Maggie Wants to Open a Checking Account That Will Be

question 66

Essay

Maggie wants to open a checking account that will be the least expensive, given her normal financial transactions. She typically writes 15 checks a month and uses an automated teller machine (ATM) 35 times a month. Her monthly minimum checking balance falls to about $350 on an average. Which of the following accounts would be least expensive for Maggie? (Show all work.)
Account A:
No monthly fee is charged if a minimum balance of at least $300 is maintained.
A $5.00 fee is charged in any month the minimum balance falls below $300.
An ATM fee of $0.10 per transaction is charged on all transactions.
Account B:
No monthly fee is charged if a minimum balance of at least $500 is maintained.
A $3.00 fee plus $0.10 per check is charged in any month the minimum balance falls below $500.
There is no ATM fee on transactions.

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Definitions:

Adjustments

Corrections or changes made to the book balances of accounts to reflect more accurate values in financial accounting.

Payroll

The total amount of wages, salaries, and other earnings that a company pays to its employees.

Workweek

A fixed, standard period used for labor scheduling and payroll, commonly defined as a set number of hours or days that an employee works.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.