereo sells telephones, along with televisions and stereos. A two-line cordless telephone set

with a speaker phone base, two extra remote handsets, and an answering machine is priced at $182.40.

This price includes a markup of $109.44. If this set actually sells for $182.40, what are the cost and the

markup percent based on selling price?

Cost

Markup percent

26. Teak World, a warehouse superstore, purchased a large volume of teak lounge chairs for $232 each. Uphol-

stered pads were included in the price. To sell the chairs and pads quickly, the store priced the chairs at

$320. Compute the dollar markup and the markup percent based on selling price.

Dollar markup

Markup percent

Score for D (24)

$88 4 $320 5 0.275, or 27.5%

27.5%

$320 2 $232 5 $88

$88

$109.44 4 $182.40 5 0.60, or 60%

60%

$182.40 2 $109.44 5 $72.96

$72.96

$156 4 0.60 5 $260; $260 2 $156 5 $104

$104

100% 2 40% 5 60%

$260

$348 2 $174 5 $174

$174

0.50 3 $348 5 $174

$174

Notes

Chapter 8 Markup 155

Accounting

Applications

Part

9 Banking

10 Payroll Records

11 Taxes

12 Insurance

Banking

Chapter 9 Banking 157

Learning Objectives

By studying this chapter and completing all assignments, you will be able to:

Learning Objective

Maintain a checking account.

Reconcile a bank statement with a checkbook balance.

Learning Objective

Bank customers usually make deposits to their checking accounts by using deposit

slips. Figure 9-1 shows a typical deposit slip, with spaces to list cash and checks being

deposited.

In most businesses, each deposit will include a number of checks. Each check is indi-

vidually listed on each deposit slip. Deposits are also made electronically. Many employ-

ees have their pay electronically transmitted directly from their employer’s bank

accounts to their individual bank accounts.

A bank check is a written order directing the bank to pay a certain sum to a desig-

nated party, called the payee. Banks normally provide checkbooks to their members.

Figures 9-2 and 9-3 show typical bank checks, one with the stub on the left and the other

with the stub on the top.

158 Part 3 Accounting Applications

Using Deposit Slips and Bank Checks

Learning Objective

Maintain a checking account.

9.1 Local banks are usually very willing

to provide sample forms and have rep-

resentatives talk about the banking

process.Bringing in an outside speaker

is an excellent way to introduce this

chapter.

Many students will have personal

checking accounts.It’s a good idea to

have students bring in their check-

books from various local banks.

Figure 9-1 Deposit Slip

DATE 20

USE OTHER SIDE FOR

ADDITIONAL LISTING.

BE SURE EACH ITEM IS

PROPERLY ENDORSED.

WELLS FARGO BANK

VAN NESS-CALIFORNIA OFFICE 1560 VAN NESS AVENUE SAN FRANCISCO, CA 94109

35-6686

3130

HART FURNITURE CO.

1039 BROADWAY

SAN FRANCISCO, CA 94103

CASH

CURRENCY

COIN

LIST CHECKS SINGLY

TOTAL FROM

OTHER SIDE

LESS CASH RECEIVED

TOTAL

NET DEPOSIT

DEPOSITS MAY NOT BE AVAILABLE FOR IMMEDIATE WITHDRAWAL

SIGN HERE FOR LESS CASH IN TELLER’S PRESENCE

PLEASE LIST EACH CHECK SEPARATELY BY BANK NUMBER

Back of

Deposit Slip:

16-30

18-21

17-17

300 00

60 49

250 00

125 00

216 00

209 00

1,160 49

–

1,160 49

CHECKS

DOLLARS CENTS

PLEASE FORWARD

TOTAL TO

REVERSE SIDE

14-36

13-22

7 6 75

1 3 25

1 1 9 00

2 0 9 00

Today, many bank transactions are completed electronically. Funds that are transmit-

ted electronically, primarily via computers, are called electronic fund transfers (EFTs).

They include automatic teller machine (ATM) transactions by which customers can

check their balances, make deposits, and withdraw funds from their accounts without

having to wait for the next available bank teller. Computer programs also initiate many

electronic fund transfers. These transactions are processed through the Automated

Clearing House Association and include: direct deposits of payroll and Social Security

checks, government pension benefits, and other payments specified for direct deposit.

Chapter 9 Banking 159

Figure 9-2 Check with Check Stub on Left

No.

2506

September 24

Ace Auto Repair

Delivery truck

124.35

1,332 80

1,160 49

2,493 29

124 35

2,368 94

For

Balance

Bro’t Fwd.

Amount

Deposited

Total

Amount

This Check

Balance

Car’d Fwd.

Delivery truck repair

For

31306686 2506 1170208

One hundred twenty - four and 35/100

124.35

Ace Auto Repair

Robert S. Hart

$¢

- -

September 24

No. 2506

- -

35-6686

3130

DOLLARS

Pay to the

order of

Hart Furniture Co.

