4.02 CCheck Writing & Endorsements Students will understand and apply steps in writing checks & appropriately endorsing checks.
Parts & Parties to a Check/Share Draft Check Number Drawer’s Name & Address Joint Account ABA # 3. Payee 2. Check Date Melanie Paige Charles Paige 319 619 Main Street Raleigh, NC 27601 2-131/1034 July 16, 2010 Pay To the Order of _____Donnie Tatum______________________$100.50 _One hundred and 50/100 ---------------------------------------------------DOLLARS State Credit Union For _______________ Charles Paige 2131/1034:78434 234320 100.50 07-18-2010 2251 4- numeric amount 5- amount in words 7. Drawer’s Signature - Last item completed on check! Bank Name - Drawee 6. Memo MICR Banking #s
Parties to a Check/Share Draft* • Drawer • owner of the account who signs the check • Drawee • bank or other financial institution that pays a check presented for payment • Payee • person to whom the check is written • Checking accounts are a legal contract between drawer and drawee. • Drawer demands action from the drawee. • Examples of demands: • Process check from account • Accept deposits into account *Share Drafts are issued by credit unions, but process like a check.
Check Writing Procedures • Write information in the check register first, (ensure checks are written in numerical order) • Write the date the check is written. • Write the payee’s name. • Write in the numerical amount of the check. • Write in the amount of the check in words. *Numeric and amount in words should match • Write in the purpose of the check in memo section • Sign the check using authorized signature.
Keep Accurate Records!Check Register Balance • To keep a continuous or running balance: Start with beginning balance , then record + deposits - checks written - debit card transactions - ATM transactions - service fees charged = Ending Balance
How Do I Know the Amount in my Checking Account? Keep a Check Register or Check Stub* Continuous Balance • Subtract checks written (or debit card transactions) from balance • Add deposits to balance • Keep a running balance after writing checks or making deposits • Check Register/stub is YOUR documentation of how much money is in your account? • What if mistakes are made? • You will make corrections when you reconcile (balance) bank statement *Check stub is part of check that stays in check book. Check details and a continuous “running” balance is maintained.
Check Endorsements • Definition: Signature of the payee on the back of a check, may include additional instructions • allows the payee to cash the check, deposit the check or transfer payment of the check to someone else. Different types of endorsements: What type of endorsement should I use ? • 1. Blank – to cash check • 2. Restrictive – to deposit check into account, or • 3. Full/special – to transfer payment of the check to someone else * Endorsement provides legal proof that the payee received the funds
Endorsements How should a check be endorsed? • Endorser (payee who is signing) • should sign the check the way it is on the front of the check and • if the name is misspelled, correct the signature directly up under the first endorsement
Blank Endorsements Should match payee’s name • Signed with endorser’s name only (endorser is payee from front of check) • Can be cashed by anyone who holds the check with a blank endorsement! • Don’t use blank endorsement before you are ready to cash or deposit!
Special/Full Endorsement • Transfers payment of a check to someone else. • Payee signs check , then writes “pay over to” another person • Can be used to make payment on a debt • Juan is payee on check • Juan owes Maria money • Juan transfers payment to Maria. Debt = money owed Might also endorse: Juan Delgado pay over to Maria Fernandez
Full/Special Endorsement Example • Transfers payment to someone else • Payee signs the check over to another person to receive payment • Who was payee on check? John • Who was the check transferred to? Jane
Restrictive Endorsement • Limits use of the check so it can be deposited only to endorser’s account. • Safest type of endorsement • Cannot be cashed by a thief or someone who finds the check • Best to use when mailing a check for deposit or when using the ATM for deposit. Stamp often used by businesses for speed and convenience