Virginia SOL 8 - 2020 Edition
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4.03 Reconciling an account balance
Lesson

Most people tend to have a checking account as well as a savings account.

checking account is the account where our salary is deposited.  It is also where we make most of our payments from.  Sometimes those payments are made by check, but usually they are made using a debit card.  This account is used for spending and we therefore don't earn any interest on the money we have there.  Checking accounts are not very good for saving at all!

A savings account is an account that we set aside just to deposit money we wish to save and grow. These accounts earn interest based on a set interest rate and are therefore better for saving money than a checking account. Usually we continue to make deposits until we have saved enough money to buy something that we have been planning for like a car, a down payment for a house, or a vacation.

 

Understanding your bank account statement

Below is the account statement for a fake checking account.

Date Description Amount Amount Balance
04/07/2019 Paycheck from Lita's Pizza $1100.00$1100.00   $1375.23$1375.23
04/10/2019 Rent to Sea Breeze Apartments   $-1275.00$1275.00 $100.23$100.23
04/13/2019 Car Insurance   $-95.00$95.00 $5.23$5.23
04/15/2019 YourBank A.T.M. Deposit $50.00$50.00   $55.23$55.23
04/17/2019 Visa Payment to Sally's Surf'n'Ski   $-85.00$85.00 $-29.77$29.77
04/17/2019 Overdraft Fee   $-35.00$35.00 $-64.77$64.77
      Total Remaining: $-64.77$64.77

Typically we will receive a statement like this once a month and each of our purchases and deposits will be listed here, along with any fees the bank charges us.  Purchases are also referred to as withdrawals or debits from our account.  Deposits are payments made into our account and may also be called credits to our account.  

The above example also shows that the account is overdrawn (the end balance is a negative amount), meaning that this individual spent more money than they have in their account.  Notice the bank has charged an overdraft fee because of this.  Overdraft fees are an amount of money that the bank charges for spending more money than we have in our account.  

 

Worked example

Question 1

Sometimes banks make mistakes and add or remove the wrong amount of money from an account. Because of this we should always compare the receipts from any transactions we make with our bank statements to confirm that we have the correct amount of money in our account.

Below is a list of transactions from the receipts Dani kept for the month of June.

Date Description Amount
06/12/2019 Lunch at Hero's Deli $15.73$15.73
06/14/2019 Gas at EZ Fuel $34.22$34.22
06/21/2019 Groceries at Food-n-Stuff $86.94$86.94
06/25/2019 Phone bill at Cell Mobile $64.99$64.99
06/30/2019 Hair cut at Snippy Clip $14.75$14.75

Dani looks at her bank statement for the month of June. It shows that her starting balance was $\$1783.29$$1783.29 and lists her ending balance as $\$1550.66$$1550.66 after her five transactions for the month of June. Did the bank make an error? If so, how far off were they from the correct amount?

Think: How much did Dani actually spend in the month of June? How much does the bank think she spent? Are these numbers the same? If not, how far apart are they?

Do: Add up the transactions to find out how much Dani spent. Then subtract the starting and ending balances to find out how much the bank took out of her account. Then find the difference between those numbers.

$15.73+34.22+86.94+64.99+14.75=216.63$15.73+34.22+86.94+64.99+14.75=216.63 $216.63$216.63 Amount actually spent
$1783.29-1550.66=232.63$1783.291550.66=232.63 $232.63$232.63 Amount bank took from account
$232.63-216.63=16.00$232.63216.63=16.00 $16.00$16.00 Amount bank overdrew

 

Reflect: The bank took $\$16.00$$16.00 extra from Dani's account. This is why it is always important to check your bank statements for accuracy!

Practice questions

Question 2

David’s mom is organizing his birthday party and she has a budget of $\$$$$50$50.

Items Prices
Juice (2L)

$\$$$$6.50$6.50

Popcorn $\$$$$4.25$4.25
Cupcakes (box of 12) $\$$$$8.30$8.30 
Lollipops (200g bag) $\$$$$2.95$2.95
Napkins (100 ct) $\$$$$2.20$2.20
Party poppers (bag of 8) $\$$$$3.30$3.30
Balloons (bag of 10) $\$$$$2.80$2.80
  1. Help complete the budget to make sure David’s mom has budgeted enough money.

    2 bottles of juice

    $\$$$$13.00$13.00

    3 bags of popcorn $\$$$$12.75$12.75
    1 box of cupcakes $\$$$$\editable{}$
    2 bags of lollipops $\$$$$\editable{}$
    1 pack of napkins $\$$$$2.20$2.20
    2 bags of party poppers $\$$$$6.60$6.60
    2 bags of balloons $\$$$$\editable{}$
    TOTAL $\$$$$\editable{}$
  2. Is David’s mom under budget or over budget?

    Over budget

    A

    Under budget

    B

    Over budget

    A

    Under budget

    B
  3. Which of the following items could she remove from her list so she is under budget?

    1 bag of party poppers

    A

    1 bag of lollies

    B

    1 bag of balloons

    C

    1 bottle of juice

    D

    1 bag of party poppers

    A

    1 bag of lollies

    B

    1 bag of balloons

    C

    1 bottle of juice

    D

Question 3

Here is Fiona’s weekly budget.

  1. Fill in the blanks in the table.

    Income Expenses
    Wages $\$80.00$$80.00 Phone $\$8.50$$8.50
    Umpiring $\$25.00$$25.00 Bus ticket $\$13.00$$13.00
        Entertainment $\$$$$\editable{}$
        Food $\$45.25$$45.25
    Total $\$$$$\editable{}$ Total $\$91.15$$91.15
  2. Fiona saves any money that she has not spent. How much does Fiona save each week?

Outcomes

8.4

Solve practical problems involving consumer applications

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