1039 Broadway

San Francisco, CA 94103

WELLS FARGO BANK

VAN NESS-CALIFORNIA OFFICE 1560 VAN NESS AVENUE SAN FRANCISCO, CA 94109

Figure 9-3 Check with Check Stub on Top

Suit-Slacks

For

1221011913500 0255 355521

Three hundred no/100------------------------------------

300.00

Men’s Wearhouse

Mary Mayhew

October 1,

3500

- -

91-119

1221(1)

DOLLARS

Pay to the

order of

WELLS FARGO BANK

BAL. FWD.

DEPOSITS

NEW BAL.

DATE

TO:

FOR:

NEW BAL.

THIS CHECK

BAL. FWD.

997 03

451 04

107 01

1,555 08

300 00

1,255 08

10/1/20- -

Men ’s Wearhouse

Suit - Slacks

3500

VALUED

CUSTOMER SINCE

1976

MARY MAHEW

40 ACELA DR.

TIBURON, CA 94920

A bank checkbook also provides check stubs or a special page on which to record de-

posits, withdrawals, check numbers, dates, check amounts, other additions and subtrac-

tions, and the account balance.

Figure 9-2 shows that check number 2506 was written against the account of Hart

Furniture Co. on September 24 to Ace Auto Repair. The check was for $124.35 for repairs

to the delivery truck. The stub shows a balance brought forward of $1,332.80, a deposit

160 Part 3 Accounting Applications

✔

Fill in the total (as necessary) and balance on each check stub.Carry each balance forward to the

next stub.

CONCEPT CHECK 9.1

No.

May 1

Citizens News

Advertising

65.00

890 00

65 00

For

Balance

Bro’t Fwd.

Amount

Deposited

Total

Amount

This Check

Balance

Car’d Fwd.

$¢

$ No.

May 4

District Utilities

Gas & electric

79.00

79 00

For

Balance

Bro’t Fwd.

Amount

Deposited

Total

Amount

This Check

Balance

Car’d Fwd.

$¢

$ No.

May 5- -- - - -

U.S. Postal Service

Stamps

25.00

100 00

25 00

For

Balance

Bro’t Fwd.

Amount

Deposited

Total

Amount

This Check

Balance

Car’d Fwd.

$¢

825 00

746 00

821 00

846 00

Using Checkbooks and Check Registers

Figure 9-4 Check Register

Sept 24

Oct 19

Deposit cash receipts

Ace Auto Repair

Morton Window Decorators

Donation to Guide Dogs

Secure Alarm Systems

Best Janitorial Service

Deposit cash receipts

124.35

450.00

100.00

150.00

325.00

1,160.49

980.00

$1,332.80

2,493.29

2,368.94

1,918.94

1,818.94

1,668.94

855.94

1,835.94

2506

2507

2508

2509

2517

CHECK REGISTER DEDUCT ALL PER CHECK OR SERVICE CHARGES THAT APPLY BALANCE

DATE CHECK

NUMBER

CHECKS ISSUED TO OR

DEPOSITS RECEIVED FROM

AMOUNT

OF CHECK

AMOUNT

OF DEPOSIT

on September 24 of $1,160.49, the amount of this check ($124.35), and a balance carried

forward of $2,368.94.

Today, most small businesses and many individuals use a check register. Like a

check stub, a check register provides a place to record information about each bank

transaction. Figure 9-4 shows a typical check register. Note that a continuous balance is

maintained.

Chapter 9 Banking 161

9.2 Today,withdrawals from personal

checking accounts are frequently made

through ATMs.Thus,it is extremely im-

portant to record all withdrawals and

to reconcile personal figures with the

bank’s figures monthly.

✔

In this check register, fill in the cash balance resulting from each transaction.

CONCEPT CHECK 9.2

Mar 27

Apr 01

Replenish petty cash

Jiffy Janitorial Service

Sun County Water District

Deposit weekly receipts

Midtown Mortgage Co.

Sun Gas and Electric Co.

Midtown Weekly Advertiser

Trash Disposal, Inc.

Pacific Plumbing Supplies

Deposit weekly receipts

$ 65.20

150.00

96.72

835.20

72.18

32.80

60.00

906.97

$2,470.80

2,942.50

$520.42

455.22

305.22

208.50

2,679.30

1,844.10

1,771.92

1,739.12

1,679.12

772.15

3,714.65

123

124

125

–

126

127

128

129

130

–

CHECK REGISTER DEDUCT ALL PER CHECK OR SERVICE CHARGES THAT APPLY BALANCE

DATE CHECK

NUMBER

CHECKS ISSUED TO OR

DEPOSITS RECEIVED FROM

AMOUNT

OF CHECK

AMOUNT

OF DEPOSIT

Reconciling Bank Statements

Checking account customers receive a printed bank statement every month. The bank

statement shows an opening balance; deposits and credits, including EFTs; checks paid;

withdrawals, including EFTs; service charges; general information about the account;

and the balance at the end of the period. In addition, most banks now provide electronic

banking through your personal computer. This allows you to view your current bank

statement at any time. Figure 9-5 shows a typical bank statement.

The balance shown in the checkbook or check register is usually different from the

balance shown on the bank statement. The items that cause this difference are used in

reconciling the two balances. These items are as follows:

An outstanding check is one that has been written but hasn’t yet cleared the bank.

Almost always you will have written and recorded some checks that haven’t yet been

presented to or processed by the bank for payment and charged to the customer’s

account.

A bank charge is a fee for services performed by the bank. At the time the bank state-

ment is made up, your account may have been charged for bank service fees, printing

checks, extra copies of statements, wired funds, traveler’s checks, cashier’s checks,

safe-deposit box rentals, bad checks returned, or EFTs that you haven’t yet recorded.

These charges would therefore not yet be deducted from your checkbook or check

Reconcile a bank statement with

a checkbook balance.

Learning Objective

162 Part 3 Accounting Applications

Figure 9-5 Bank Statement

WELLS FARGO BANK

VAN NESS-CALIFORNIA

1560 VAN NESS AVE.

SAN FRANCISCO CA 94109

PAGE 1 OF 1

WELLS FARGO

NEWSLINE

NEW! GET STAMPS AT EXPRESS ATMS WHEN YOU STOP BY FOR CASH.

AND, PLEASE NOTE THAT THE COMBINED TOTAL OF CASH WITHDRAWN

AND STAMP PURCHASES CANNOT EXCEED YOUR DAILY CASH LIMIT.

THIS STATEMENT COVERS: 09/21/– – THROUGH 10/20/– –

REWARD

ACCOUNT

31306686

CHECKS AND

WITHDRAWALS

DEPOSITS

CHECK

2506

2507

2508

2509

2510

2511

2512

CUSTOMER DEPOSIT

EFT CREDIT

DATE PAID

9/26

9/27

10/03

10/10

10/20

DATE POSTED

9/25

9/26

AMOUNT

SUMMARY

PREVIOUS BALANCE

DEPOSITS

WITHDRAWALS

INTEREST

MONTHLY CHECKING FEE

AND OTHER CHARGES

NEW BALANCE

MINIMUM BALANCE

AVERAGE BALANCE

$1,332.80

1,560.49

1,081.23

6.30

13.00

$1,805.36

$980.17

$1,336.91

#307

HART FURNITURE CO.

1039 BROADWAY

SAN FRANCISCO, CA 94103

CALL (415) 456-9081

24 HOURS/DAY, 7 DAYS/WEEK

FOR ASSISTANCE WITH

YOUR ACCOUNT.

▲

124.35

450.00

100.00

150.00

50.00

132.50

74.38

1,160.49

400.00

A credit is a deposit or addition to a bank account. In many cases, the bank will have

credited your account for an item such as an EFT deposited into the account or inter-

est earned on the account. You, the customer, don’t know the amount of these credits

until the bank statement arrives, so the credits haven’t yet been entered in your

checkbook or check register.

An outstanding deposit is a credit that hasn’t yet been recorded by the bank. A de-

posit that you made near the end of the statement period may have been recorded in

your checkbook or check register but not recorded by the bank in time to appear on

the statement.

Because these items cause a difference between the bank statement balance and your

checkbook or check register balance, you should always reconcile the two balances im-

mediately upon receipt of the statement.

To start the reconciliation, compare the check stubs or check register, all deposit slips,

and any company records of ATM transactions with the bank statement. Such a compar-

ison is called a reconciliation of the bank balance.

When Hart Furniture Company received its monthly bank statement, the bookkeeper

noted that the ending balance was $1,805.36 but that the balance in the company check-

book was $1,835.94. To determine the correct balance, the bookkeeper noted the follow-

ing differences:

1. An EFT credit for $400 had been made to the account but not recorded by Hart.

2. A bank service charge of $13 had been subtracted from Hart’s account by the

bank.

3. Interest earnings of $6.30 had been added to Hart’s account.

4. A deposit on October 20 of $980 had not yet been recorded by the bank.

5. Checks for $27.92, $10, $48.95, $144.25, and $325 had not yet been processed and

deducted by the bank.

Most bank statements have printed on the back of the statement a form that can be

used to quickly and easily reconcile the customer’s checkbook or check register balance

with the statement balance. Figure 9-6 shows this form as completed by the Hart Furni-

ture bookkeeper using the information just noted. Note that the adjusted checkbook bal-

ance and the adjusted bank balance now agree, showing the correct cash balance of

$2,229.24.

Chapter 9 Banking 163